According to Theo Haimman,

Delegation of Authority merely means the granting of authority to subordinates to operate within
prescribed limits.

1. Enables a manager to use his time on high priority activities.

2. It satisfies the subordinate's need for recognition and provides them with opportunities to develop
and exercise initiative.

3. The manager shall still be accountable for the performance of the assigned task.

4. The authority granted to a subordinate can be taken back and redelegated to another person.

Elements of Delegation

1. Authority > Authority refers to the right of individuals to command his subordinates and to take
action within the scope of his position.

Authority also refers to the right to take decisions inherent in a managerial position to tell people
what to do and expect them to do it.

Authority flows from top to bottom.

2. Responsibility -> Responsibility is the obligation of a subordinate to properly perform the assigned
duty.

- Responsibility flows upward. Ex - Subordinate will always be responsible to his superiors.

- When an employee is given responsibility for a job he must also be given the degree of authority
necessary to carry it out.

3. Accountability -> Accountability implies being answerable for the final outcome once authority has
been delegated and responsibility accepted one cannot deny accountability.

- It cannot be delegated and flows upward. A subordinate will be accountable to a superior for
satisfactory performance of work.

# Decentralization

Top management -> Board of directors

-> Managing director

-> General Manager

Middle management -> Branch managers

-> Production manager

-> Marketing manager

-> Financial manager

-> Personnel managers

Lower management -> Foremen

-> Office superintendents

-> Supervisors

-> Departmental Heads - Heads

When decision-making authority is retained by higher management levels, an organization is

centralised.

When such authority is delegated to different levels of organization, it is decentralised.

According to Louis Allen -> Decentralization refers to systematic effort to delegate to the lowest level.
Wednesday 10 all authority except that which can be exercised at central points.

According to Henry Fayol -> Everything which goes to increase the importance of a subordinate's role
is decentralization, everything that goes to reduce it is centralization.

Importance of decentralization ->

1. Develops initiative among subordinates. When lower managerial levels are given freedom to take
their own decisions, they learn to depend on their own judgment.

2. Develops managerial talent for the future. Gives them a chance to prove their abilities and creates
a reservoir of qualified manpower.

Who can be considered to fill up more challenging positions through promotion:

iii) Quick decision making ->

iv) Relief to top management

v) Facilitates growth -> Allows to function in a manner best suited to their department and fosters a
sense of competition amongst the department.
Delegation Authority

Delegation of authority is the act of transferring decision-making power or task to another person.

- Delegation of authority can help tasks run smoothly and efficiently, and can help organizations meet
deadlines.

Decentralization ->

Decentralization refers to a specific form of organizational structure where the top management
delegates decision-making responsibilities and daily operations to middle and lower subordinates.

- Decision-making authority is given to the lower-level of management or even employee.

- When only the executives at an organization manage the planning and decision-making
responsibilities.

Delegation means handing over an authority from one person of high level to the person of low level.
In delegation, a superior delegates or transfers some rights and duties to a subordinate in respect of
that work does not end.

---

Decentralization

The dissemination of authority, responsibility and accountability to the various management

levels, is known as Decentralization.

Decentralization is achieved when the delegation of authority is performed systematically and

repeatedly to lowest level.

Delegation

→ Managers delegate some of their function and authority to their subordinates.

→ Technique of Management

→ Superiors are accountable for acts done by subordinates.

→ Subordinates do not have full liberty.

Decentralization

→ Centrals to take decisions is shared by top management and other management levels.

→ Philosophy of Management

→ Department heads are accountable for the acts of the concerned department.

→ A substantial amount of freedom is there.

Centralization

→ Centralization refers to concentration of power or authority in few hands.

→ An organization is centralized when the decision making authority lies in the hand of top
management only.

Directing / Controlling

 There are five functions of management:

i. Planning
ii. Organizing
iii. Staffing
iv. Directing
v. Controlling

Directing

 The process of instructing, guiding, counselling, motivating, and leading people in the
organization to achieve its objective.

Features / Characteristics of Directing

 Directing initiates action.

 Directing takes place at every level of management.
 Directing is a continuous process.
 Directing flows from top to bottom.

