Distinction between Delegation and Decentralization

Even though delegation and decentralization may be interchangeable terms, in reality there is considerable difference between then. The following are the main points of distinction: 

 

Delegation  Decentralization 
  1. It is an act, or a process.

2. It refers to relationship between two individuals. ie., a superior and his immediate subordinate(s).

3.      It is vital to management process. Only through delegation of duties, subordinates can be involved in the activities aimed at the accomplishment of enterprise objectives.

4.      Control over a subordinate’ performance is exercised by his superior who constitutes the source of delegation of authority.

 

 

  1. It is the end-result of delegation and dispersal of authority at various levels.

2. It refers to a relationship between the top management and various departments and divisions in the enterprise.

3. It is optional in the sense that the top management may or may not favor a deliberate policy to work for a general dispersal of authority.

4. Even the power to control may be delegated to     the department concerned.

For example, suppose, the chief executive of a company authorizes the production manager to make appointments to all such positions under him in the case of which the maximum salary does not exceed $ l,OOO. This is a case of delegation of authority. But suppose the same authority is given to all departmental managers (marketing, finance etc.), it would be called decentralization of authority. When departmental heads or those below them are granted authority in respect of the following it would be decentralization:

  1. Sanctioning increase in wages and salaries.
  2. Sanctioning disbursement of travel expenses.
  3. Sanctioning promotions.
  4. Sanctioning purchase of goods, machines, etc.

In a decentralized enterprise, there may even be separate balance sheet and profit and loss account for each division.