Principles of Management & Communication – KCA 103

Unit 2 – Planning & Organizing

Exercise 2

1. Explain various models of decision making.

2. How biasing takes place in decision making?
3. Explain the need and importance of organizing.
4. Expound various organizational structures.
5. Explicate the threats faced by an organization.
6. Explain various styles of management.
7. What is delegation? Explain various elements and steps of delegation.
8. Explain various principles of delegation.
9. Explicate the importance of delegation.
10.Differentiate between Centralization and Decentralization.

Q.1. Explain various models of decision making.

Decision Making Models:

Making effective decisions is a critical leadership quality. However, settling on the best
course of action is often easier said than done. When instinct and reasoning alone
aren't enough to pinpoint the best decision out of your available options, it can often
be helpful to utilize a decision-making model.
A decision-making model works by walking you through the decision-making process
— and there are several such models available for you to choose from.

To help you improve your problem-solving abilities and make better decisions, let's
take a look at five proven decision-making models and when you should use them.

Decision-making models are frameworks designed to help you analyse possible

solutions to a problem so that you can make the best possible decision. Because
different decision-making models take different approaches to this goal, it's important
to match the model with your unique situation and leadership style.
Given that only 20% of team members say that their organization excels at decision-
making, most organizations and team leaders have a lot of room to improve in this
area. If you want to improve your decision-making approach, mastering the five
decision-making models is a great place to start.

The 5 main decision-making models

 1. Rational decision-making model
2. Bounded rationality decision-making model
3. Vroom-Yetton decision-making model
4. Intuitive decision-making model
5. The recognition primed model

There are five main decision-making models designed to help leaders analyse relevant
information and make optimal decisions.

Once again, each of these models takes a unique approach to decision-making, so it is

important to choose the model that will work best for you and your unique situation.
With that said, let's take an in-depth look at each model and the situations where each
one is most applicable.

1. Rational decision-making model

The rational decision-making model involves identifying the criteria that will have the
biggest impact on your decision's outcome and then evaluating possible alternatives
against those criteria. The steps of the rational decision-making model are:

Step #1) Define the problem: You'll want to start by identifying the issue you are
trying to solve or the goal you are trying to achieve with your decision.

Step #2) Define criteria: The next step is to define the criteria you are looking for
in your decision. For instance, if you are deciding on a new car, you might be
looking for criteria such as space, fuel efficiency, and safety.

Step #3) Weight your criteria: If all of the criteria you define are equally important
to you, then you can skip this step. If some factors are more important, you will
want to assign a numerical value to your criteria based on how important each
factor is.

Step #4) Generate alternatives: Having defined and weighted the criteria you are
looking for, it's time to brainstorm ideas and develop a few alternatives that meet
your criteria.

Step #5) Evaluate your alternatives: For each possible solution you come up with,
you should evaluate it against your criteria, giving extra consideration to the
criteria you weighted more heavily.
Step #6) Choose the best alternative: After evaluating all possible alternatives,
select the option that best matches your weighted criteria.

Step #7) Implement the decision: The next to last step in the rational decision-
making model is simply putting your decision into practice.

Step #8) Evaluate your results: It's essential to evaluate your results anytime you
make a decision. Looking at your decision from a retrospective point of view can
help you decide if you should use the same decision-making process in the future.

When to use this model

The rational decision-making model is best employed when you have numerous
options to consider and plenty of time to evaluate them. One example of a scenario
where this model might prove useful is choosing a new hire from a pool of candidates.

2. Bounded rationality decision-making model

Sometimes, taking action quickly and choosing a "good enough" option is better than
getting bogged down in searching for the best possible solution. The bounded
rationality decision-making model dictates that you should limit your options to a
manageable set and then choose the first option that meets your criteria rather than
conducting an exhaustive analysis of each one. Going with the first option that meets
your minimum threshold of requirements is a process known as "satisficing." While
this may not be the best process for every decision, a willingness to satisfice can prove
valuable when time constraints limit you.

