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How Does Delegation Affect a Company?

written by: Vikas Vij•edited by: Linda Richter•updated: 1/1/2011

Concerned about how does delegation affect a company? Delegation of authority is critical to the growth and expansion of an organization, as long as it is matched by an equal amount of responsibility and accountability.

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    Importance of Delegation of Authority

    Delegation of Authority and Responsibility As a business organization grows in size and scope, it is no longer possible to have concentration of power and authority in just a few hands. Delegation of authority becomes crucial for the efficient management of every aspect of the organization. One of the natural concerns of most business owners is to know how delegation affects a company. They wish to ensure a smooth dispersal of authority without compromising the core values and principles on which the company has been built. That makes it important to understand the impact of delegation on a company’s growth and expansion.

    Delegation of Authority and Responsibility

    How does delegation affect a company? That is largely a question of how effectively the dispersal of power is managed. Many organizations make the mistake of delegating responsibility without delegating sufficient authority to carry out that responsibility. As a result, the manager is forced to check with the superiors at every step and cannot take any decisions on his own. Sometimes this can result in lost opportunities when quick decisions must be taken on the ground.

    The other common mistake made by management is when authority is delegated unaccompanied by responsibility. This can result in an unproductive blame game, passing the buck from one department to another or from one individual to another in the event of any problem. The responsibility must be fixed and pinpointed clearly in advance. When both authority and responsibility go hand in hand, it results in effective delegation. The managers feel more involved with the company’s business, and there is a high level of motivation to achieve business objectives.

    Delegation and Accountability

    A key element of delegation is accountability. A proper system of accountability and performance measurement must be put in place to ensure that the managers take their responsibilities seriously. Without accountability there are chances of complacency and lack of motivation to perform. In a highly competitive business environment, the company cannot afford to have slackness of attitude from the responsible managers who are vested with substantial authority and responsibility.

    Advantages of Delegation

    The business organization can aim for a higher growth rate and multiply its size and scope rapidly with an efficient delegation of authority and responsibility to capable employees. Cost competencies can be much better if the company grows in size and has higher sales volumes. This can lead to market leadership due to economies of scale for the business. This is the core objective of any growth-oriented organization and it cannot be achieved without adequate delegation of authority and responsibility.

    Risks of Delegation

    In the absence of a close monitoring, supervising, and performance evaluation system, delegation of authority and responsibility may lead to deviation from the core mission and objectives of the company. The central values and principles of the company may be compromised if the individual who has been delegated with serious responsibility is unfit for the job. Therefore, the delegation process must be carried out gradually and scientifically. Managers who have consistently displayed an exemplary loyalty and high performance levels in the organization should be chosen for dispersal of authority. The delegation must be increased progressively in proportion with the performance and results produced by the manager over a period of time.

    Photo Credit: sachyn