1. Power and Distribution of Authority

2. Power The ability to exert influence on other people.
In organizations managers exert power. Also employees influence managers. Stakeholders influence managers and employees

3. Sources of Power
Reward power: it is the power based on the influencer having the ability to reward another influencee for carrying out orders or meeting performance requirements.
Coercive power: based on the influencer’s ability to punish the influencee for not meeting requirements. Punishment may range from a reprimand to loss of a job.

4. Legtimate power: exists when an influencee acknowledges that the influencer is entitled to exert influence within certain bounds. This is also called as formal authority.
Expert power: based on the belief or understanding that the influencer has specific knowledge or relevant expertise that the influencee does not.

5. Referent power: based on the desire of the influencee to be like or identify with the influencer.

6. Authority
Authority is a form of power. Formal authority is legitimate power.
It is the type of power that we associate with organizational structure and management.
Basis of Formal Authority: 2 views
1. Classical view
2. Acceptance view

7. Classical View
A classical view is that authority originates at some very high level and then is lawfully passed down from level to level.
According to the classical view of formal authority in American organizations, management has a right to give lawful orders and employees have an obligation to obey. This obligation is, in effect , self-imposed.

8. Acceptance View
Acceptance View finds the basis of authority in the influencee rather than in the influencer.
It starts with the observation that not all legitimate laws or commands are obeyed in all circumstances. Some are accepted by the receiver and some are not. The key point is that the receiver decides whether or not to comply.

9. Line and Staff Authority and Functional Authority
Line authority: Managers with line authority are those people in the organization who are directly responsible for achieving organizational goals. Line authority is represented by the standard chain of command starting with the board of directors and extending down through the various levels in the hierarchy to the point where the basic activities of the org. are carried out.
It is based on legitimate power

10. Staff Authority
Staff authority belongs to those individuals or groups in the organization who provide services and advice to the managers. Staff provide managers with varied types of expert help and advice.
It is based on expert power.
Staff can assist in policy implementation, monitoring and control, in legal and financial matters

11. Functional Authority
The role of staff members-to provide advice and service to line members –implies that staff lacks independent formal authority. In reality staff departments especially those responsible for audit functions may have formal authority over line members within the limits of their functions.
The right to control activities of other departments as they relate to specific staff responsibilities is known as functional authority.

12. Functional Authority
It is common in organizations. It is based on legitimate and expert power. The skills required to manage functional authority relationships are similar to the skills required to manage dual boss relationships in matrix organizations.

13. Delegation
The act of assigning formal authority and responsibility for completion of specific activities to a subordinate.

14. Advantages of Delegation
1. More tasks managers delegate more opportuities they have to seek and accept higher responsibilities from higher level managers.
2. It causes employees to accept accountability and exercise judgement.
3. This helps to train them
4. It improves their self confidence and willingness to take initiative.
4. It frequently leads to better decisions.
5. it speeds up decision making.

15. Barriers to Delegation
1. Manager is simply too disorganized or inflexible to cooperate effectively even though they would benefit from doing so.
2. Insecurity and confusion about who is ultimately responsible for a task-the manager or the employee. Eg: in the case of difficult or unpleasant tasks
3. Fear of reduction of own authority.

16. Guidelines for Effective Delegation
Prerequisites:
1. Managers willingness to allow freedom to employees
2. Open communication between managers and employees.
3. Manager’s ability to analyze such factors as the organization’s goals, task requirements and the employee’s capabilities.

17. Task of Effective Delegation
1. Decide which tasks can be delegated.
2. Decide who should get the assignment.
3. Provide sufficient resources for carrying out the delegated task.
4.Delegate the assignment.
5. Be prepared to run interference, if necessary.
6. Establish a feedback sysytem.

18. Decentralization and Centralization
The degree to which formal authority is delegated by managers throughout the organizations runs along a continuum from decentralization to centralization.
In a decentralized organization considerable authority and accountability are passed are passed down the organizational authority.
In a relatively centralized organization considerable authority and accountability remain at the top of the hierarchy.

19. Advantages and Disadvantages
Same advantages as delegation
Disadvantages:
Total decentralization with no coordination and leadership from the top would clearly be undesirable.

20. Challenges of Decentralization
Training of managers in order to improve their decision making abilities and for the additional staff.

21. Factors influencing decentralization
1. Environmental influences such as market characteristics, competitive pressures and availability of materials.
2. The organisation’s size and growth rate.
3. Other characteristics of the organization such as costliness of given decisions, top management preferences, the organisation’s culture and ability of lower level managers

22. 1. Strategy and Organizational environment
A Strategic plan will influence the types of markets, technological environment and competition which the organization must face.
These factors in turn will influence the degree of decentralization.
Alfred Chandler found that managers at firms that developed new products through a strategy of R &D leading to product diversification chose a decentralized structure.

23. Other managers operating in industries in which markets were more predictable, production processes were less dynamic and competitive relationships were more stable would centralize authority.

24. 2. Size and rate of growth
Increase in size and complexity leads to decentralization.
Faster the rate of growth more likely it is that upper management bearing the weight of an ever-increasing workload, will be forced to accelerate the delegation of authority to lower levels.

25. Other characteristics of the organization
The extent to which decision making authority is centralized is also likely to be influenced by internal characteristics of the company such as
1. cost and risk associated with the decision-Managers must be cautious for delegating authority for decisions that could have a heavy impact on the performance of their subunits or the organizations as a whole.

26. Other characteristics of the organization
2. an individual managers preference and confidence in employees-some managers pride themselves in knowing everything others tak pride in the confidence of delegating.
3. The organizational culture-shared norms and values and understandings (culture)of members of some organizations.
4. The abilities of lower level managers-If authority is not delegated because managers lack faith in the talent below, the talent will not have much opportu nity to develop.