Difference between Delegation and Decentralization

Introduction to Delegation and Decentralization

One person cannot complete every work and make every decision inside an organisation. As a result, delegation and decentralization of power were created. Understanding the difference between Delegation and Decentralization is crucial for managers looking to effectively distribute responsibilities and authority within an organization. Delegation refers to the transfer of power from one person in a superior position to another who is under him. It is a downward delegation of authority in which the manager divides up the workload among the subordinates. Decentralization, on the other hand, refers to the distribution of authority from the top-level management to the lower-level management. It is the orderly transmission of authority and accountability up the organisational ladder. It clarifies the organisational hierarchy’s allocation of decision-making authority.

Difference between Delegation and Decentralization

Delegation is, although being similar to Decentralization, they differ widely from each other. Delegation and Decentralization are both ways of transferring power from higher to lower levels of an organization. The difference between Delegation and Decentralization lies in the scope of power that is transferred from higher to lower levels. Delegation refers to assigning of responsibility and authority to a subordinate by a manager to carry out specific tasks. Decentralization is the transfer of decision making power and assignment of accountability and responsibility for all levels of management.

Managers who want to efficiently share tasks and authority within a company must understand the difference between delegation and decentralization. Delegation and decentralization are required to ensure smooth conduct of tasks. There are important differences between the Delegation and Decentralization, even though they both refer to the process of moving power from higher to lower levels. Although these two phrases are frequently used synonymously, they are not the same. So, we have provided a thorough comparison of delegation and decentralization of authority below.

What is Delegation?

Meaning of Delegation: – Giving or assigning subordinates the responsibility and authority to complete specific tasks is known as Delegation of authority. Basically, Delegation is passing down authority from one level to another in an organisation. The superior’s guidelines must be followed by the subordinate. Managers can divide the workload to others via delegating. They can focus on more important work by minimizing the workload for mundane tasks. It aids in raising subordinates’ job satisfaction, motivation, and morale. It satisfies their desires for freedom, accountability, and acknowledgment.

In any organisation no individual can perform all duties and accomplish all tasks by himself. It is physically impossible for a single individual to look after the affairs of a large business. His skill lies in his ability to get things done through others. As an organisation grows in size and the managers job increases beyond his personal capacity, his success lies in his ability to multiply himself by training his subordinates and sharing his authority and responsibility with them. The only way he can achieve more is through delegation – through dividing his work load and sharing responsibilities with others. Thus, the sharing of power or authority with another for the performance of certain tasks and duties is known as Delegation.

The act of delegating involves giving duties or responsibilities to a person or group while maintaining ultimate responsibility for the results. This implies that it is still the delegating authority’s responsibility to make sure the assignment is accomplished to the required standard. The delegator retains decision-making power and manages the resources needed to finish the work in this procedure.

Delegation is done by top management, and this is a practice that is seen in all types of organizations. The delegation of authority can increase productivity and improve decision-making but managers should clearly evaluate the performance of their subordinates before delegating responsibilities to them, and this is based on the trust that managers have towards the employees as well.

What are the elements of Delegation?

Delegation consists of the following three components: –

Delegation of Tasks or Responsibilities: – The delegator (superior) provides tasks to the delegatee in the first phase (subordinate). The delegator must be certain in his mind what tasks he should delegate to subordinates before he assigns the duties. As a result, before a task or piece of labour is allocated, it is identified and precisely defined. For instance, a sales manager must explicitly outline the goals, the sales territory, etc. when asking a subordinate to establish a divisional sales office.

Transfer of Authority: – The second stage of delegation is the transfer of power. The rights and powers given to someone else to carry out the work that has been delegated can be referred to as authority. The ability to secure the resources required to complete the task at hand may be one of these powers. The subordinate (delegatee) cannot be expected to carry out his work or duties without sufficient authority. For instance, in the scenario mentioned above, the sales manager must grant his employee the authority to obtain and utilise the resources required to establish a divisional office.

