Strategic Management: Formulation and Implementation


There are four main factors that begin to tilt the scale from the centralization side of the continuum toward the decentralization side:

Large size tends to require more decentralization simply because it becomes more difficult for toplevel managers to have either the time or the knowledge to make all the major decisions.

Geographic dispersion of operations makes decentralization more necessary.

Technological complexity creates pressure for greater decentralization.

Environmental uncertainty tends to produce a need for more decentralization.

Delegation Authority

Once managers establish a span of control, they must decide how much responsibility and authority individuals should have to do their jobs.

Responsibility is the obligation to carry out duties and achieve goals related to a position.

Authority is the right of managers to direct the activities of subordinates and demand accountability. The amount of authority possessed by manager is related to his position in the hierarchical command structure and also by law. When decisionmaking power is vested in a subordinate by a superior, authority has been delegated. Accountability is the requirement to provide satisfactory reasons for significant deviations fromd uties or expected results.

Delegation of authority is the assignment of part of managers's work to others along with both the responsibility and the authority necessary to achieve expected results. Delegation is important to vertical integration because it allows the hierarchy to be both more efficient and more effective by enabling work to be done at the lowest level possible. More delegating is done with a decentralized structure than with a centralized one.

The common reluctance of managers to delegate has serious implications for organizing efforts:

If managers do not delegate when possible, they can become overloaded. Overloading causes vertical coordination to break down because the manager becomes a bottleneck rather than facilitator.

Subordinates may not be developed to fill future managerial positions, thus weakening prospects for adequate vertical coordination in the future.

Subordinates with high job competence perform better in situations in which their bosses engage in high levels of the delegation because the subordinates significant job competence is utilized.

Failure to delegate tends to adversely affect innovation because the ideas of others in the chain of command are underutilized and managers have little time to innovate if they are bogged down in work.

The failure to delegate can hurt managerial careers.