Principles Of Management Chapter 8 GTU MBA

7/31/2019 Principles Of Management Chapter 8 GTU MBA

1/25

LINE/STAFF AUTHORITY,EMPOWERMENT, AND

DECENTRALIZATION


2/25

AUTHORITYAND POWER

Power is the ability of individuals or groups toinduce or influence the beliefs or actions of otherpersons or groups.

Authority is the right in a position to exercisediscretion in making decisions affecting others.


3/25

DIFFERENT BASESOF POWER

Legitimate power normally arises from position andderives from our cultural system of rights,obligations, and duties whereby a position is

accepted by people as being legitimate.

Expert power is the power of knowledge.

Referent power is influence that people or groupsmay exercise because people believe in them andtheir ideas.


4/25

DIFFERENT BASESOF POWERCONT

Reward power is the power to grant or withholdrewards, such as high grades given by a universityprofessor.

Coercive power is closely related to reward powerand normally arises from legitimate power; it is thepower to punish.


5/25

WHATIS EMPOWERMENT?

Employees, managers, or teams at all levels in theorganization have the power to make decisionswithout asking their superiors for permission.

Power should be equal to responsibility (P=R)

If power is greater than responsibility (P>R), thenthis could result in autocratic behaviour of thesupervisor

If responsibility is greater than power (P


6/25

THE BASIS OF FORMAL AUTHORITY: TWOVIEWS

A Classical View: Authority originates at some veryhigh level, and then is lawfully passed down formlevel to level. At the top of this hierarchy may beGod, King, Elected President, or the collective will

of the people.

According to the classical view of formal authorityin organizations, management has a right to givelawful orders and employees have an obligation to

obey. This obligation is, in effect, self-imposed.


7/25

The Acceptance View: The basis of authority lieswith the influencee rather than the influencer.

This view starts with the observation that not alllegitimate laws or commands are obeyed in allcircumstances.

The key point is that the receiver decides whetheror not to comply.

THE BASIS OF FORMAL AUTHORITY: TWOVIEWS (CONT.)


8/25

ACCEPTANCE VIEW

Chester Barnard, a strong proponent of theacceptance view, has defined the conditions underwhich a person will comply with higher authority:

1. He can understand the communication

2. At the time of decision he believes that it isconsistent with the purpose of the organization

3. At the time of decision he believes it to becompatible with his personal interest as a whole

4. He is able mentally and physically to comply with it


9/25

SCALAR PRINCIPLEIN ORGANIZATION

The clearer the line of authority from the ultimatemanagement position in an enterprise to everysubordinate position, the clearer will be theresponsibility for decision making and the more

effective will be organizational communication.


10/25

LINE, STAFF, AND FUNCTIONAL AUTHORITY

Line authority is the relationship in which a superiorexercises direct supervision over a subordinate.

Line authority is based primarily on legitimate power.

The activities classified in line will differ in each

organization as it is identified in terms of companysgoals.

Staff relationship is advisory.

Staff authority is primarily based on expert power.


11/25

LINE, STAFF, AND FUNCTIONALAUTHORITY

Functional authority is the right delegated to anindividual or a department to control specifiedprocesses, practices, policies, or other mattersrelating to activities undertaken by persons in other

departments. In reality, staff departments especially those responsible

for audit functions, may have formal authority over linemanagers within the limit of their functions

Thus it is based on both legitimate power and expert

power.


12/25

LINE & STAFF AUTHORITY

Advantages:

Everything kept Simple

Authority relationship graphicallyillustrated by hierarchy

Close to employees so decisionscan be made quickly

Disadvantages:

Neglects advisers Too many decisions to make in

short time period

Requires very skilled managers

Advantages:

Uses the best experts

Frees line managers for day-to-dayactivities

Can be used as screening andtraining for future line managers

Disadvantages:

Confusing to some employees Creates line-staff conflicts

Places staff in submissive role

Line Authority Staff Authority


13/25

DECENTRALIZATIONOF AUTHORITY

Decentralization is the tendency to dispersedecision-making authority in an organized structure.