When to use this model

The bounded rationality decision-making model is best employed when time is of the
essence. It's the best model to use when inaction is more costly than not making the
best decision. For example, suppose your company has encountered an issue causing
extended downtime. In that case, you may want to use the bounded rationality
decision-making model to quickly identify the first acceptable solution since every
minute wasted is costly.

3) Vroom-Yetton decision-making model

The Vroom-Yetton decision-making model presents seven "yes or no" questions for a
decision-maker to answer followed by five decision-making styles for them to choose
from. It's the most complex decision-making model on our list, requiring decision-
makers to utilize a decision tree to arrive at the right decision-making style based on
their answers to the model's questions.
Check out this helpful resource for a complete breakdown of the Vroom-Yetton
decision-making model and a copy of the decision tree template you will need to use.

When to use this model

The Vroom-Yetton decision-making model was specifically designed for collaborative
decision-making and is best employed when you involve multiple team members in the
decision-making process. In fact, one of the main objectives of this model is to
determine how much weight should be given to the input from a leader's
subordinates.

4) Intuitive decision-making model

Have you ever heard that it's often best to go with your gut? While making decisions
based only on instinct may not seem like the best idea to those who prefer a more
careful and logical approach, there are plenty of instances where going with your gut is
the best way forward.

For example, if you don't have much information to consider, instinct may be the only
tool for finding the best solution that you have available. Likewise, trusting your
instinct can often yield the best results in cases where you are already deeply
experienced with the matter at hand since nothing hones instinct better than
experience.

When to use this model

The intuitive decision-making model probably shouldn't be the first model you turn to
when you need to make a decision, but there are instances where it can be useful.
We've mentioned a couple already, including cases where there isn't enough
information for you to make a more informed decision and instances where your own
experience is more reliable than the available information.

The intuitive decision-making model can also be useful in cases where you don't have a
lot of time and need to make a decision quickly.

5) The recognition primed model

The recognition primed model is similar to the intuitive decision-making model in that
it relies heavily on the decision-maker's experience and instinct. However, the
recognition primed model is a little more structured than intuitive decision-making and
includes the following steps:
 Step #1) Analyze available information to identify possible solutions: The
first step in the recognition primed model is to brainstorm possible solutions
based on your available information.
 Step #2) Run scenarios through your head: For each possible solution, run
the scenario through your head and see how it plays out.
  Step #3) Make a decision: The recognition primed model dictates that the
solution that leads to the best possible outcome when you visualize it in your
mind is the solution that you should choose.

When to use this model

Like the intuitive decision-making model, the recognition primed model works best in
instances where:
 You don't have a lot of information available.
 You trust your instinct and experience.
 Time constraints are a factor.
With that said, using this model effectively does require a certain degree of creativity
and imagination since you will have to visualize the outcome of each possible solution.

Q.2. How biasing takes place in decision making?

Biasing in decision-making:

Anytime you are faced with an important decision, it is essential not to let biases get in
your way. Biases might be rooted in prior experiences, but that doesn't inherently
mean that they are grounded in facts. In many cases, avoiding biases is also key to
making an ethical decision since biases can sometimes cause you to mistreat certain
people and their ideas.

Understanding the different biases

Preventing biases from getting in the way of your decision-making skills starts with
identifying the types of biases you need to be aware of, including:

1. Confirmation bias
2. Availability bias
3. Survivorship bias
4. Anchoring bias
5. Halo effect

1. Confirmation bias:
Confirmation bias entails favouring or focusing on information that confirms your
pre-existing beliefs and ignoring information that runs counter to those beliefs.
While it's important to trust your own experience and beliefs, you don't want to
subconsciously favour information just because it aligns with what you already
believe to be true.

2. Availability bias:
Information that is easily accessible in your memory often gets undue weight, and
this is known as availability bias. One example of availability bias is overestimating
the likelihood of an event just because you can remember a similar event
happening to you in the past.

