Fundamentals of

Management
Unit 4
Planning
a) A plan is a predetermined course of action.
b) It is a blue print for goal achievement.
c) It is setting goals and deciding how to achieve them.
d) Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. It
bridges the gap from where we are to where we want to go.
e) Planning has a number of characteristics:
f) Planning is goal-oriented: All plans arise from objectives. Objectives provide the basic guidelines
for planning activities. Planning has no meaning unless it contributes in some positive manner to
the achievement of predetermined goals.
g) Planning is a primary function: Planning is the foundation of management. It is a parent exercise
in management process. It is a preface to business activities.
h) Planning is all-pervasive: Planning is a function of all managers. It is needed and practiced at all
managerial levels. Planning is inherent in everything a manager does.
i) Planning is a mental exercise: Planning is a mental process involving imagination, foresight and
sound judgment.
j) Planning enables logical thinking.
k) Planning is a continuous process: Planning is continuous. It is a never-ending
activity. It is an ongoing process of adjustment to change. There is always need for a
new plan to be drawn on the basis of new demands and changes in the
circumstances.
l) Planning involves choice: Planning essentially involves choice among various
alternative courses of action. If there is one way of doing something, there is no
need for planning. The need for planning arises only when alternatives are available.
m) Planning is forward looking: Planning means looking ahead and preparing for the
future. It means peeping into the future, analysing it and preparing for it. Managers
plan today with a view to flourish tomorrow. Without planning, business becomes
random in nature and decisions would become meaningless, ad hoc choices.
n) Planning is flexible: Planning is based on a forecast of future events. Since future
is uncertain, plans should be reasonably flexible. When market conditions change,
planners have to make necessary changes in the existing plans.
o) Planning is an integrated process: Plans are structured in a logical
way wherein every lower-level plan serves as a means to accomplish
higher level plans. They are highly interdependent and mutually
supportive.
p) Planning includes efficiency and effectiveness dimensions: Plans aim
at deploying resources economically and efficiently. They also try to
accomplish what has been actually targeted. The effectiveness of plans
is usually dependent on how much it can contribute to the
predetermined objectives.
Process of Planning

• Establishing objectives: The first step in the planning process is to identify the
goals of the organisation. The internal as well as external conditions affecting
the organisation must be thoroughly examined before setting objectives. The
objectives so derived must clearly indicate what is to be achieved, where action
should take place, who is to perform it, how it is to be undertaken and when is
it to be accomplished. In other words, managers must provide clear guidelines
for organisational efforts, so that activities can be kept on the right track.
• Developing premises: After setting objectives, it is necessary to outline
planning premises. Premises are assumptions about the environment in which
plans are made and implemented. Thus, assumptions about the likely impact of
important environmental factors such as market demand for goods, cost of raw
materials, technology to be used, population growth, government policy, etc.
on the future plans are made. Plans should be formulated by the management,
keeping the constraints imposed by internal as well as external conditions in
mind.
• Evaluating alternatives and selection: After establishing the
objectives and planning premises, the alternative courses of action
have to be considered. The pros and cons as well as the consequences
of each alternative course of action must be examined thoroughly
before a choice is made.
• Formulating derivative plans: After selecting the best course of
action, the management has to formulate the secondary plans to
support the basic plan. The plans derived for various departments,
units, activities, etc., in a detailed manner are known as ‘derivative
plans’. For example, the basic production plan requires a number of
things such as availability of plant and machinery, training of
employees, provision of adequate finance, etc. To ensure the success
of a basic plan, the derivative plans must indicate the time schedule
and sequence of performing various tasks.
• Securing cooperation and participation: The successful
implementation of a plan depends, to a large extent, on the whole-
hearted cooperation of the employees. In view of this, management
should involve operations people in the planning activities.
• Providing for follow-up: Plans have to be reviewed continually to
ensure their relevance and effectiveness. In the course of
implementing plans, certain facts may come to light that were not
even thought of earlier. In the light of these changed conditions, plans
have to be revised. Without such a regular follow-up, plans may
become out-of-date and useless. Moreover, such a step ensures the
implementation plans along right lines.
Different Types of Planning