Importance of Directing

 Initiates Action
 Integrates Group Activity
 Provides Motivation
 Facilitates Changes
 Provides Stability and Balance in the organization.

Elements of Directing

1. Supervision
2. Motivation
3. Leadership
4. Communication

Supervision

Instructing, guiding, and observing subordinates at work to ensure that they are working as
per plan and to help them in solving their work problems.
Motivation

Inspiring subordinates to work enthusiastically for the achievement of organizational goals.

Leadership

The process of influencing people's behavior so that they contribute to the achievement of the
organizational goals.

Communication

The process of exchange of information and ideas between two or more people.

2) Motivation

Process of stimulating and inspiring people at work to accomplish desired goals.

→ Inner psychological force.

Motive / Motivation / Motivators

 Motive → Desire, which activates, compels and directs individual to behave in the
direction of achievement of goals.
 Motivation → Process of stimulating and inspiring people at work to accomplish
desired goals.
 Motivators → Technique used to motivate people in an organization (like pay, bonus,
promotion, recognition, responsibility, etc.)

Features / Nature of Motivation

 Motivation is an internal feeling.

 Motivation produces goal-directed behavior.
 Motivation can be either positive or negative.
 Motivation is a complex process.

Maslow's Need Hierarchy Theory

 Abraham Maslow, An eminent U.S. Psychologist.

 Maslow's Theory is based on human needs.

There exists a Hierarchy of five Needs:

1. Basic Physiological Needs

2. Safety / security
3. Social / Affiliation Needs
4. Esteem Needs
5. Self-actualization Needs
Basic Physiological Needs

 Includes food, shelter, clothing and other basic necessities of life.

Safety / security Needs

 Include need for financial growth, physical security.

Social / Affiliation or Belonging Needs

 Include need for affection, love, sense of belongingness, acceptance, companionship

and friendship.

Esteem Needs

 Include the need for self-respect, autonomy, status, recognition and attention.

Self-actualization Need

 Realize what we actually want to do.

Need Theory X and Theory Y

 Given by Douglas McGregor in 1960.

He suggests two aspects of human behaviour at work.

 Two different views of individuals employees.

 One view is negative, called as Theory X and another view is positive called Y theory.

Theory X

Assumption of Theory X

An average employee naturally does not like work and tries to escape it whenever
possible.

 Since the employee does not want to work, he must be persuaded, compelled or
warned with punishment so as to achieve organizational goals. A close supervision is
required on part of managers. The managers adopt a more dictatorial style.
 Many employees rank job security on top, and they have little or no
aspiration/ambition.
 Employees generally dislikes responsibilities.
 Employees resist change.
 An average employee needs formal direction.

Theory Y
 Assumption of Theory Y

 Employees can perceive their job as relaxing and normal. They exercise their physical
and mental efforts in an inherent manner in their jobs.
 Employees may not require coercion to work, but they can use self-direction and self-
control if they are dedicated and committed.
 Many employees rank job security on top, and they have little or no
aspiration/ambition.
 Employees generally dislikes responsibilities.
 Employees resist change.
 An average employee needs formal direction.

Need for Affiliation

 It is a desire for relationship based on cooperation and mutual understanding.

 A person is satisfied if he is able to maintain pleasant social relationships.
 Individuals having high affiliation needs prefer working in an environment providing
greater personal interaction.

Need for Power

 The desire to influence other individuals' behaviour as per your wish.

 It is the desire to have control over others and to be influential.
 It is satisfied by occupying higher positions.
 Person is motivated if the organization provides him opportunities to exercise his
personal power.

Herzberg’s two factor theory model

 Frederick Herzberg developed the model in 1959.

 Interviewed over 200 professionals.
 Argues that there are two factors that an organization can adjust to influence
motivation in the workplace.

Hygiene factors

 Maintenance factors/ Dissatisfiers.

 Related to condition under which job is performed.
 Company policy and administration
 Technical Supervision
 Interpersonal relationship
 Salary
 Job security

Personal Life

 Working Condition
 Status
 Necessary to maintain at a reasonable level for satisfaction of employees.
 Any decrease in the level will dissatisfy them.
  Improving those factors helps to decrease job satisfaction.