3. Survivorship bias:
Survivorship bias entails focusing only on the solutions that have generated
success in the past. While it's important to consider past results, ignoring possible
solutions just because they are unproven will place unnecessary constraints on
your decision-making process.

4. Anchoring bias:
Anchoring bias is the tendency to "anchor" yourself to the first piece of
information you learn. Information should not get extra weight just because you
have known about it for longer, and new information can be equally important to
consider.

5. Halo effect:

The halo effect occurs when positive experiences with or impressions of one
aspect of a possible solution cause you to view the entire solution positively.
Rather than being blinded by the positives, seek out and consider the negatives as
well.

Q.3. Explain the need and importance of organizing.

Importance of Organizing
Organizations are systems created to achieve common goals through people-to-people
and people-to-work relationships. They are essentially social entities that are goal-
directed, deliberately structured for coordinated activity systems, and is linked to the
external environment. Organizations are made up of people and their relationships
with one another. Managers deliberately structure and coordinate organizational
resources to achieve the organization’s purpose.
Each organization has its own external and internal environments that define the
nature of the relationships according to its specific needs. Organizing is the function
that managers undertake to design, structure, and arrange the components of an
organization’s internal environment to facilitate attainment of organizational goals.
Organizing creates the framework needed to reach a company's objectives and goals.
Organizing is the process of defining and grouping activities, and establishing authority
relationships among them to attain organizational objectives.
Need and Importance of Organizing

A comprehensive approach to organizing helps the management in many ways.

Organizing aligns the various resources towards a common mission.

1. Efficient Administration
2. Resource Optimization
3. Benefits of Specialization
4. Promotes Effective Communication
5. Creates Transparency
6. Expansion and Growth

1. Efficient Administration
It brings together various departments by grouping similar and related jobs under a
single specialization. This establishes coordination between different departments,
which leads to unification of effort and harmony in work.
It governs the working of the various departments by defining activities and their
authority relationships in the organizational structure. It creates the mechanism for
management to direct and control the various activities in the enterprise.

2. Resource Optimization
Organizing ensures effective role-job-fit for every employee in the organization. It
helps in avoiding confusion and delays, as well as duplication of work and overlapping
of effort.

3. Benefits of Specialization
It is the process of organizing groups and sub-divide the various activities and jobs
based on the concept of division of labour. This helps in the completion of maximum
work in minimum time ensuring the benefit of specialization.

4. Promotes Effective Communication

Organizing is an important means of creating coordination and communication among
the various departments of the organization. Different jobs and positions are
interrelated by structural relationship. It specifies the channel and mode of
communication among different members.

5. Creates Transparency
The jobs and activities performed by the employees are clearly defined on the written
document called job description which details out what exactly has to be done in
every job. Organizing fixes the authority-responsibility among employees. This brings
in clarity and transparency in the organization.
6. Expansion and Growth
When resources are optimally utilized and there exists a proper division of work
among departments and employees, management can multiply its strength and
undertake more activities. Organizations can easily meet the challenges and can
expand their activities in a planned manner.

Q.4. Expound various organizational structures.

Organizational Structures

An organization is a social unit of individuals that is designed and managed to achieve

collective goals. As such organizations are open systems that are greatly affected by
the environment they operate in. Every organization has its own typical management
structure that defines and governs the relationships between the various employees,
the tasks that they perform, and the roles, responsibilities and authority provided to
carry out different tasks.

An organization that is well structured achieves effective coordination, as the structure

defines formal communication channels, and describes how separate actions of
individuals are linked together.

Organizational structure defines the manner in which the roles, power, authority, and
responsibilities are assigned and governed, and depicts how information flows between
the different levels of hierarchy in an organization.

The structure an organization designs depends greatly on its objectives and the
strategy it adopts in achieving those objectives.

An organizational chart is the visual representation of this vertical structure. It is

therefore very important for an organization to take utmost care while creating the
organizational structure. The structure should clearly determine the reporting
relationships and the flow of authority as this will support good communication –
resulting in efficient and effective work process flow.