Strategic Planning
• Strategic planning involves decisions about the organisation’s long term goals such as survival, growth
etc.
• It involves setting long term objectives (by top management) and deciding about the judicious
deployment of resources to achieve those objectives.
• Strategic planning, thus, is long-term in nature. It tends to be a top management responsibility. It
requires looking outside the organisation for threats and opportunities.
• It also requires looking inside the organisation for finding out weaknesses and strengths.
• It affects many parts of the organisation, as its decisions have enduring effects that are difficult to
reverse.
• It tries to equip the organisation with capabilities needed to confront future uncertainties, by taking a
holistic view of the entire organisation.
• Its focus is clearly on the ‘jungle, not the trees’. The main objective is to position the firm in an
advantageous position in relation to the environment, keeping the firm’s own capabilities in mind.
Example: In business, it means how much money is going to be dedicated to a project, and by when you
expect the project complete. In personal life, suppose you plan a wedding, it means deciding on the
budget and the date.
Tactical Planning
• Tactical planning translates broad strategic goals and plans into specific
goals and plans that are relevant to a definite portion of the organisation,
such as a functional area like marketing or human resources.
• Tactical plans focus on a major actions a unit must take to fulfil a part of
the strategic planning.
• They are often focused on 1-2 years in the future.
• This is the implementation of the strategic plan stage combining your
available resources, look at obstacles and review alternatives.
• Example: In business, it means an analysis of resource combination,
planning for obstacles, and general timetable. In personal life, for the
wedding, it means, finding the place, developing a guest list, deciding on
a menu and music.
Operational Planning
• Operational planning identifies the specific procedures and processes
required at lower levels of the organisation.
• Frontline managers usually focus on routine tasks such as production
runs, delivery schedules, and human resource needs etc.
• They typically focus on the short term, usually 12 months or less.
• These plans are the least complex of the three and rarely have a direct
effect or other plans outside of the department or unit for which the
plan was developed.
To be fully effective, the organisation’s strategic, tactical and operational
plans must be aligned – that is, they must be consistent, mutually
supportive and focused on meeting the common purpose and direction.
Decision making

• It is the process of making choices by recognizing the problem, gathering information

about feasible solutions and finalizing the best alternative.
• This process is carried out through an intuitive or logical process, or a combination of
two.
• Intuition is all about using your gut feeling to take a stand on the possible course of
action.
• In contrast, a logical process uses facts and figures to make scientifically sound
decisions.
• Intuition is an acceptable way of decision-making; nevertheless, it is often more
suited when the decision is easy, personal, or needs to be made quickly.
• More complex judgments typically need a more formal, systematic approach that
incorporates both intuition and logical reasoning.
• It is critical to avoid rash reactions or intuitions in such scenarios, majorly in business
decisions.
Characteristics of Decision Making

• Decision-making is a skill that comes from training and experience.

Here are a few characteristics of decision-making.
• Rational-thinking
Rational thinking involves fixing goals and objectives, systematically
analysing options, and choosing the right path using logic and evidence.
However, this also involves considering emotions apart from cold logic.
• Process
Every efficient task needs a robust process to make it consistently
successful. Decision-making is also familiar with this fact. It also must
have a process that starts at a stage, has specific steps and has an end.
• Selective
A management decision is highly selective, and you can only use the trial and
error method if that costs you money. You must ensure that each selection has
clear evidence of a positive impact on the organization.
• Purposive
The management decision has a purpose. For example, you decide to improve
the state of the organization; it could be improving profits or employee lifestyles.
This characteristic comes into play very early in the decision-making process as
objectives.
• Positive
While making a management decision, you aim for positive outcomes. This
characteristic differs from a scientific decision; you don’t need a positive result.
However, any negative impact due to management decisions will cost the
company capital and reputation.
• Commitment
Commitment is necessary for any success; however, managers need to
have a strong commitment because of the number of opposition they
will face and the responsibility they shoulder. To successfully make
management decisions, you need to commit to defending them and
seeing through them.
• Evaluation
Management decision-making involves lots of evaluation; you must see
all the angles. In addition, you must have several backup plans when
your first one fails, requiring meticulous evidence evaluation while
making a decision.
Decision Making Process