Motivating Factors (Satisfiers)

1. Related to Job Achievement

2. Recognition
3. Advancement
4. Possibility of growth and responsibility.

 Any decrease in the factors will not affect the satisfaction.

 Any increase in these factors will satisfy the employees.
 Useful in motivating them for higher performance.

Vroom's Expectancy Theory

 Victor Vroom in the 1960s

1. Valence
2. Instrumentality
3. Expectancy

Individuals act when they expect positive results from their action.

 Expectancy: Belief that Effort will lead to increased performance.

 Instrumentality: Belief that Performance leads to reward.
 Valance: What is the value of the rewards that result from the performance? Reward
is valuable or not.

Expectancy
Individual effort
Instrumentality
Individual performance
Valance
Organizational rewards
Equity Theory - Stacy Adams
Equity is measured by comparing the ratio of contribution to benefit for each person.
Considered one of the justice theories.

Employees seek to maintain equity between the inputs that they bring to a job and the
outcomes that they receive from it, against to perceived inputs and outputs of others.

Input = Output

Reinforcement Theory - B.F. Skinner

 Theory aims at achieving the desired level of motivation among employees by means of
reinforcement/punishment and extinction.

 Positive reinforcement
 Negative reinforcement
 Punishment
 Extinction

Leadership

Process of influencing the behaviour of people towards achievement of organizational goal.

 Leadership indicates the ability of an individual to maintain good interpersonal

relation with followers and motivate them to contribute for achieving organizational
objective.

Features of Leadership

 Leadership indicates ability of an individual.

 It aims to bring changes in the behaviour of others.
 It indicates interpersonal relation between leader and followers.
 It is exercised to achieve common goals of the organization.
 It is a continuous process.

Manager and Leader

 All managers are leaders, but all leaders are not managers.
 Managers - Formal organization, to influence behaviour of the employees formally as
the have formal authority.
 Leaders - Formal as well as informal organization, only informal authority cause.

Leadership styles:
It is a leader reflects behaviour pattern which the leader persists as his sole style.
Leadership style is the result of philosophy, personality, experience and value system
of leader.
Depending on the use of authority, there are three basic styles of leadership:

1. Autocratic
2. Democratic
3. Laissez Faire or Free Rein.
4. Transformational Leadership
5. Transactional Leadership

Autocratic style of leadership:

Leader centralizes the decision-making powers.
Democratic Style of Leadership
Leader encourages active participation of subordinates in decision-making process.
Laissez Faire Style of Leadership
Laissez Faire leaders allow maximum freedom to subordinates in deciding their own
policies and methods.

Autocratic Leadership

Under this style, the leader centralizes all decision-making powers and exercises complete
control over his subordinates.

 Communication is one way.

 The leadership is dogmatic.

Autocratic leadership is effective in getting productivity in situations like in a factory

where supervision is tight and responsible for production on time and also has to ensure
labour productivity

This style of leadership is also known as directive style of leadership.

Advantage

 Quick decision making

 Necessary for less competent employees.

Disadvantage

 Leads to low morale and frustration among subordinates.

 Reduces initiative and creativity of subordinates.
 Subordinates do not get an opportunity for development and growth.

Democratic Leadership

A democratic leader develops action plan and makes decisions in consultation with his
subordinates.

Democratic Leadership

 He encourages them to participate in decision-making and to give suggestions in

setting goals.
 The democratic leader needs to respect the other’s opinion and support subordinates
in performing their duties and achieving organizational objectives.
 The style of leadership wins greater confidence, cooperation, loyalty and initiatives of
the group. It also raises the morale of the subordinates.
Advantages

 Improves morale and job satisfaction of employees.

 Promotes a sense of belongingness and responsibility among subordinates.
 Improve decision-making and reduce absenteeism.

Disadvantages

 May lead to unnecessary delay in decision-making.

 Leaders may try to evade responsibility by passing the work to subordinates.

Laissez-Faire Leadership

This style of leadership is known as laissez-faire, which means "no interference in the affairs
of others."

 The followers are given high degrees of independence and freedom to formulate their
own objectives and ways to achieve them.
 Group members work on their own tasks and resolve the issues themselves.
 The leader's only role is to support them and supply them with complete information
to complete the assigned task.

