Delegation of authority is an important part of the not-for-

profit governance process.

Corporate laws state that board directors are responsible for making
sound decisions and providing acting in the best interest of their
organisations. However, it isn’t always practical to do be involved in
every aspect of an an organisation. As an organisation grows, its
board members are likely to become busier and need to be strategic
about how they spend their time.

Delegating work can be effective for spreading the workload and

passing on legal authority to others while still meeting legal
obligations. Delegation of authority shares formal authority to
specific individuals and assists the board in running the organisation
smoothly without taking too many risks or causing delays.

What is Delegation of Authority?

Delegation is the allocation of powers to an individual who has the
skills and experience to carry out the functions and duties of and act
on behalf of a board of directors. To work properly, delegation of
authority must be founded on three principles:

1. authorisations must be lawful, accurate and transparent,

2. delegates must only make decision they are authorised to,
3. and decisions and delegation of authority should be recorded.

Delegation of authority allows the board to regulate authority and

accountability, allowing managers to make decisions related to
finance, employees, and regulations.

The delegation of power focuses on the role or position rather than

the person. Typically, individuals in positions such as CEO or
Executive Director, and people assigned to board sub-committees
can become delegates.

Exercising Delegation
A person who is authorised to perform duties and functions on
behalf of a board member is a delegate. Delegates must ensure
their name is recorded and must act in the best interest of the
organisation, in accordance with legislation, regulations, and
internal policies.

The goal of exercising delegation is to empower individuals in senior

management roles to use their discretion and judgement when
making decisions. While a delegate may seek advice from others
they should not be influenced when making decisions.

Delegation of Authority Policy

Delegation of authority must be written down.

The goal of the delegations policy is to establish a framework for

how to delegate authority in a way that facilitates efficiency and
effectiveness without removing accountability. The objective of the
framework should therefore be to ensure that the right individuals
are provided with the appropriate levels of authority they need to
accomplish their duties and responsibilities.

A delegation of authority policy can assist organisational leaders in

making informed decisions on behalf of others. It can also help the
organisation establish strong internal controls and do its due
diligence.

A good delegation of authority policy should describe the positions

to whom board members can delegate their functions, what duties
they may and may not delegate, and how to proceed when
assigning authority to a delegate.

Key Principles of Delegation of Authority

While the delegation of authority framework is different for every
organisation, there are common principles that apply to the non-
profit sector. Authorised individuals should take on only the level of
responsibility that supports the administration and decision making
they need. A delegate should not perform duties or functions that
place them in a conflict of interest and should not be encouraged to
act beyond the scope of the powers delegated to them.

While delegates can exercise delegations according to the

organisational policy, some may have limits place on their powers.
For example, a person assigned to a CEO role on an interim basis
may only be authorised for a limited time, and senior executives
should not have the authority to approve their own expenditures.

Advantages of Delegation of Authority

The advantage of using delegation of authority is that it can save
time and give board directors more freedom to focus on other high-
level tasks. It can improve efficiency and reduce bureaucracy,
making the decision process quicker across the organisation.
Delegations can support risk management and oversight by
assigning decision making to experts or people with experience,
avoiding some of the risks that come with making bad decisions due
to lacking experience in a specific area of expertise.

It can encourage discussions about the challenges CEOs face in their

jobs, and which responsibilities and authority levels can help them
be more productive. Delegation of authority creates an open space
for discussion and should not be use as a form of control but rather
to facilitate the work of the organisation. The goal is to have a clear
understanding of who can do what, this can change as the
organisation changes.

Disadvantage of Delegating Authority

The disadvantage of delegating authority to another person is that
board directors may believe they are no longer liable for providing
oversight. Directors are still fully responsible for the decisions made
my delegates. If the delegate is neglectful or makes a wrong
decision, the board is ultimately liable for their actions.