1. Identify Your Goals

• The first step in mastering the art of decision-making is to clarify your
objectives. When it comes to making a professional decision, you should
have a rough idea about which direction you want to follow. Once you've
narrowed down your objectives, you'll be able to make more informed
judgments. Try to define the nature of judgement you want to make.
2. Make Use of the Elimination Process
• Along with what you want to achieve with your judgment, evaluating
what you don’t is also critical. Making smart judgments might be difficult
if you're still trying to determine what you want to do. However, if you
know what you want to avoid, the process of elimination might make
certain decisions easier.
3. SWOT Analysis Method
• SWOT is an acronym that stands for Strengths, Weaknesses,
Opportunities and Threats. The SWOT analysis is an excellent
decision-making tool since it allows you to determine the pros and
cons of a certain decision readily. All you have to do is draw a
rectangular shape, divide it into four parts and label each section of
the table with SWOT parameters. The image given below portrays the
sample SWOT metrics.
• In the next step, you will fill all the positives and negatives of your
initiative. Focus more on what connects strengths and opportunities
when you complete your selection. Anything that is continually linking
threats and vulnerabilities should preferably be avoided.
4. Simulate Feasible Outcomes
• While simulating probable outcomes isn't a reliable approach to
predicting what will happen after you make a decision, there are
certain ways to simulate what is more likely to happen because of
your decision. If you’re familiar with project management concepts,
some of your learnings can be applied here to visualize the outcome
of your decision. Scientific methodologies such as problem trees,
SCQA (situation, complexity, question, answer), and MECE (mutually
exclusive, collectively exhaustive) can also help you add a touch of
science to your decision making.
5. Choose Best Alternative
• After you've analysed all of your options and created a solid visual
picture of the repercussions of each, you're ready to choose the one
that appears to be the greatest fit for you. If you cannot decide the
course of action, ask for help from your colleagues, leadership team
and friends.
a. Take Action
Finalize and move on to the next objective.
b. Review the Decision
• Based on the results of the action, ensure that your decision is right.
You may be wrong sometimes, but you must only rework the decision
without panicking.
Decision Making Techniques and Tools

1. Marginal Analysis
• Marginal analysis helps organizations allocate resources to increase profitability and
benefits and reduces costs. An example from indeed.com is if a company has the
budget to hire an employee, a marginal analysis may show that hiring that person
provides a net marginal benefit because the ability to produce more products
outweighs the increase in labour costs.
2. SWOT Diagram
• This tool helps a manager study a situation in four quadrants:
• Strengths: Where does the organization excel compared to its competition? Consider
the internal and external strengths.
• Weaknesses: What could the organization improve?
• Opportunities: How can the organization leverage its strengths to create new avenues
for success? How could addressing a specific weakness provide a unique opportunity?
• Threats: Determine what obstacles prevent the organization from achieving its goals.
3. Decision Matrix
• A decision matrix can provide clarity when dealing with different choices and variables.
It is like a pros/cons list, but decision-makers can place a level of importance on each
factor.
• To build a decision matrix:
• List your decision alternatives as rows
• List relevant factors as columns
• Establish a consistent scale to assess the value of each combination of alternatives and
factors
• Determine how important each factor is in choosing a final decision and assign weights
accordingly
• Multiply your original ratings by the weighted rankings
• Add up the factors under each decision alternative
• The highest-scoring option wins
4. Pareto Analysis
• The Pareto Principle helps identify changes that will be the most
effective for an organization. It’s based on the principle that 20
percent of factors frequently contribute to 80 percent of the
organization’s growth.
• For example, suppose 80 percent of an organization’s sales came from
20 percent of its customers. A business can use the Pareto Principle
by identifying the characteristics of that 20 percent customer group
and finding more like them. By identifying which small changes have
the most significant impact, an organization can better prioritize its
decisions and energies.
Types of Decision-Making in Management