Accountability: – When tasks are delegated to a subordinate and authority is granted, the delegator establishes a responsibility or accountability to carry them out. Accountability is the duty to perform the work and bear responsibility in accordance with the standards defined and stipulated. Hence, accountability is the responsibility of a person to give a principal, to whom he reports, an account of the fulfilment of his tasks. For the work given to him, the subordinate must constantly answer to the superior. His accountability is fixed to the post; therefore, he cannot transfer it to anybody else. Hence, through accountability, the superior can manage the output of his subordinate. Through reports, meetings, and evaluations, the delegatee must answer to his delegator.

What is Authority?

Authority is a legitimate right to make decisions to carry out decisions and to direct others. Managers expect to have the authority to assign work, hire or fire employees and the allotment of money. Organizations have a formal authority system that depicts the authority relationship between the people and their work.

E.g. In case of line organization, superior has an authority over his subordinates. In case of line and staff, the staff has authority over the subordinates but they work with the line managers. Functional authority allows managers to direct specific processes or policiesin other departments.

What is Responsibility?

Responsibility is the obligation to accomplish the goals related to the position and the organization. In order to enable the subordinate do his duty well, it is the duty of a superior to tell him what is expected of him.

Responsibility is the task assigned by managers to subordinates. It means an ethical commitment to do the work assigned. A person who does some work has a responsibility to do it.

Manager at whatever level of the organization have the same basic responsibilities when it comes to managing the workforce i.e. direct employees toward objectives, oversee the work effort of employees, deal with the immediate problems and report the progress of work to superiors.

What is Accountability?

It is the obligation to carry out responsibility and exercise authority in terms of performance standards. When a subordinate is given an assignment and is granted necessary authority to complete it, the final phase is holding the subordinate responsible for results. However, the extent of accountability depends upon the authority and responsibility delegated.

A person cannot be held answerable to the acts not assigned to him by his superior. For effective accountability, performance standards be
communicated in advance to the subordinate and he must accept it.

Importance of Delegation

One of the most crucial aspects of the organisational process is the delegation of authority. The network of roles and activities that make up an organisation defines it. The process of delegation is how relationships are established between people in their various organisational responsibilities.

It is physically difficult for a single man to manage the affairs of a huge organisation; hence delegation is required. A manager’s success depends on his capacity to replicate himself through others. The modern organisations are not only very big, but also very complex. No manager can claim to be fully qualified to handle the wide range of jobs that exist. Once more, large-scale corporate operations are not confined to a single position. It may have a number of branches and units spread over several positions. Running these branches necessitates delegation.

A continuity exists within an organisation. Although managers may come and go, the organisation still exists. Operations within the organisation are maintained through delegation. Delegation promotes management growth within an organisation.

Delegation is crucial for any organisation since it relieves the manager’s workload and frees him up to handle critical issues inside the company. It is a technique for preparing subordinates to take on greater responsibility. By fostering greater understanding among the staff, it gives the organisation continuity and fosters a positive workplace culture.

Principles of Delegation

One of the most crucial steps in the organising process is delegation. In any organisation, relationships are established through delegation. It is possible to use a few principles as a set of rules for effective delegation.

These ideas include: –

Principle of Delegation by Results: – Delegation is used to complete tasks more effectively and efficiently than they could be by the delegator themselves in a particular situation. As a result, it is crucial that tasks be assigned and that authority be delegated while keeping the desired outcomes in mind.

Principles of Competence: – The delegatee should be qualified to carry out the duty that has been given to him.

Principle of Trust and Confidence: – It is essential that there be a culture of trust and confidence throughout the organisation as a whole and that the delegator and the delegatee have a sense of mutual trust. The delegatee ought to have complete mental freedom while working. If his mind is clear, he will be able to apply his initiative and desire to his task.

Principle of Equal Responsibility and Authority: – It states that the authority granted should be sufficient to carry out the task. It seems sense that accountability for acts cannot be larger than the power granted and should not be lower.

