12) The business of ABC ltd is on large scale. Rukmani is the CEO of the company. She directs the marketing manager that he can take decisions to spend up to Rs.1 lakh in order to improve the performance of his division. For example, if the marketing manager wishes to run an advrtising campaignwithin the limit of Rs. 1 lakh, then his decision can be taken without the consent of the CEO. This authority is not delegated to the remaining departmental heads. After the umpteen times insistence of other departmental managers, they are provided with this authority. After some days, another decision was taken with which authority was further delegated by departmental managers to their supervisors.
(a) What would you call the authority given to the marketing manager to take decisions upto Rs.1 lakh?
(b) What does the change introduced in the organisation with the delegation of authority to all the departmental managers signify?
(c) The filtration of authority to the level of supervisors-what does this situation indicate? (3 marks)
Hey Athulya,
1. This is called the delegation of authority.
2. In this scenario, the change introduced in the organisation is called decentralisation.
3. This situation indicates the extension of decentralisation to lower levels. As in decentralisation the authority is distributed at not just one but multiple levels. That is, while delegation involves just two persons, i.e. the superior and subordinate, decentralisation is a wider concept of the same (delegation) where the power gets transferred to numerous levels. Therefore, it can be said that delegation at each level leads to decentralisation and decentralisation is extending delegation to the lowest level.