Managements need to seriously consider how they wish to structure the organization.
Some of the critical factors that need to be considered are –

 The size of the organization

 Nature of the business
 The objectives and the business strategy to achieve them
 The organization environment
Most common organizational structures are mentioned below:

1. Functional Organization Structure

2. Product Organizational Structure
3. Geographic Organizational Structure
4. Matrix Organizational Structure
Functional Organization Structure
The functional structure is the most common model found in most organizations.
Organizations with such a structure are divided into smaller groups based on
specialized functional areas, such as operations, marketing, finance, Human
Resources, etc.

The organization’s top management team consists of several functional heads, such as
the VP Operations, VP Sales/Marketing etc. communication generally occurs within
each functional department and is communicated across departments through the
department heads.

This structure provides greater operational efficiency as employees are functionally

grouped based on expertise and functions performed. It allows increased specialization
as each group of specialists can operate independently.

In spite of the above benefits there are some issues that arise with this structure.
When different functional areas turn into silos (get isolated from other departments)
they focus only on their area of responsibility and do not support other functional
departments. Also expertise is limited to a single functional area allowing limited scope
for learning and growth.

Product Organizational Structure

This is another commonly used structure, where organizations are organized by a

specific product type. Each product category is considered a separate unit and falls
within the reporting structure of an executive who oversees everything related to that
particular product line. For example, in a retail business the structure would be
grouped according to product lines.

Organization structured by product category facilitates autonomy by creating

completely separate processes from other product lines within the organization. It
promotes depth of understanding within a particular product area and also promotes
innovation. It enables clear focus with accountability for program results.

As with every model, this model also has a few downsides like requirement of strong
skills specializing in the particular product. It could lead to functional duplication and
potential loss of control; each product group becomes a diverse unit in itself.
Geographic Organizational Structure
Organizations that cover a span of geographic regions structure the company
according to the geographic regions they operate in. This is typically found in
organizations that go beyond a city or state limit and may have customers all across
the country or across the world.

It brings together employees from different functional specialties and allows

geographical division. The organization responds more quickly and efficiently to
market needs, and focuses efforts solely on the objectives of each business unit,
increasing results.
Though this structure increases efficiency within each business unit, it reduces the
overall efficiency of the organization, since geographical divisions duplicate both
activities and infrastructure. Another main challenge with this model is that it tends to
be resource intensive as it is spread across and also leads to duplication of processes
and efforts.

Matrix Organizational Structure

A matrix structure is organized to manage multiple dimensions. It provides for
reporting levels both horizontally as well as vertically and uses cross-functional teams
to contribute to functional expertise. As such employees may belong to a particular
functional group but may contribute to a team that supports another program.
This type of structure brings together employees and managers across departments to
work toward accomplishing common organizational objectives. It leads to efficient
information exchange and flow as departments work closely together and
communicate with each other frequently to solve issues.
This structure promotes motivation among employees and encourages a democratic
management style where inputs from team members are sought before managers
make decisions.
However, the matrix structure often increases the internal complexity in organizations.
As reporting is not limited to a single supervisor, employees tend to get confused as to
who their direct supervisor is and whose direction to follow. Such dual authority and
communication leads to communication gaps, and division among employees and
managers.

Q.5. Explicate the threats faced by an organization.

Common Threats to an Organization

What do you understand by threats to an organization? Threats refer to negative
influences which not only hamper the productivity of an organization but also bring a
bad name to it.

Let us go through common threats faced by an organization.

1. One of the most common threats faced by organization is employees with a

negative approach:
2. High attrition rate is another big threat to an organization
3. Data and information loss:
4. Security issues pose a major threat to the organization:
 5. Lack of funds is another area of concern for the organizations:

1. One of the most common threats faced by organization is employees with a

negative approach:
Remember; nothing can harm an organization more than unfaithful employees.
Believe me, employees who attend office just to earn their salaries are in fact the
biggest threat to an organization.
Non serious employees do not contribute much towards the productivity of an
organization. They are a mere burden on the system. Even the best of clients, best of
infrastructure or the best of machinery would not help if people associated with the
organization are not loyal and committed towards it.