1. Routine and Basic Decision-making

• Routine decision-making, on the other hand, refers to the process of making
decisions that are made regularly and involve choosing between a few options
that the decision-maker is familiar with. Examples of routine decision-making
include setting work schedules, ordering supplies, and approving routine
expenses. Managers make routine decisions in the daily functioning of the
organization, and they often delegate these decisions to their subordinates.
• Basic decision-making refers to the process of making simple decisions that do
not require much evaluation or analysis. Examples of basic decision-making
include setting work schedules, ordering supplies, and approving routine
expenses. Managers make basic decisions in the daily functioning of the
organization, and they often delegate these decisions to their subordinates.
2. Personal and Organizational Decision-making
• Personal and organizational decision-making are two distinct types of
decisions that managers make. An organizational decision is made on
behalf of the organization and is related to the organization's operations,
policies or strategic plans. These decisions can be delegated to
subordinates and usually have a significant impact on the organization's
success. Examples of organizational decisions include setting production
targets, choosing suppliers, or investing in new technology.
• In contrast, a personal decision is a decision made by a manager that is
not related to the organization in any way. These decisions are related to
the manager's personal life within the organization and cannot be
delegated to subordinates. Examples of personal decisions include what
to eat for lunch, what mode of transportation to use for commuting, or
what hobby to pursue outside of work.
3. Individual and Group Decision-making
• Individual decision-making is when one person makes a decision in an
official capacity, often in smaller organizations or with an autocratic
management style. Examples include a CEO investing in a new
product or a manager firing an employee.
• Group decision-making involves a collective of employees and
managers making decisions through a collaborative process. Multiple
viewpoints and perspectives are considered. Examples include a team
of managers deciding on a marketing strategy or a board of directors
deciding on a merger or acquisition.
4. Programmed and Non-Programmed Decision-making
• Programmed decision-making refers to decisions that are repetitive in nature and
follow a specific set of procedures. These decisions are typically made by lower-level
managers and are implemented on a daily basis. Examples of programmed decisions
include setting work schedules, granting employee leave and ordering routine supplies.
These decisions are not typically long-term and can be changed at any time.
• Non-programmed decision-making, on the other hand, relates to decisions that are not
routine and arise from unstructured problems. These decisions are usually made by
upper-level management and have a long-term impact on the organization. Examples
of non-programmed decisions include launching a new product line, entering a new
market, or responding to a crisis situation.
• For example, a programmed decision could be approving routine expenses such as
office supplies or travel expenses, as the process for approval is already in place and
does not require much thought. In contrast, a non-programmed decision could be
deciding to invest in a new technology that requires significant analysis and research to
determine if it is viable for the company's long-term success.
5. Policy and Operating Decision-making
• Policy decision-making is the process of making decisions that
establish the overall direction, goals and objectives of an organization.
These decisions are made by top-level executives and have a long-
term impact on the organization as a whole. Examples of policy
decisions include setting strategic goals, defining the company's
mission and determining the organizational structure.
• Operating decision-making, on the other hand, relates to the day-to-
day operations of an organization. These decisions are made by lower-
level managers and employees and are focused on implementing the
policies and plans established by the top-level executives. Examples of
operating decisions include managing inventory, scheduling
production, and addressing customer service issues.
6. Tactical and Strategic Decision-making
• Tactical decision-making refers to the process of making decisions that
help implement the plans and policies established by higher-level
management. These decisions are more short-term in nature and are
usually made by middle and lower-level managers. Examples of
tactical decisions include scheduling production, managing inventory,
and resolving customer service issues.
• Strategic decision-making, on the other hand, refers to decisions that
have a significant impact on the long-term success of the
organization. These decisions are usually made by upper and middle-
level management and require careful analysis and evaluation.
Examples of strategic decisions include entering a new market,
developing new products or services and investing in new technology.
7. Planned and Unplanned Decision-making
• Planned decision-making refers to decisions that are made in advance
and are part of an established process. These decisions are based on
predetermined criteria and often involve a systematic approach to
problem-solving. Examples of planned decision-making include
budgeting, project planning and performance evaluations.
• Unplanned decision-making, on the other hand, refers to decisions
that are made in response to unexpected events or situations. These
decisions may not follow a predetermined process or have
established criteria. Examples of unplanned decision-making include
crisis management, responding to customer complaints and adapting
to changes in the market or industry.
Controlling
• The controlling function can be defined as a managerial process
evaluating actual performance in the organization as per the planned
performance. This function confirms that organizational activities are
performed to achieve goals and objectives according to the plans.
And if there any issues with the current progress, this will help to take
corrective actions. Therefore the controlling can be identified as a
primary goal-oriented function in the management process.
• It helps to accomplish organizational goals and objectives by
performing controlling.
• Help managers to identify irregularities such as cost overrun,
employee turnover and product defects.
• Easy to find better opportunities
• Manage complex situations in the organization as well as its
environment.
• Organizational resources are utilized with effectiveness and efficiently
• Motivates employees and their productivity
• Lower-level managers can involve with decision-making.
Advantages of controlling