Principle of Unity of Command: – The links between authority and responsibility are described by the principle of unity of command. The guiding concept emphasises that in order to prevent misunderstanding and conflict, there should only be one boss to whom each subordinate is responsible. It is assumed in delegation that the power of discretion over a certain task will pass from one superior to a subordinate.

Principle of Absolute Responsibility: – A responsibility is an obligation that cannot be temporarily or permanently transferred because the superior is the one who has delegated authority and assigned obligations, no superior can escape being held accountable for the actions of his or her subordinates. Also, the subordinate’s obligation to carry out the tasks that have been given to him is unwavering and cannot be changed.

Principle of Effective Communication: – Information should flow freely between superior and subordinate so that the latter can make judgements and accurately understand the nature of the task at hand given his level of authority and the nature of that authority.

Principle of Effective Control: – As the delegator only transfers authority and not responsibility, he is responsible for ensuring that the transferred power is used appropriately.

Principle of Reward: – Rewarding good delegation and power use is important. A logical reward system would operate as an incentive for subordinates to voluntarily accept the duty and assume control and also foster a positive work atmosphere.

What are the advantages of Delegation?

The following can be studied as the advantages of delegation of authority: –

Specialization: – According to a subordinate’s ability, knowledge, and experience, authorities and obligations are assigned. Hence, granting authority to others encourages specialization and the division of labour within an organisation.

Decrease the Workload and Pressure: – Routine responsibilities are delegated to middle-level and lower-level supervisors in delegation. It reduces the burden, strain, and stress on top-level managers. The manager has adequate time to engage in other crucial creative and productive tasks.

Quick Thinking: – Having the power to make decisions increases the decision-making abilities of lower-level managers. Because they do not need to confer with top management before deciding, decisions are made quickly at work.

Staff Development: – The ability of subordinates to exercise authority is enhanced by delegation. It enables them to carry out difficult tasks, which helps them acquire managerial skills.

Workplace Training: – Delegating authority is a form of on-the-job training that allows subordinates to pick up knowledge, enhance skills, and acquire managerial capabilities.

Better Understanding: – It promotes greater understanding and trust between management and employees in the organisation. In performing the task, it encourages good communication and a sense of teamwork.

Expanding and Diversifying: – Delegation produces a team of subordinates who are skilled, devoted, and capable. So, it aids in the growth, diversity, and extension of a company.

Suitability: – For large companies with numerous departments, branches, and units that perform a variety of organisational tasks, delegation of authority is appropriate.

What are the disadvantages of Delegation?

The following can be explored as the main drawbacks of delegation: –

Miscommunication And Conflict: – There is a danger of miscommunication and conflict between supervisors and subordinates due to improper coordination and communication. The firm’s performance and productivity can suffer as a result.

Bad Outcomes: – When authority and responsibility are given to unqualified and incompetent employees, the organisation struggles to provide the intended results due to poor performance.

Misuse Of Power: – Another disadvantage of delegation is that a subordinate may abuse their authority by making poor decisions for their own gain.

Burden on Employees: – Subordinates’ workloads and stress levels grow as a result of delegation of authority. The stress of the job may cause boredom and lower motivation.

What are the barriers to effective delegation?

Delegation is fundamentally a human leadership issue. “Delegation is not merely a managerial strategy; it is a component of the mindset of business itself.” As a result, the organisation needs to foster a culture of responsibility and generosity. By fostering a climate of mutual trust and confidence, this is made feasible. The main obstacles to delegation that are addressed here are the unwillingness of the superior to delegate and the unwillingness or avoidance of the subordinates to accept delegation.

Why are managers hesitant to deligate?

Occasionally, managers are hesitant to delegate power for the following reasons: –

Lack of Faith in Subordinates’ Abilities: – A manager may lack faith in the ability and competence of subordinates. He might believe he is better equipped to complete the task than his subordinates.
Lack of Faith in the Subordinate’s Feeling of Accountability: – The manager’s lack of faith in the subordinate’s sense of accountability may prevent the delegation of authority to others.
Fear of Losing Power: – Managers who are uneasy and worry that they might lose control if their employees do well are typically hesitant to delegate.
Lack of Confidence: – Some managers may be hesitant to delegate control because they lack confidence in themselves or are overly aware of their own inadequacies. This is valid for organisations with poor professional management.