“Directors are entitled to delegate to others […] What each director

is expected to do is to take a diligent and intelligent interest in the
information available to him or her, to understand that information,
and apply an enquiring mind to the responsibilities placed upon him
or her. Such a responsibility arises in this proceeding in adopting
and approving the financial statements. Because of their nature and
importance, the directors must understand and focus upon the
content of financial statements, and if necessary, make further
enquiries if matters revealed in these financial statements call for
such enquiries.” (paragraph 20, ASIC v Healey & Ors [2011] FCA
717)

Setting some limits can provide a structure that helps board

members manage the risks. Yet, the controls and limits placed on
delegates may vary from one organisation to another and can
increase a manager’s workload. The wrong delegation of authority
framework can lead to breaches, financial damage, a lack of
internal controls, bribery, fraud and corruption.

Documenting Delegations
Directors have the right to delegate their powers unless the
company’s constitution says otherwise. However, the delegations
must be recorded in a minute book and added to a running list of
formal delegations, the DOA register. A delegations register is a
record of the powers and functions that have been delegated by the
board to the CEO. Its purpose is to maintain and provide up to date
information about delegates such as staff members and committees
who have been delegated with certain authorities.

A few examples of the powers and functions that could be added to

a delegation of authority register include acquiring and disposing of
assets, signing agreements such as leases and land use contracts,
hiring and firing staff, and replacing equipment and vehicles. While
some responsibilities are delegated to the CEO, the board continues
to be responsible for monitoring, asking questions and holding staff
accountable. Delegation of authority should not weaken its ability to
provide oversight.

Frequently Asked Questions

What is an example of delegated
authority?
An example of delegated authority is when a board of directors
delegates the authority to the CEO to manage day-to-day
operations. This includes tasks such as hiring staff, approving
budgets, and entering into contracts. By doing so, the board allows
the CEO to make decisions and take actions necessary for the
effective management of the organisation, while still maintaining
overall oversight and accountability..

What is the purpose of the

delegations of authority?
The purpose of delegations of authority is to facilitate efficient and
effective decision-making within an organisation. By delegating
authority, organisations can ensure that decisions are made by
those with the most relevant expertise and knowledge. This helps to
streamline operations, reduce bottlenecks, and allow senior
leadership to focus on strategic priorities. Additionally, delegations
of authority help maintain accountability by clearly defining who is
responsible for specific decisions and actions.

What is the concept of delegation?

The concept of delegation involves allocating powers to an
individual who has the skills and experience to carry out specific
functions and duties on behalf of a board member or senior
manager. Delegation is essential for distributing the workload within
an organisation, allowing leaders to focus on high-level strategic
tasks while ensuring that operational tasks are managed effectively.
Successful delegation requires clear communication, appropriate
matching of tasks to individuals, and ongoing support and oversight.
What are the three elements of
delegation of authority?
The three elements of delegation of authority are:

 Lawfulness: Ensuring that all delegations comply with

relevant laws, regulations, and the organisation's constitution.
 Transparency: Clearly documenting and communicating the
scope of delegated authority to all relevant stakeholders.
 Accountability: Ensuring that delegates act in the best
interest of the organisation and within the limits of their
delegated authority, and that their actions are subject to
appropriate oversight and review.

What are the 4 types of delegation?

The four types of delegation are:

 General Delegation: Broad authority granted to manage

overall operations and make wide-ranging decisions.
 Specific Delegation: Authority granted for specific tasks or
decisions, often with clearly defined limits and conditions.
 Written Delegation: Authority that is formally documented in
writing, providing a clear record of the delegated powers and
responsibilities.
 Verbal Delegation: Authority given orally for immediate or
short-term tasks, often used in urgent or time-sensitive
situations.

What are five key principles of

delegation?
Five key principles of delegation are:
  Defining clear objectives and expectations: Clearly
outlining the tasks to be delegated, along with the expected
outcomes and any specific requirements.
 Matching skills and experience: Assigning tasks to
individuals who have the necessary skills, knowledge, and
experience to successfully complete them.
 Providing necessary resources and support: Ensuring that
delegates have access to the resources, information, and
support they need to perform their duties effectively.
 Maintaining open communication and regular
feedback: Encouraging ongoing dialogue between the
delegator and the delegate, including regular check-ins and
feedback to monitor progress and address any issues.
 Ensuring accountability and monitoring
outcomes: Establishing mechanisms for tracking and
reviewing the outcomes of delegated tasks, and holding
delegates accountable for their performance.