2. High attrition rate is another big threat to an organization

Organizations suffer a great loss when talented employees quit and join their
competitors. When an individual who has been trained for six months by an
organization leaves all of a sudden, it is both waste of time and energy. Make sure
employees who know their job and responsibilities well stick to the organization for a
long time at least for two to three years.

3. Data and information loss:

Another common threat faced by an organization is data and information loss. A lot of
effort goes in formulating important strategies for the team and organization.
It is unethical to share confidential information with your competitors. When
individuals have their best friends within the organization but working in separate
teams, they tend to share team strategies and policies. In such a case not only
respective teams suffer but also the entire organization. Client data base, monetary
transactions, company accounts, salaries of employees need to be kept confidential
under all circumstances.
In today’s business scenario, where individuals are totally dependent on their
computers, everything goes for a toss if system crashes. Believe me; a server failure
can lead to major losses for the organization. A lot of time goes in first detecting as to
what went wrong and then rectifying the problem. Employees find it extremely
difficult to deliver if their machines are not in proper working conditions. They can
neither fetch any data nor interact with their clients through emails.
Instruct employees to take proper backups at regular intervals. IT department is the
lifeline of every organization and they need to ensure proper softwares and anti
viruses are installed in every machine. Do not keep untrained professionals in your IT
team. Another major problem arises when telephone lines are out of order.

4. Security issues pose a major threat to the organization:

Make sure you have appointed security staffs who are responsible for the overall
security of the organization as well as safety of the employees.
Proper measures need to be taken to protect the organization from fire, earth quake
or any other disaster of similar sort. It becomes organization’s primary responsibility to
take care of its employees and their basic requirements. Poor working condition does
not allow employees to give their hundred percent.
Mass boycotts and strikes also pose major threat to organization. Situations where
individuals tend to form groups and go on strikes not only affect the productivity of the
organization but also spoil the work culture.

5. Lack of funds is another area of concern for the organizations:

Financial stability is of utmost importance and organizations need to have a stable
background. A situation where you are unable to give salaries to your employees and
also meet daily expenses need to be avoided at any cost. Planning is essential. An
organization needs to have sufficient funds to survive the challenging times.

Q.6. Explain various styles of management.

Management Style - Meaning and Different Types of Styles

The art of getting employees together on a common platform and extracting the best
out of them refers to effective organization management.
Management plays an important role in strengthening the bond amongst the
employees and making them work together as a single unit. It is the management’s
responsibility to ensure that employees are satisfied with their job responsibilities and
eventually deliver their level best.
The management must understand its employees well and strive hard to fulfill their
expectations for a stress free ambience at the workplace.

What is Management Style?

Every leader has a unique style of handling the employees (Juniors/Team). The
various ways of dealing with the subordinates at the workplace is called as
management style.
The superiors must decide on the future course of action as per the existing culture
and conditions at the workplace. The nature of employees and their mindsets also
affect the management style of working.

Different Management Styles

1. Autocratic Style of Working
 In such a style of working, the superiors do not take into consideration the
ideas and suggestions of the subordinates.
 The managers, leaders and superiors have the sole responsibility of taking
decisions without bothering much about the subordinates.
  The employees are totally dependent on their bosses and do not have the
liberty to take decisions on their own.
 The subordinates in such a style of working simply adhere to the
guidelines and policies formulated by their bosses. They do not have a say
in management’s decisions.
 Whatever the superiors feel is right for the organization eventually
becomes the company’s policies.
 Employees lack motivation in autocratic style of working.

2. Paternalistic Style of Working

 In paternalistic style of working, the leaders decide what is best for the
employees as well as the organization.
 Policies are devised to benefit the employees and the organization.
 The suggestions and feedback of the subordinates are taken into
consideration before deciding something.
 In such a style of working, employees feel attached and loyal towards
their organization.
 Employees stay motivated and enjoy their work rather than treating it as a
burden.