This style is effective only when leaders are leading a team of highly motivated and
skilled people who have produced excellent work in the past.

Advantages

 Improves morale, self-confidence, and job satisfaction of employees.

 Maximum opportunity for development and growth of subordinates.
 Facilitates quick decision-making.

Disadvantages:

 Subordinates do not get the benefit of knowledge, guidance, and support of leaders.
 Subordinates may give more importance to their personal interest as against
organizational interest.

Transactional Leadership

 Use clear rewards and punishment to drive employee performance

 The executive relies on rewards and punishments to achieve optimal job performance
from his subordinates.

Transformational Leadership

 Leadership style that relies on the encouragement of a team to realize overall success.
 Focused on motivation for employees to create change, innovate and shape the future
of the organizational structure.
 Controlling

Refers to comparison of actual performance with the planned performance and taking
corrective action.

Controlling cannot prevent deviations, but it can minimize them by taking action and
decisions that reduce their recurrence.

Nature of Controlling

 Controlling is a goal-oriented function.

 Controlling is a pervasive function.
 Controlling is both forward-looking and backward-looking function.
 Controlling is a continuous function.

Importance of Controlling

 Accomplishing organizational goals.

 Judging accuracy of standards.
 Making efficient use of resources (time).
 Improving employee motivation and discipline.
 Ensuring order and discipline.
 Facilitating coordination in action.

Limitations of Controlling

 Difficulty in setting quantitative standards.

 Little control on external factors.
 Resistance from employees.
 Costly affair.

Controlling Techniques

1. Traditional techniques
2. Modern techniques

Controlling Techniques
1. Personal Observation: The oldest and most important controlling technique.
Managers visit the workplace regularly and observe the performance of employees.
 Check if the work is going as per plans or not.
 If any discrepancy is found, they give instructions on the spot immediately.
2. Statistical Data: Data is collected and presented in the form of tables, charts, figures,
and graphs.
 Then it is analyzed with the help of various statistical techniques like measures of
central tendency, measures of dispersion, correlation, regression, etc. to take
decisions in the field of production, quality, inventory, sales, etc.
3. Break-Even Analysis: It is used to find out the break-even point where the total cost
is equal to total revenue.
The Point of No Loss, No Profit

 This point is used to identify the number of units of a product that must be sold to
generate enough revenue to cover costs.
 Any production above this point will yield profits.
 With the help of this technique, managers examine the impact of increase or
decrease in units sold and increase or decrease in price or costs on the amount of
profit.

4) Budgetary Control

 Budgets are prepared for various operations of the organization, like, sales budget,
production budget, financial budget, overheads budget, personnel budget, etc.
 Various budgets for different operations of the concern for future period are
prepared and then actual results are recorded.
 The actual figures are compared with the budgeted ones and discrepancies are
found out and remedial action is taken.

Modern Techniques
1. Return on Investment (ROI)
 ROI measures the rate of return on investment.
 Under this technique, profit is considered in terms of capital employed.
 It measures whether capital was effectively employed to generate a decent level of
return.
 ROI = Net Profit / Total Investment
 The managers compare ROI between two or more periods of the organization.
 Higher ROI reflects higher performance as compared to concerns with lower ROI.
2. Zero-Base Budgeting
 Under ZBB, in determination of budgets, information or figures of previous periods is
not taken into account.
 Budgets are prepared afresh without considering the information from previous
years or periods.
 Budgets are prepared in the light of current situations.
 Zero-base budget starts from scratch and is prepared every time.
 3) PERT/CPM

 Project Management techniques like planning, scheduling and controlling help the
managers in completing the project on schedule.
 In this technique, a network diagram is prepared that shows the sequence of
activities needed to complete a project and time and cost associated with each
activity.
 The purpose is to identify critical activities which are essential to perform and to
complete the project on time and to identify the least cost associated with each
activity.

4) Management Information System (MIS)

 MIS is a systematic way of collecting, organizing, processing and communicating

information to various levels of management so that decisions can be taken by the
managers in time.
 Provide important data like related to employee turnover, labor cost, etc.
 MIS helps in increasing efficiency of the organization by providing timely, accurate
information.