How to Delegate More Effectively: Four

Approaches
Trust between people is not enough to make
delegation work. Leaders must also scrutinize the
level of trust in the process — and match their
approach carefully.
Delegation still bedevils many leaders. From the overworked
manager trying to alleviate burnout to the vice president trying to
take a vacation, many leaders need to delegate more but avoid it.
Transferring responsibilities to someone else often creates worry,
friction, or unsatisfying results. But delegation is not optional:
Individuals and organizations can’t grow unless people learn how to
effectively delegate both tasks and decision-making.

In our work over the past decade, we’ve seen delegation arise as a
leadership challenge in organizations across many industries.
Indeed, in health care, manufacturing, and life sciences companies
alike, the question of when and how to delegate remains difficult. To
address this problem, we developed a framework based on two core
dynamics at the heart of effective delegation: people and process.
Trust in people is nothing new to conversations on effective
delegation; however, trust in organizational processes is an equally
important but underappreciated consideration in delegation
decisions.

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In our work with leaders, we’ve seen that no matter how reliable an
individual employee may be, if the underlying organizational
process that is central to the delegation is erratic or
underdeveloped, delegation tends to break down. So our framework
advises leaders to consider two key questions when entertaining the
delegation scenarios: “To what extent do I trust the people?” and
“To what extent do I trust the process?”

Many well-intentioned and trustworthy people have failed to execute

on a delegated task because of an underdeveloped process.

Trust in people is based on a repeated track record of meeting

goals, shared behavioral norms, and consistent interpersonal
relationships. It is a trust in the individual’s abilities and skills across
a variety of domains: Does Mary have the requisite skills to deliver
the results she promised? Does David treat team members in a
respectful manner? Trust in process, on the other hand, is based on
organizational functioning and speaks to whether a process delivers
consistent, predictable, and actionable outcomes: Does the R&D
process yield new, marketable products on a consistent basis? Is our
sales forecasting process accurate in its revenue predictions?

In our consulting engagements, we’ve seen many well-intentioned

and trustworthy individuals fail to execute on a delegated task
because of an underdeveloped process; therefore, we suggest that
it is the nexus of trust in people and trust in process that should
drive the form of delegation that a leader chooses. This article offers
a framework with four ways leaders can approach delegation with
the confidence that their choice matches the trust level at hand.

Weighing Trust in People and Process

As shown in the graphic below, we’ve identified four ways to

approach delegation based on whether there is emerging or
established trust in people and the organizational process:
Empower, Engage, Educate, and Engineer.

A Framework for Making Delegation Decisions

This framework helps leaders select the most effective approach for
delegating tasks and decisions, given the current level of trust in the
people and the organizational process. For example, if trust in both
the people and the process is still emerging, the Engage style
makes sense: The leader delegates while assisting closely with
challenges. Conversely, if trust in the process is still emerging but
trust between people is more established, the Engineer style fits:
The leader and person to whom the tasks are being delegated both
focus on adapting the process to improve it.
1. Engage: Emerging Trust in Both Process and People

We start with a scenario in which trust in both the people and the
process is only beginning and not yet established. Here, delegation
can break down quite easily if not managed appropriately. Let’s look
at an example.

We saw such a dynamic unfold on a newly formed senior

management team at a regional hospital. The new CEO had pulled
together an interdisciplinary team of veteran leaders with deep
knowledge in their respective fields: a chief medical officer, a chief
nurse officer, the CFO, and the chief operating officer. While
accomplished leaders in their own domains, this team had never
worked together before under the leadership of this new CEO.
Emerging trust in each other was a significant impediment to
delegation. Trust in organizational processes was also quite low,
given that the new team had been established to improve the
hospital’s quality, safety, and efficacy ratings. In other words,
improving processes was at the heart of their requisite work
together. Although the CEO tried to delegate decision-making, she
struggled with understanding when to step away and let her team
make decisions and when to stay closer to the work. The team of
seasoned leaders felt as though the CEO was continually looking
over their shoulders, often second-guessing their approach. The CEO
(rightfully so) worried that important organizational systems and
processes were breaking down.