Why do subordinates resist delegation?

Under the following scenarios, subordinates are also observed to avoid delegation: –

A Reluctance to Accept Responsibility: – Studies have revealed that many subordinates prefer a controlled existence with little responsibility. Some workers refuse to accept the responsibility that comes with being given leadership.
Fear of Criticism: – Another element that leads subordinates to shirk responsibilities is the fear of being criticised for errors or inefficiency.
Fear of Insufficient Resources: – Many subordinates are reluctant to take on responsibility out of concern for a lack of the resources required to complete the task and a delegator’s unwillingness to cooperate.
Lack of Motivation: – The workplace environment is frequently insufficiently inspiring. It hinders subordinates from taking ownership.
Several studies carried out in India demonstrate the delegators’ love for authority, the tendency of superiors to withhold information that subordinates require, and the delegators’ lack of faith in the subordinate’s ability to complete tasks.

What is Decentralization?

Meaning of Decentralization: – Decentralization refers to the distribution of power within an organisation so that no single entity has complete decision-making authority. Decentralization is a systematic delegation of authority at all levels of management and in all of the organization. Decentralization entails giving authority over decision-making and resources to lower levels of the organisation in addition to duties and responsibilities. Because of the organization-wide distribution of decision-making power, lower-level managers now have more freedom and influence over the responsibilities that fall under their purview.

Decentralization is the transfer of decision making power and assignment of accountability and responsibility for all levels of management. This is also a form of delegation where authority is divided in a systematic manner among all levels of management.

In a decentralization, authority is retained by the top management for taking major decisions and framing policies concerning the whole concern only. Rest of the authority may be delegated to the middle level and lower level of management. In other words, it is the diffusion of authority in a planned way.

Decentralization and delegation differ in the extent to which power is moved from higher to lower levels. When you delegate, you give someone particular duties or obligations while keeping final accountability and decision-making power for yourself. Decentralization entails moving resources and decision-making authority to lower levels of the organisation in addition to duties and responsibilities.

Importance of Decentralization

Now that we have a fundamental understanding of decentralization, let’s look at its crucial function in the commercial setup described below: –

Speeds Up Decision Making: – Decision-making is sped up since daily operations are handled by middle and lower-level managers. Also, having the freedom to act swiftly gives them the ability to carry out their decisions in a timely and efficient manner.

Strengthens Leadership Qualities: – Due to decentralization, employees are given significant exposure since they are given the opportunity to complete jobs independently. As a result, it contributes to the development of an environment at work where individuals can greatly improve their executive skills. The firm’s total productivity increases as they learn to hone their skills and take ownership of a variety of jobs.

Enhances Administrative: – Each manager’s ability to make decisions that affect their department gives them more freedom to make changes as they become necessary as operations progress. In turn, it not only assists in raising the department’s performance standards but also enables them to find appropriate solutions to departmental problems. All of this greatly contributes to raising the standard of administration at every level.

Facilitates Greater Control: – Top management can more effectively assess the performance of various departments with the aid of decentralization. Additionally, it enables them to review, pinpoint, and make the necessary corrections to existing flaws. This not only reduces the likelihood of operational flaws but also gives each area of operation more control.

Advantages of Decentralization

Some of the advantages of decentralization are listed below: –

Enables Effective Communication: – The communication between superiors and subordinates in each department is easy because there are fewer hierarchical levels present. The top management then benefits from this setup and is kept up to date on the complaints and operations of each department. Also, it enables them to communicate with their subordinates as needed and improves the way choices are carried out.

Encourages Expansion: – Due to the middle and lower levels of management’s increased involvement in day-to-day operations, top management looks for opportunities to concentrate on growth and the maintenance of profitability. Decentralization also improves management’s ability to spot areas that need further focus or improvements to become more productive. As a result, management is better able to make the necessary changes fast and effectively, which really helps the company grow and become more profitable.