14/25

CENTRALIZATION & DECENTRALIZATIONASTENDENCIES

Authority not delegated

Authority delegated

Complete centralization(no organization structure)

Complete decentralization(no organization structure)


15/25

DIFFERENT KINDSOF CENTRALIZATION

1. Centralization of performance pertains togeographic concentration; it characterizes, forexample, a company operating in a single location.

2 Departmental centralization refers to concentrationof specialized activities, generally in onedepartment. For example, maintenance for a wholeplant may be carried out by a single department.

3. Centralization of management is the tendency to

restrict delegation of decision making. A highdegree of authority is held at or near the top.


16/25

DELEGATION

Delegation: The act of assigning formal authorityand responsibility for completion of specificactivities to a subordinate.


17/25

THEPROCESSOFDELEGATIONINVOLVES:

Determining the results expected from a position.

Assigning tasks to the position.

Delegating authority for accomplishing these tasks.

Holding the person in that position responsible forthe accomplishment of the tasks.


18/25

PERSONAL ATTITUDES TOWARD DELEGATION

Receptiveness

Willingness to let go

Willingness to allow mistakes by subordinates

Willingness to trust subordinates Willingness to establish and use broad controls


19/25

OVERCOMING WEAK DELEGATION

1. Define assignments and delegate authority inlight of results expected.

2. Select the person in light of the job to be done.

3.

Maintain open lines of communication.4. Establish proper controls.

5. Reward effective delegation and successfulassumption of authority.


20/25

RECENTRALIZATION OF AUTHORITY ANDBALANCE AS THE KEY TO DECENTRALIZATION

Recentralization

Centralization of authority that was oncedecentralized; normally not a complete reversal ofdecentralization, as the authority delegated is notwholly withdrawn.


21/25

ADVANTAGES & LIMITATIONS OFDECENTRALIZATION

Advantages

Relieves top management of some burden of decision making.

Encourages decision making & assumption of authority.

Gives manager more freedom in decision making.

Promotes establishment & use of broad controls. Makes comparison of performance of different organizational

units possible.

Facilitates setting up profit centers.

Facilitates product diversification.

Promotes development of general managers.

Aids in adaptation to fast-changing environment.


22/25

ADVANTAGES & LIMITATIONS OFDECENTRALIZATION (CONT)

Disadvantages

Makes it more difficult to have a uniform policy

Increases complexity of co-ordination of decentralizedorganizational units.

May result in loss of some control by upperlevel managers. May be limited by inadequate control techniques.

May be constrained by inadequate planning & control systems.

Can be limited by the lack of qualified managers.

Involves considerable expenses for training managers.

May be limited by external forces.

May not be favoured by economies of scale of some operations.


23/25

CENTRALIZATION

The extent to which important decisions that canaffect the performance and decisions of others areretained in the hands of one or a few personsindicated centralization of authority in an

organization.


24/25

ADVANTAGES: APPROPRIATEDELEGATION

The task/job goes to the right person.

Speeding up of decision, task performance &response to the demands of the changing businessenvironment.

The skill and competence of the staff to whom theresponsibility is delegated improves.

When the person to whom tasks are delegated aresupported & rewarded appropriately, it enhancestheir motivation and confidence, commitment &involvement.

The manager who delegated the task to some oneelse is freed up for more important or serious jobs.


25/25

LIMITATIONS: INADEQUATE /INAPPROPRIATEDELEGATION

The person accepting responsibility needs to have therequired ability & willingness to perform.

Success of delegation also requires co-ordination amongother performing staff & other organizational arrangements.

Even if the staff is skilled, if the trust between the superiorand the subordinate is missing, then there may be too littledelegation and its acceptance.

Too much of the delegation is same as the superiorabdicating his or her responsibility and making the junior do

what actually needs the superior's involvement, too littledelegation slowed down decision.

Managers doing other tasks still need to be available whenthe juniors need their support.

Principles Of Management Chapter 8 GTU MBA

Documents

Transcript of Principles Of Management Chapter 8 GTU MBA