This is undoubtedly a tough situation in which to delegate effectively

— and yet not an uncommon one, particularly when a new
leadership team is formed, a new leader is brought into an existing
team, or organizational processes are tentative or newly
established. Across these situations, everyone involved in
coordination activities is unsure of the underlying processes and
people’s abilities. While delegation can be tough in such a context,
it’s not impossible: It requires a degree of engagement from the
leader in order to effectively manage delegation.

What does this look like? It involves striking the right balance
between allowing the employee to learn and try while remaining
close enough to assist and buffer any problem areas or roadblocks.
Though it may be tempting to let the team “run with it” on its own,
an engaged approach allows for collaboration on decisions. This not
only enables the leader to better understand the employees’
capabilities but also lets the team work together to create new
processes and fix prior flaws. Is the closely engaged approach
permanent? Absolutely not. However, it helps each side to build
trust through working together and to better understand the efficacy
of new processes.

In the hospital setting, we helped the team to create joint processes

from the ground up and then watch each other tackle those
processes. This set the stage for both the leader and her team to
build trust in processes and people.

2. Educate: Established Trust in Process, Emerging Trust in People

The second approach to delegation is called for when there is a high

level of trust in the process but only emerging trust in people. This
may be the situation that comes to mind most often when leaders
think about challenging delegation scenarios. For example, think
about when individuals are promoted into new roles within the
organization or when a new hire is brought in from outside the
organization and must learn processes that are new to them.

We recently worked with the CEO of a rapidly growing chemical

manufacturing company who was looking to develop the next
generation of leaders within the organization. To the CEO’s credit,
he recognized that while the organization had a track record of
success, further growth and strong performance would be possible
only if emerging leaders could effectively execute upon delegated
work. The organizational processes were well established and had
been vetted, but the managers were new. Under such
circumstances, it’s like handing a beginning driver the keys to a
finely tuned car.

In this scenario, delegation can take the form of educating. Unlike

the engagement scenario above, the goal here is for the employee
to learn the established process and build confidence in their own
ability to carry it through. Over time, this will boost the leader’s trust
in the employee’s ability to do so. Delegation through educating
means that the leader stays close enough to advise (not assist) the
employee through the process steps and answer any questions
along the way. This helps the leader build trust that the employee
will ultimately do well with decisions on their own.

In the chemical company, as the new managers demonstrated an

ability to work within the established processes with positive
outcomes, upper managers could reduce their hand-holding and
slowly build comfort in entrusting the new managers with additional
responsibilities.

3. Engineer: Established Trust in People, Emerging Trust in Process

The next delegation scenario arises when there is established trust

in people but only emerging trust in the process. This situation is
common in startup companies or during a turnaround when new or
reengineered processes are being put into play within established
teams. It’s also common in larger companies with an innovation
culture grounded in process improvement.

We witnessed this scenario when we worked with a startup medical

device company founder who hit roadblocks in effectively delegating
to his sales executive. While there was well-established trust
between the founder and sales lead (after all, they had built the
company together), little to no sales forecasting infrastructure
existed in the organization at that point. So when the founder
expected the sales lead to execute effectively on sales forecasting,
the sales lead felt as though the founder was setting him up for
failure by questioning every decision and approach. Stepping back,
the dynamic was not surprising: While the founder trusted the sales
executive’s abilities, they both lacked trust in an underestablished
organizational process — sales forecasting. Pointing this out helped
them both understand why there was friction in the relationship. It
wasn’t a lack of trust in the sales executive’s skills, and it wasn’t a
founder trying to micromanage. The problem was the little-trusted
process.