3. Democratic Style of Working

 In such a style of working, superiors welcome the feedback of the
subordinates.
 Employees are invited on an open forum to discuss the pros and cons of
plans and ideas.
 Democratic style of working ensures effective and healthy communication
between the management and the employees.
 The superiors listen to what the employees have to say before finalizing
on something.

4. Laissez-Faire Style of Working

 In such a style of working, managers are employed just for the sake of it
and do not contribute much to the organization.
 The employees take decisions and manage work on their own.
 Individuals who have the dream of making it big in the organization and
desire to do something innovative every time outshine others who attend
office for fun.
 Employees are not dependent on the managers and know what is right or
wrong for them.

5. Management by Walking Around Style of Working

 In the above style of working, managers treat themselves as an essential
part of the team and are efficient listeners.
  The superiors interact with the employees more often to find out their
concerns and suggestions.
 In such a style of working, the leader is more of a mentor to its
employees and guides them whenever needed.
 The managers don’t lock themselves in cabins; instead walk around to find
out what is happening around them.

Q.7. What is delegation? Explain various elements and steps of delegation.

Delegation:

A manager alone cannot perform all the tasks assigned to him. In order to meet the
targets, the manager should delegate authority.

Delegation of Authority means division of authority and powers downwards to the

subordinate.

Delegation is about entrusting someone else to do parts of your job. Delegation of

authority can be defined as subdivision and sub-allocation of powers to the
subordinates in order to achieve effective results.

Elements of Delegation

1. Authority
2. Responsibility
3. Accountability

1. Authority - in context of a business organization, authority can be defined as the

power and right of a person to use and allocate the resources efficiently, to take
decisions and to give orders so as to achieve the organizational objectives.

Authority must be well-defined. All people who have the authority should know what
is the scope of their authority is and they shouldn’t misutilize it. Authority is the right
to give commands, orders and get the things done. The top level management has
greatest authority.

Authority always flows from top to bottom. It explains how a superior gets work done
from his subordinate by clearly explaining what is expected of him and how he should
go about it.

Authority should be accompanied with an equal amount of responsibility. Delegating

the authority to someone else doesn’t imply escaping from accountability.
Accountability still rest with the person having the utmost authority.

2. Responsibility - is the duty of the person to complete the task assigned to him.
A person who is given the responsibility should ensure that he accomplishes the tasks
assigned to him. If the tasks for which he was held responsible are not completed, then
he should not give explanations or excuses. Responsibility without adequate authority
leads to discontent and dissatisfaction among the person.

Responsibility flows from bottom to top. The middle level and lower level
management holds more responsibility. The person held responsible for a job is
answerable for it. If he performs the tasks assigned as expected, he is bound for
praises. While if he doesn’t accomplish tasks assigned as expected, then also he is
answerable for that.

3. Accountability - means giving explanations for any variance in the actual

performance from the expectations set.

Accountability cannot be delegated. For example, if ’A’ is given a task with sufficient
authority, and ’A’ delegates this task to B and asks him to ensure that task is done well,
responsibility rest with ’B’, but accountability still rest with ’A’.

The top level management is most accountable. Being accountable means being
innovative as the person will think beyond his scope of job. Accountability, in short,
means being answerable for the end result.

Accountability can’t be escaped. It arises from responsibility.

For achieving delegation, a manager has to work in a system and has to perform
following steps: -

1. Assignment of tasks and duties

2. Granting of authority
3. Creating responsibility and accountability

Delegation of authority is the base of superior-subordinate relationship, it involves

following steps:-
1. Assignment of Duties - The delegator first tries to define the task and duties to the
subordinate. He also has to define the result expected from the subordinates. Clarity
of duty as well as result expected has to be the first step in delegation.

2. Granting of authority - Subdivision of authority takes place when a superior divides

and shares his authority with the subordinate. It is for this reason, every subordinate
should be given enough independence to carry the task given to him by his superiors.

The managers at all levels delegate authority and power which is attached to their job
positions. The subdivision of powers is very important to get effective results.

