Delegation of Authority and Empowerment in Management

Delegation of authority is the result of:

• the firm’s growth
• more complex decisions

Delegation and empowerment are essential skills for effective managers. Although the terms are sometimes used interchangeably, there are several areas of difference between them:

• Delegation is a straightforward means of assigning tasks to your employees.
• Empowerment seeks to give an employee more authority with the aim of developing employee commitment, enthusiasm, and expertise, while encouraging innovation that will benefit the organization over time. Empowerment necessarily requires some level of delegation, but not all instances of delegation will produce an empowered employee.

Responsibility: The obligation, placed on employees through delegation, to perform assigned tasks satisfactorily and be held accountable for the proper execution of work.

Centralized organizations: authority is concentrated at the top, and very little decision-making authority is delegated to lower levels. Centralized organizations ensure control, even though decision-making could be delayed.

Decentralized organizations: decision-making authority is delegated as far down the chain of command as possible. Decentralized organizations may increase the firm’s productivity, even though they might require more qualified personnel. The net benefits of decentralization will be highest in rapidly changing environments.

• Benefits of decentralization increases as a firm enters more markets with a broader array of products.
• Information becomes more important.

Vertical integration increases the net benefits of decentralization.

Benefits of Decentralization:

• Effective use of local knowledge:
  1. local tastes and preferences
  2. price sensitivities of particular customers
• Conservation of management time:
  1. senior management focus on strategy
• Training and motivation for local managers.

Costs of Decentralization:

• Potential agency problems:
  1. effective control systems may be expensive.
• Coordination costs and failures:
  1. Duplication may occur in market analysis