Is delegation, centralization or decentralization the solution to most of the problems faced by today’s organizations?

Is delegation, centralization or decentralization the solution to most of the problems faced by today’s organizations? Explain various aspects of the above processes in the light of reducing interdepartmental conflicts and managing organizations more effectively. Substantiate your arguments with relevant organizational examples, where you have worked or you are familiar with. Describe the organization you are referring to.



Delegation is the process where a manager divides the work assigned to him so as to get help from others in accomplishing the same. It involves the following four steps that are indivisible:
the determination of results expected
the assignment of tasks
the delegation of authority for accomplishing these tasks • the exaction of responsibility for their accomplishment
Looked at differently, these four steps have three elements: responsibility, authority and accountability. Delegation is the entrustment of responsibility and authority.to another and the creation of accountability for performance. Let us briefly consider these three elements.
Responsibility: Responsibility refers to the activities which must be performed to carry out the task assigned. Responsibility can be delegated.
Authority: Authority refers to the powers and rights entrusted to enable performance of the task assigned or delegated. Certain authority is imperative to shoulder a given responsibility. In organisations people derive authority mainly from two sources: position and personal. Position authority is related to powers of decision-making, reward and punishment. Personal authority refers to the expert knowledge and certain qualities which are part of the personality of an individual manager. Position authority can be delegated, but not personal authority. Authority could be formal or informal. Here we refer to formal authority that is clear, structured and communicated to all.
Accountability: Accountability is the obligation to carry out responsibility and exercise authority as per established standards or norms. It is an obligation to account for, and report upon, the discharge of responsibility or use of authority. Accountability can not be delegated. The person who delegates continues to be responsible to his superior for what he had delegated as well.
Since accountability cannot be delegated, the accountability of superiors for the acts of their subordinates is absolute. By the same token, we see that the delegatee is accountable to the delegator to the extent he is delegated responsibility and authority For example, if the line managers are not given the responsibility to train the· operators, they cannot be held accountable for the operators proficiency.
While accountability always moves upward, responsibility and authority move downward in a hierarchy. A person can be accountable only to one superior for delegated responsibility and authority. Accountability is easy to establish if the standards and measures of performance are predetermined
CENTRALISATION AND DECENTRALISATION
Centralisation and decentralisation are extensions of delegation. Delegation refers mainly to ,entrustment of responsibility and authority from one person to another. Downward transfer of responsibility and authority at individual level is referred to as delegation and when the same is done organisation-wide in a systematic way it is known as decentralisation. Decentralisation refers to systematic delegation of authority in an organisation. An organisation is considered centralised to the degree that a'uthority is not delegated, but concentrated at higher levels of management. In juxtaposition, to the degree that authority is delegated, an organisation is considered decentralised. As Henry Fayol puts it, "Everything that goes to increase the importance of the subordinates role is decentralisation, everything which goes to re.duce it is centralisation".
The terms centralisation and decentralisation are meaningful only in a relative sense. No organisation can operate on a completely decentralised basis since all authority to make decisions would rest at the lowest managerial levels and make it difficult to achieve coordination. Similarly, except very small firms, no organisation can be completely centralised. It is appropriate to recall the experience of two of the largest ,automobile corporations In the U.S. The Ford Motor Company, at one time, was said to have suffered due to centralisation while the General Motors suffered due to decentralisation. This example bears out the impracticability of complete centralisation or complete decentralisation.
Factors Influencing Centralisation'
An organisationor a manager needs to have some reserve authority to integrate the efforts in an organisation and achieve the desired degree of cQordination and control
required to accomplish the specific goals. -
Centralisation also facilitates personal leadership when the company is small, to provide for integration and uniformity of action, and to handle emergencies.
Factors Influencing Decentralisation
Decentralisation becomes important and imperative when an organisation grows bigger. The main purpose of decentralisation is to ease the burden of top executives. The warning signals that point to a need for decentralisation can be had from the problems in planning and control of operations, neglect of proactive strategies in preference to routine fire-fighting operations, proliferation of personal staff arot,lnd top executives and mushrooming of committees. Decentralisation also facilitates diversification and divisionalisation and is in fact a necessary accompaniment, if not a prerequisite.
Decentralisation also encourages and motivates managers to better performance because it affords them opportunities to take more important decisions, gives them the flexibility and autonom.y in their functioning ..
How to Decentralise?
Clearly, as organisations grow, expand or diversify, the need for decentralisation increases. The moot question then is, 'How to decentralise'~
The first step in decentralisation, though it may sound paradoxical, is centralisation. As in the case of delegation, here again, there is need for some reserve authority for coordination and control at the nerve centre of the organisation, Le., the corporate headquarters. Planning, overall guidance and direction for each subunit or division or department of the organisation need to be formulated, coordinated and controlled at the headquarters.
If the organisational activities are somewhat homogeneous (say, confined to one industry such as automobiles) it is relatively easy to develop sound policies and control systems for all the decentralised work units or profit centres in the organisation. But when the organisation is highly diversified and deals in a variety of businesses such as engineering, textiles, tea an,d chemicals, it is difficult to develop uniform policies and " control systems for all the work units or profit centres. Thus the design of the administrative structure should take into account the needs of the organisation and of ,its operating units as competitive units in their own markets.
Effective decenttalisation requires a balance of the necessary centralisation of planning, organisation, coordination and control, while decentralised units should be developed as autonomous business units operating as individualprofjt centres, with provision for effective coordination and communication. The central management team should I,ave a well-established system for measuring, recording, and reporting 9perating results.