3. Creating Responsibility and Accountability - The delegation process does not end
once powers are granted to the subordinates. They at the same time have to be
obligatory towards the duties assigned to them.

Responsibility is said to be the factor or obligation of an individual to carry out his

duties in best of his ability as per the directions of superior.

Responsibility is very important. Therefore, it is that which gives effectiveness to

authority. At the same time, responsibility is absolute and cannot be shifted.

Accountability, on the others hand, is the obligation of the individual to carry out his
duties as per the standards of performance. Therefore, it is said that authority is
delegated, responsibility is created and accountability is imposed.

Accountability arises out of responsibility and responsibility arises out of authority.

Therefore, it becomes important that with every authority position an equal and
opposite responsibility should be attached.

Therefore every manager,i.e.,the delegator has to follow a system to finish up the

delegation process. Equally important is the delegatee’s role which means his
responsibility and accountability is attached with the authority over to here.

Q.8. Explain various principles of delegation.

Principles of Delegation
There are a few guidelines in the form of principles which can be a help to manager in
the process of delegation. The principles of delegation are as follows:

1. Principle of Expected Result

2. Principle of Parity of Authority and Responsibility
3. Principle of absolute responsibility
4. Principle of Authority level
1. Principle of Expected Result

This principle suggests that every manager before delegating the powers to the
subordinate should be able to clearly define the goals as well as results expected from
them. The goals and targets should be completely and clearly defined and the
standards of performance should also be notified clearly.

For example, a marketing manager explains the salesmen regarding the units of sale to
take place in a particular day, say ten units a day have to be the target sales. While a
marketing manager provides these guidelines of sales, mentioning the target sales is
very important so that the salesman can perform his duty efficiently with a clear set of
mind.

2. Principle of Parity of Authority and Responsibility

According to this principle, the manager should keep a balance between authority
and responsibility. Both of them should go hand in hand.

According to this principle, if a subordinate is given a responsibility to perform a task,

then at the same time he should be given enough independence and power to carry
out that task effectively. This principle also does not provide excessive authority to the
subordinate which at times can be misused by him. The authority should be given in
such a way which matches the task given to him. Therefore, there should be no degree
of disparity between the two.

3. Principle of absolute responsibility

This says that the authority can be delegated but responsibility cannot be delegated by
managers to his subordinates which means responsibility is fixed. The manager at
every level, no matter what is his authority, is always responsible to his superior for
carrying out his task by delegating the powers. It does not means that he can escape
from his responsibility. He will always remain responsible till the completion of task.

Every superior is responsible for the acts of their subordinates and are accountable to
their superior therefore the superiors cannot pass the blame to the subordinates even
if he has delegated certain powers to subordinates example if the production manager
has been given a work and the machine breaks down. If repairmen is not able to get
repair work done, production manager will be responsible to CEO if their production is
not completed.

4. Principle of Authority level

This principle suggests that a manager should exercise his authority within the
jurisdiction/framework given.

The manager should be forced to consult their superiors with those matters of which
the authority is not given that means before a manager takes any important decision,
he should make sure that he has the authority to do that on the other hand,
subordinate should also not frequently go with regards to their complaints as well as
suggestions to their superior if they are not asked to do.

This principle emphasizes on the degree of authority and the level up to which it has to
be maintained.

Q.9. Explicate the importance of delegation.

Importance of Delegation
Delegation of authority is a process in which the authority and powers are divided and
shared amongst the subordinates. When the work of a manager gets beyond his
capacity, there should be some system of sharing the work. This is how delegation of
authority becomes an important tool in organization function.

Through delegation, a manager, in fact, is multiplying himself/herself by

dividing/multiplying his/her work with the subordinates. The importance of delegation
can be justified by -

1. Through delegation, a manager is able to divide the work and allocate it to the
subordinates. This helps in reducing his work load so that he can work on
important areas such as - planning, business analysis etc.
2. With the reduction of load on superior, he can concentrate his energy on
important and critical issues of concern. This way he is able to bring
effectiveness in his work as well in the work unit. This effectivity helps a
manager to prove his ability and skills in the best manner.
3. Delegation of authority is the ground on which the superior-subordinate
relationship stands.