• The organization will able to reach its goals and objectives easily
• The quality of the products increases
• Employee motivation increases, and it will be led to an increase in
productivity.
• Easy to find mistakes/errors in the planning function and manage risks
• Optimum utilization of organizational resources
• Every manager can make decisions at the right time in the right ways.
Process of controlling

1. Establishing standards
• As the first step in the control process, this involves setting up future targets
which need to be accomplished to reach expected performance. Setting up
standards is also a part of the planning process in management. There are
different standards such as time standards, cost standards, income standards,
market standards and personal quantitative standards.
2. Measuring actual performance
• This step can be referred to as a task of computing and evaluate the actual
performance. This is a continuous task, and it involves collecting information that
represents the actual performance. The evaluation of actual performance is
compared with the expected performance/standards. And also, different
methods can be used to measure the performance. The plans include ratio
analysis, computerized devices, statistical analysis, personal observation and
strategic control points.
3. Comparing actual performance with standards
• This is a task of comparing actual performance against standards. Because of
this comparing, the management will understand the difference between
actual performance and the expected performance. If there any wrong
things/ deviations, the administration must be involved with corrective
actions. When management makes this comparison, they use some methods
to present comparison results. The methods are graphical method and
mathematical method etc.
4. Taking corrective actions
• After comparing the actual performance with established plans, the
comparison results can be equal with the standards, higher or lower. If there
are deviations, the management needs to take corrective actions. When
considering corrective actions, they can be divided into three alternatives
such as,
• Maintaining existing situation
If the actual performance is equal to standards, the management needs
to continue the current situation.
• Correct the deviation
If the actual performance is lower than the standards, the management
must be done to correct deviation/deviations.
• Change the standards
If the actual performance is higher than the standards, it is better to
change standards.
Levels of controlling

• 1. Strategic control
• Strategic control is a process used by companies to control the
implementation and development of strategic plans. Top-level
management in an organization involves this strategic control process
and is mainly focused on achieving long-term future goals.

• When doing strategic controlling, the management needs to make

sure that the tactical and operational plans are being executed as
planned at both middle & lower management levels.
• Mainly, there are four types of strategic controls: premise control,
implementation control, strategic surveillance and special alert
control.
2. Tactical control
• While strategic control focuses on achieving the long-term goal, tactical
control involves tactical plans to reach that goal. Middle managers in the
company mainly involve with tactical control and implement tactical plans
at every departmental level.
• They concentrate on middle-term time frames (weekly & monthly) and
monitor periodical results to take corrective actions when there is a
necessity.
3. Operational control
• Operational control involves implementing operational plans. It regulates
day-to-day results and is concerned with rules: budgets, schedules and
specific outputs. And also take corrective actions as necessary. Operational
control is a responsibility of lower-level management in the organization.
Types of control

• Feedforward control
Feedforward control, also known as preliminary control, is referred to
controls, which are future-directed and designed to ensure the quality
of the inputs (materials, human, information, financial resources).
These feedforward controls attempt to identify deviations and take
corrective actions before they occur.
• Concurrent control
The concurrent controls, alternatively known as screening control, can
be referred to as a control applied into the operations while
transformation is proceeding. Concurrent controls allow management
to identify deviations during the transforming process and use
corrective actions.
• Feedback control
• Feedback control, also called post-action control, concentrates on the
organization’s outputs and examines the completed task and the
feedback of the outcomes. But the problem of this feedback control
is, the organization unable to take corrective actions when there is a
defect in output. But this type of control is helpful to managers for
planning future and performance evaluation.
Organizing
• Organizing is the process of structuring relationships between people,
tasks, and other activities. It involves identifying and grouping work,
defining and delegating responsibility and authority, and establishing
relationships.
• The goal is to enable people to work together effectively to
accomplish objectives. Organizing is a management function that
comes after planning. It involves allocating resources,
departmentalizing work, demarcating authority, and distributing
responsibilities. Organising is a management function that forms the
step after planning.
Principles of organization structure
1. Division of Labour or Specialization
2. Consideration of Objectives

