Limits of Delegation

There are certain conditions m a business system, both internal and environmental, those evoke tendencies toward centralization and work against decentralization and delegation of authority and responsibility. Some of them reflect wider, uncontrollable forces; others are open, relatively, to manipulation. We shall take not here of these important influences:

  1. Some decisions are irreversible, especially in the short run; others can be reversed or corrected but at a high cost in terms of money or embarrassment. This is so, regardless of the size of the commitment which may be large, medtum or even small. An example is say, when a dealership has to be awarded to one among an excluded category.
  2. Some decisions involve large commitments in terms of money, time or direction, or a combination of them. Even an initial move (not so large in itself) can trigger off the wide commitment chain. It is unsafe to delegate such initial decisions to juniors.
  3. Certain decisions are apt to create an uncomfortable precedent – being off the track or running counter to recognized enterprise policy. Regardless of the individual content (importance) of such decisions, they are better retained at a high level.
  4. A certain decision, of not moment in so far as it goes, might create repercussions – a chain reaction elsewhere. An example is the waiver of the minimum educational qualification of a worker of a factory for his promotion. The repercussions may extend throughout the industrial relations climate of the enterprise: Such a decision should not be delegated.
  5. Decisions where the personal (semi-judiciary) judgment of the senior is called into play. An example is passing of orders of major punishments on grounds of discipline- involving, say, dismissal or termination of service. The decision may be retained at a high level regardless of the level of employees concerned.
  6. The traditional make up of the enterprise influences the degree of decentralization and delegation. With a series of able and authoritarian administrators at the top dominating an enterprise, say, for a half a century, the tradition is likely to release tendencies against decentralization and delegation.
  7. In enterprises owned and managed by a dynasty or familial group decentralization tends to be confined to members of the family. The nodal points of decision and control remain in the hands of a few. Professionalization of management, in such a situation, has impact on the lower routine echelons of management and on the advisory specialist services.
  8. Policy decisions are usually retrained at higher management levels. Besides the principles of size and commitment, this is also conditioned by the need to observe uniformity.
  9. The growth, diversity and complexity of an enterprise evoke tendencies of decentralization and delegation on functional, territorial or product lines or a combination of the two or more criteria.
  10. Often adequacy of trained and competent managers imposes a constraint on decentralization and delegation. Key positions, in such a situation, tend to be held by a few senior and well-tried executives.
  11. A situation of flux (may be, in a particular phase of an organization’s life cycle) or a quick change is apt to put a brake on the progress of decentralization and the delegation scheme. A delegation system does not function well unless in a stable system and a comparative monotone of repetitive management.
  12. The environment, the institutional framework and the laws of the land cast their strong influence on in-company delegation and decentralization. In a controlled system many facets of enterprise operations and decision are bound by regulatory measures and forms of a prescriptive nature.

While, in a situation as this, overall and absolute decentralization is constrained, there is nothing to prevent flow of delegation of authority at the top down the scalar chain.