An organization functions as the authority flows from top level to bottom. This
in fact shows that through delegation, the superior-subordinate relationship
become meaningful. The flow of authority is from top to bottom which is a way
of achieving results.

4. Delegation of authority in a way gives enough room and space to

the subordinates to flourish their abilities and skill.

Through delegating powers, the subordinates get a feeling of importance. They

get motivated to work and this motivation provides appropriate results to a
concern.

Job satisfaction is an important criterion to bring stability and soundness in the

relationship between superior and subordinates.
 Delegation also helps in breaking the monotony of the subordinates so that they
can be more creative and efficient.

5. Delegation of authority is not only helpful to the subordinates but it also helps
the managers to develop their talents and skills. Since the manager get enough
time through delegation to concentrate on important issues, their decision-
making gets strong and in a way they can flourish the talents which are required
in a manager.

Through granting powers and getting the work done, helps the manager to
attain communication skills, supervision and guidance, effective motivation and
the leadership traits are flourished. Therefore it is only through delegation, a
manager can be tested on his traits.

6. Delegation of authority is help to both superior and subordinates. This, in a

way, gives stability to a concern’s working.

With effective results, a concern can think of creating more departments and
divisions flow working. This will require creation of more managers which can be
fulfilled by shifting the experienced, skilled managers to these positions. This
helps in both virtual as well as horizontal growth which is very important for a
concern’s stability.

Therefore, from the above points, we can justify that delegation is not just a process
but it is a way by which manager multiplies himself/herself and is able to bring
stability, ability and soundness to a concern.

Q.10. Differentiate between Centralization and Decentralization.

Difference between Centralization and Decentralization

According to Henri Fayol,” Everything which goes to increase the importance of a

subordinate’s role is decentralization, everything that goes to reduce it is
centralization”.

What is Centralization?
Centralization refers to the concentration of authority at the top level of the
organisation. It is the systematic and consistent reservation of authority at the
central points within an organisation. In a centralized organisation, managers at the
lower level have a limited role in decision-making. They just have to execute the
orders and decisions of the top level.
What is Decentralization?

Decentralization means the dispersal of authority throughout the organisation. It

refers to a systematic effort to delegate to the lowest levels all authority except
which can be exercised at central points. It is the distribution of authority throughout
the organisation. In a decentralized organisation, the authority of major decisions is
vested with the top management and balance authority is delegated to the middle
and lower levels.

Difference between Centralization and Decentralization:

Basis Centralization Decentralization

The evenly and systematic

The concentration of authority at
distribution of authority at all
Meaning the top level is known as
levels is known as
Centralization.
Decentralization.

There is no delegation of authority

There is a systematic
Delegation of as all the authority for taking
delegation of authority at all
authority decisions is vested in the hands of
levels.
top-level management.

It is suitable for small It is suitable for large

Suitability
organizations. organizations.

Freedom of There is no freedom of decision- There is freedom of decision-

decision making at the middle and lower making at all levels of
making level. management.

Flow of There is a vertical flow of There is an open and free

Information information. flow of information.

Employee Employees are demotivated as Employees are motivated as

Motivation compared to decentralization. compared to centralization.

Conflict in There are least chances of any There are chances of conflict
Basis Centralization Decentralization

Decision conflict in decision as only top- in decision as many people

level management is involved. are involved.

The burden of work is not shared

The burden of work is shared
Burden and only one group carries the
amongst all levels.
burden.

There cannot be complete centralization or decentralization in a practical world.

Absolute centralization means each and every decision is taken by the top-level
management, which is not possible. Similarly, absolute decentralization implies no
control over the activities of subordinates, which is also not possible. So a balance
should be maintained between centralization and decentralization. A proper balance
between dispersal of authority among lower levels and adequate control over them
should exist.