Introduction to Management

Chapter Summary

Although the term authority has various connotations, in the organizational context, authority is defined as the power to make decisions which guide the actions of others. Power, on the other hand, is the ability of individuals to influence the beliefs and actions of others. Power can be legitimate, expert, referent, reward, or coercive. Various authority relationships exist in an organization, many of which are related to line and staff functions.

Line functions are those which are directly responsible for accomplishing the objectives of the enterprise, while staff functions are advisory in nature. The main staff functions are investigation, research and giving advice to line managers on how to accomplish tasks. Functional authority involves conferring rights upon individuals or departments to control the processes and practices pertaining to personnel in other departments. Instead of making recommendations to the line managers or superiors, functional authority allows staff personnel to issue instructions to line managers directly.

Although line managers and staff personnel are expected to work together for accomplishment of organizational goals, there are many factors which contribute to the conflicts between line and staff personnel. The line managers have clashes with the staff personnel as they feel that staff personnel are not accountable for their actions. Moreover, line managers feel that staff personnel invade their territory and dilute their powers.

Since staff personnel may not have experience of the operational activities, their recommendations and ideas may lack applicability. Staff managers feel that line managers do not make the right use of talents of the staff personnel and are not open to new ideas. Further, since staff personnel lack authority, they may not be able to implement their solutions for problems. The difference in the nature of line and staff functions is also a prime reason for conflicts between line and staff managers.

The line and staff conflicts can be avoided by having clearly defined authority relationships between line and staff functions and by ensuring proper use of staff talent. The staff personnel should also be made accountable for the outcome of their actions and present line managers the solutions for problems in as complete a form as possible, leaving only its acceptance or rejection to the line manager.

Organizations differ from each other in the amount of authority given to the lower-level employees regarding decision-making. Centralization is the retention of decision-making authority with the top management, whereas decentralization is granting of decision-making powers to the lower-level employees. It is not possible for an organization to be either completely centralized or completely decentralized. An organization can either follow a centralized or decentralized approach depending upon the manner in which it has grown over time, its size, the technical complexity of its tasks and the geographical dispersion of its business operations.

Apart from these, other factors like time frame of decisions, importance of a decision to the organization, the planning and control procedures used and influence of various environmental factors determine the level of decentralization in an organization. Moreover, decentralization is facilitated if competent and experienced managers are present in the organization and subordinates are willing to take on additional responsibilities.

Depending on whether the organization follows a centralized or decentralized approach, authority is either retained with the top management or is delegated to the lower-level managers. Delegation of authority refers to a manager granting the right to a subordinate to make decisions or use his discretion in judging certain issues. The amount of authority delegated depends on the delegator and the delegant, as well as organizational factors.

The delegation of authority may not be effective if a superior does not like to delegate, if he is afraid of his subordinates' advancement, if he fears that his shortcomings may be exposed or if he has a negative attitude towards his subordinates. Also, if the delegant is afraid of criticism, lacks information and resources, lacks self-confidence and if the rewards and incentives are not attractive enough, the delegant may not be willing to take on additional responsibility.

Organizational factors such as its decentralization policy, control procedures, availability of managers and management philosophy also affect the delegation of authority. It is always important to strike a balance between centralized and decentralized functions in an organization.

Major policy areas like finance, new product programs, marketing strategies, etc. should be centralized, whereas routine and monotonous tasks which do not need much guidance from superiors, can be decentralized. Since the costs of decentralization are high, the potential benefits must be high enough to justify the costs involved.

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