• Objectives are helpful in determining the activities and the structure

itself. Once objectives are clearly defined, the organizer can
conveniently proceed to group activities, delegate authority to
individuals to whom activities have been assigned and coordinate
their efforts for better results.

3. The Scalar Principle

4. The Principle of Departmentalization
• Departmentalization requires analysing everything that has to be
done and determining the grouping in which it can be placed without
violating the principle of homogeneity.
5. The Principle of Unity of Command
6. The Principle of Span of Control
7. The Principle of Flexibility
• A flexible organisation is able to withstand pressures, but gives way to
the demand for genuine change without fundamentally altering the
basic functions of the various segments of the structure.
8. The Principle of Balance
• This principle implies that each area and function of an enterprise
should operate with equal effectiveness in making its allotted
contribution to the total purpose.
• Problems of balance arise from the tendency to sub-divide the work
into small units.
• If sub-division is carried too far, the problem of timing, coordination
and integrating the work sequences becomes very complex.
• The idea of balance applies to organisation structures as well as to
functions and processes.
9. Principle of Decentralization
12. Combination of Line and Staff Functions
• Line structure consists of vertical relationships with power to
command and execute. Staff functions are auxiliary to the line
functions and are advisory in nature.
 Delegation and Decentralization

Delegation Decentralization

Involves assigning specific tasks or Involves distributing power and decision-making

responsibilities to specific individuals or teams. authority throughout an organization.
Focuses on the delegation of specific tasks and Focuses on the distribution of power and
responsibilities. decision-making authority.
Typically involves a top-down approach, where Typically involves a bottom-up approach, where
decisions are made by upper management and decision-making authority is distributed to all
delegated to lower levels of the organization. levels of the organization.
Can result in increased efficiency and Can result in increased employee engagement
productivity as tasks are delegated to individuals and empowerment as all levels of the
with specific skills and expertise. organization have a say in decision-making.
 Delegation Decentralization
Can lead to a lack of accountability as individuals may Can lead to a lack of direction and coordination as
not fully own the tasks they have been delegated. decision-making is distributed throughout the
organization.

Can be useful in situations where upper Can be useful in situations where a wide range of
management has more expertise or experience in a perspectives and ideas are needed to make
specific area. effective decisions.

Can be used in conjunction with decentralization to Can be used in conjunction with delegation to
balance the distribution of power and decision- balance the distribution of power and decision-
making authority with specific tasks and making authority with specific tasks and
responsibilities. responsibilities.

Can be implemented in a hierarchical or flat Can be implemented in a hierarchical or flat

organizational structure. organizational structure.
Difference between Delegation and Decentralization
• Decentralization refers to the distribution of power or decision-
making authority away from a central authority, while delegation
refers to assigning specific tasks or responsibilities to others.
• While delegation retains authority, decentralization distributes it
among multiple individuals or entities.
• In an organization, delegation is often used to flatten or distribute
tasks, while decentralization is used to flatten or distribute power.
• Delegation can be temporary or specific to specific tasks, while
decentralization is a permanent change in an organization's structure.
• By distributing decision-making across multiple decision-makers,
decentralization increases efficiency, accountability, and reduces risk
of failure.
Factors that determine the Degree of Decentralization