Motivates Subordinates: – Decentralization is a powerful tool for increasing staff morale and work satisfaction. They gain a sense of belonging and further develop a sense of teamwork when given duties inside the department. Decentralization has a good effect on a company’s efficiency, but it also presents certain difficulties.

The Motivation of Employees: – Decentralization increases job satisfaction and morale, particularly among lower-level supervisors. It also tries to uphold the many requirements for involvement, independence, and reputation. Decentralization also promotes a sense of cohesiveness and group spirit.

Security: – To the prior statement, decentralised networks are extremely safe because of the way they handle data and transactions. In addition to using encryption and hashing to create blocks, these networks also ensure the security of the data ledgers. The more transactions that occur on the network, the more blocks that are created, and the more secure the data become—there is truly no weak link in the chain—the more blocks that are created. This is because each block in the chain needs information from the blocks before and after it to use cryptography to validate the data.

Improved Direction and Control: – Decentralization enhances management and monitoring. Because divisions and sub-divisions govern how everything is arranged, managing each department is easier. As the leaders of these departments are normally nominated, the higher authorities are freed from having to oversee each department individually. These supervisors oversee and direct the employees who work for them, and they also communicate the issue to the top managers. By delegating duties, enforcing rules, and implementing changes as necessary as long as doing so furthers the goals of the organisation as a whole, these leaders also have some influence over the employees under their control.

Disadvantages of Decentralization

Some of the disadvantages of Decentralization are as follows: –

Conflict: – Divisional leaders are under more pressure as a result of decentralization to maximise revenues at any costs. Due to divisional competition, there may be violent clashes. The temptation to expand one’s own empire at the expense of others may exist for each divisional leader. When such “mini-companies” or “small empires” develop within an organisation, coordination and control issues may also occur.

Decentralization Increases Spending: – Decentralization at the medium and lower levels necessitates the use of qualified, competent, and talented management. They will be paid in accordance with their qualifications and area of expertise.

Financial Burden Increase: – Decentralization results in a higher financial burden, the requirement for capable employees, and the impossibility for small enterprises to hire specialists across a range of industries.

In Case of Emergency, Decentralization is Ineffective: – In a decentralised structure, lower and intermediate-level managers only have the power to make standard decisions. They cannot act anytime they come into complex and unplanned difficulties because they lack the authority to do so.

The Coordination Problem: – When power is widely dispersed throughout the organisation, coordination problems are made more challenging by decentralization of power.

Decentralization Increases the Risk: – Since it transfers authority for making decisions to a lower level. Lower-level managers may make poor judgements that increase risks and result in losses if they lack the requisite knowledge and skills.

Specialized Services Cannot Benefit from Decentralization: – The decentralization model may not be appropriate for all service kinds. For specialised services like accounting, human resources, engineering, medicine, etc., it is inappropriate.

Similarities Between Delegation and Decentralization

The core of delegation and decentralization is the transfer of decision-making power from a central authority to lower levels of an organisation.
Delegation and Decentralization, both procedures seek to boost efficiency and effectiveness by giving decision-making power to people who will be performing the work.
To guarantee that choices are taken in the organization’s best interests, delegation and decentralization call for open lines of communication and accountability.
Delegation and decentralization require clear lines of communication and accountability to ensure that decisions are made in the organization’s best interest.
A clear understanding of roles and duties, as well as the required materials and assistance, are crucial for decision implementation.
By granting employees greater authority and ownership, delegation and decentralization can both boost employee motivation and engagement.
Delegation is closely related to decentralization. Delegation leads to decentralization. The degree of decentralization in any organisation is determined by several factores like the size of organisation, the rate of growth and the nature of organisation.It is influenced by the management philosophy and the environment in which an organisation operates. Whatever may be the size of the organisation there is nothing like a complete centralisation nor complete decentralization in an organisation. Neither complete centralization nor complete decentralization is desirable. What is required is a golden mean —a balance between the two.