Delegation

Responsibility 

Responsibility is the obligation to perform the work, function, or activities assigned to a particular organisational component or person. Responsibility may be delegated and redelegated. A total responsibility, or a total function, may be split into several parts and the sub parts be delegated and redelegated to lower levels in the organisation. For examples, the manufacturing responsibility may be split into production and engineering, and the head of manufacturing may delegate these responsibilities to his subordinates. The head of engineering, in turn, may split his responsibility into various parts - production engineering and plant maintenance, and redelegate these parts to his subordinates. In each case, however, certain parts of the overall responsibility cannot be delegated so, there is a need to distinguish responsibility from accountability. 

Accountability 

Accountability is an obligation to answer to a superior for carrying out delegated responsibilities; obligation to produce and account for results, in terms of objectives or work which have been delegated. While responsibility may be delegated or redelegated, accountability may never be delegated. It emerges each time responsibility is delegated. In other words, the responsibility for making decisions can be delegated, the responsibility for the consequences of the decisions cannot be abdicated. Thus, the accountability of higher authority for the acts of its subordinates is absolute. 

Authority 

Authority is the right, power, and freedom to take action necessary to carryout work or obtain results for which the person is accountable. Authority is delegated, as responsibility. However, within a company no manager bas complete authority or complete freedom to act. His authority is subject to restraint in tbe from of such overall corporate controls as objective, policies and budgets. Delegated authority thus emerges as freedom to act or make decisions within, and in conforming with, overall corporate objectives and policies. 

The principle of 'Party'  suggests that when the responsibility for a decision is assigned to a subordinate, the individual must also receive sufficient authority to make the decision and to see that it is implemented. It is meaningless to delegate responsibility without authority, and it is dangerous to delegate authority without responsibility. When the authority delegated is not equal to the responsibility created, the risk is reduced subordinate performance, confusion, and conflict- or all three. 

Centralisation - Decentnlisation 

An idea closely related to delegation is the decentralisation of authority. Delegation takes place between the superior and his subordinate. When the company encourages maximum delegation throughout the organisation, it is termed "decentralisation." In other words, organisational centralisation and decentralisation refer to the degree to which authority is retained at the top of the organisation (centralisation) or delegated to the lower levels (decentralisation). The greater the delegation of authority throughout the organisation, the more decentralised the organisation is. 

The principle of decentralisation suggests that authority to take or initiate action should be delegated as close to the scene of action as possible. The advantages of decentralisation in term of quicker and better decisions, manager development, reducing levels of organisation, feeling supervisors to concentrate on broader responsibilities have been extolled for many years. 

Normally, the delegation of decision making authority is guided by three criteria listed below : 

1. Competence to make decisions on the part of the person to whom authority is delegated; confidence in that competence on the part of the superior is also an essential element. 
2. The person making the decision requires adequate and reliable information, pertinent to the decision. 
3. If a decision affects more than one unit, the authority to make the decision rests with the manager accountable for the several units. Thus, authority can be decentralised to the level where the impact of the decision is local. Certain decisions having company wide effect - corporate objectives, policies, budgets  are usually not decentralised at all. 

Centralisation-decentralisation, however, is not an "either/or" choice. Each has its place in the overall process of vertical coordination. Decentralisation, in practice, becomes a matter of degree - with the degree being determined how far down authority has been delegated any bow stringent the limits are that have been placed on authority. This suggests that no organisation is completely decentralised : organisations are only more or less decentralised. 

Profit Centre 

In order to maximize the benefits of decentralisation and minimise its disadvantages, many organisations have established profit centres. 

A Profit centre is a highly autonomous unit given broad decision-making authority for its own operation. 

Each decision of an organisation is given authority to operate on its own as long as it makes acceptable progress towards achieving the organisation's objective. Organisations that operate in several countries (multi-national corporations) and serve multiple type of customers with multiple products and services make extensive use of profit centres.