In such instances, the focus needs to be on engineering rather than

on delegation through engagement or education so that trusted
employees can succeed with an underestablished process. The goal
here is for the leader to support the employee in adapting the
process to ensure improved functioning. This may mean that the
leader becomes a sounding board for the employee’s proposed
approaches, or it may require the leader to roll up their sleeves and
learn about the process flaws from the ground up. Alternatively, the
leader may need to step in to make a final decision and
communicate the new process implementation to ensure that the
wider culture adopts it.

Here, we start to really see the unique distinctions between the

different forms of delegation. A focus on engineering around an
underdeveloped process is quite distinct from educating a newer
manager on an established process. When there is trust in the
individual but a lack of trust in a new or flawed process, open
communication and clearly defined process milestones become
critical to effective delegation.

At the medical device startup, the founder and sales lead ultimately
worked together to engineer and adopt an effective sales
forecasting process. As the process began to yield results, a higher
level of trust in the process began to develop. With time, the sales
executive felt empowered to successfully manage related decisions
and outputs.

4. Empower: Established Trust in Process, Established Trust in

People

Let’s end with the scenario that offers the most ideal conditions for
effective delegation — when trust in people and trust in the process
are both well established. This is a prototypical scenario that likely
comes to mind when we think of delegation: A leader has a longtime
direct report who’s relied upon to “hold down the fort” when the
leader is out of town.

Here, delegation is best handled through empowerment. Full

responsibility is assigned to a person who has the skills to manage a
process that the leader trusts to be effective. The individual is
empowered to make any decisions and adjustments as necessary,
without concern that the leader will second-guess or backtrack on
the approach. This reflects an ideal hands-off approach to
delegation that many leaders may envision.

But delegation through empowerment doesn’t happen overnight; it

often requires an established working relationship, where the leader
and employee have a history of successes together and understand
each other’s expectations and work styles. Additionally, both parties
not only trust the organizational process but also understand where
it sometimes breaks down. Perhaps the leader and delegate have
worked together to adapt the process over time, having navigated
prior delegation situations in the Engineering quadrant. The leader
trusts the employee’s skills and knows that they’ve built a
consistently functioning process.

This reminds us of a situation in the chemical company that involved

a newly hired vice president tasked with solidifying processes and
teams for a growing business unit. After a year in their role, they
were successfully handling strategic matters — having empowered
team members to manage the day-to-day processes they had
engineered together to support business growth. In effect,
empowerment allows for just that: Leaders can focus on higher-level
strategy when they’ve successfully put in the work to establish trust
in people and processes.

However, this delegation approach requires that two critical aspects

of the larger culture be nurtured: accountability and voice. When a
decision fails, the employee needs to feel comfortable taking
accountability for the issues and voicing this to the leader.
Accountability should not be the basis of finger-pointing but rather
an opportunity for collective reflection. For example, the leader
empowers the middle manager to run the business unit in a
relatively hands-off manner, but when it’s clear that the unit will
miss its forecast for the quarter, the manager takes accountability
for the miss and works with the leader to reflect on what went
wrong. Empowerment without accountability risks damaging both
the relationship and the ongoing effectiveness of the delegation
scenario.

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As we’ve illustrated, successful delegation requires careful

consideration by leaders. This is not like developing a
communication style and sticking with it. A leader’s choice of
delegation style will vary, depending on the trust level in the person
and process at hand. Delegation is not simply about letting people
make the decision: The most capable people will fail if the processes
are flawed, and even the best processes can be undermined by a
poorly prepared individual who has been set up to fail.

Conversations around trust in the process or a person’s abilities may

be difficult for leaders to initiate, but doing so is critical to ensuring
that delegation leads to individual and organizational success.

ABOUT THE AUTHORS

Beth K. Humberd, Ph.D., is an associate professor of management at
the Manning School of Business at the University of Massachusetts
Lowell. Scott F. Latham, Ph.D., is a professor in strategy at the
Manning School of Business at the University of Massachusetts
Lowell.