1. Size of Organization and its Complexity

• If the organization is large and complex, then it has a greater need for
decentralization. However, if the organization is relatively simpler and
smaller, then creating autonomous units is usually costly. Therefore,
the top management makes most of the decisions.
• Let’s say that an organization has its production and
sales units geographically scattered across multiple locations. In such
cases, keeping centralized control over all the processes is very
difficult. Therefore, such organizations tend to opt for
decentralization. On the other hand, if an organization has all the
units present within the same building, then having centralized
control is more effective.
2. Degree of Diversification
• In the case of companies having multiple diverse product lines,
decentralization is necessary as well as beneficial. On the other hand,
if the organization desires high standards of standardization, then it
needs centralization.
• An organization can successfully decentralize authority only if it has
competent and experienced managers at lower levels. If there is a
dearth of such employees in the organization, then decentralization
will function in a restricted manner.
3. Top Management’s Outlook
• If the top management is conservative and believes in control in the
hands of a limited number of people, then it is likely to centralize
authority.
• On the other hand, if it believes in individual freedom and is
comfortable with the authority not being confined to a limited few, then
the organization will have a high degree of centralization.
4. Nature of Functions
• Usually, some basic functions in an organization like sales, production,
etc. have a higher degree of decentralization.
• In comparison, staff functions like personnel, research and
development, finance, etc. are less decentralized or even majorly
centralized.
5. Communication System in the Organization
• If an organization decides to decentralize authority, then it must ensure
that an effective communication system exists. This is necessary for
coordinating and controlling the activities of the operational units. On the
other hand, if an organization has an ineffective communications system,
then it should opt for centralization. Further, computerized management
information systems have enabled centralized decision-making.
6. Planning and Control Procedures in the Organization
• If an organization is clear about its objectives and policies, then seniors are
more willing to allow their subordinates to make independent decisions.
Remember, decentralization is successful only when there is a good control
system in the organization. This is because the top management can use
this system to assess the effectiveness of the decisions that the
subordinates make.
7. Environmental Factors
• The environmental factors play a major role in determining the
degree of decentralization in an organization. To give an example, if
the business environment of an organization is highly uncertain, the
organization might not give a high degree of freedom to operating
units. This is because, in uncertain conditions, this might endanger
the existence of the organization itself.
Benefits of Delegation
1. Time management
• Delegation can help you meet deadlines and manage multiple tasks at once. It can also free up
your time to focus on more important tasks.
2. Efficiency
• Delegation can help you distribute work among multiple people. This can increase the speed and
quality of work that gets done.
3. Trust
• Delegation can help build trust. It shows you trust others with essential tasks, and when they
complete those tasks well and on time, you trust those people more.
4. Resource use
• Delegation can help you use resources efficiently. By delegating tasks, you can ensure that
everyone in your team is working on something they're good at.
5. Innovation
• Effective delegation can lead to better overall outcomes and a more streamlined workflow. It can
also increase creativity and job satisfaction.
Disadvantages of delegation

• Quality of work- If the wrong tasks are delegated to the wrong people, the quality of
work may suffer. This could include the quality of communication with clients, sales
pitches, or delivered products.
• Employee burden- Employees may feel stressed if they are assigned multiple tasks
with tight deadlines. If too many tasks are placed on an employee, they may feel
abused and no longer trusted.
• Loss of control- Managers may fear losing control over tasks or outcomes when
delegating to others.
• Time investment- Initially, delegation may require more time to explain tasks and
monitor progress.
• Limited creativity and innovation- When only one team member is responsible for a
task, it limits the potential for generating new ideas and solutions from other team
members.
• Lack of expertise- A lack of knowledge in delegation can lead to several negative
consequences.
Advantages of decentralization:

• Improved communication: Decentralization can reduce communication congestion and improve the ability
to deliver services.
• Faster response times: Decentralization can help organizations react more quickly to unexpected problems.
• Better information: Decentralization can provide more information about local conditions.
• Increased support: Decentralization can lead to more support from beneficiaries of programs.
• Improved employee morale: Decentralization can improve employee morale and job satisfaction, especially
for lower-level managers.
• Increased employee engagement: Decentralization can give employees more autonomy, which can lead to
increased engagement.
• Faster decision making: Decentralization can reduce the burden on top management and enable faster
decision making.
• Improved supervision and control: Decentralization can help with evaluating the performance of different
sections of a company.
• Increased motivation and empowerment: Decentralization can create a sense of ownership and drive
among community members.
• Increased efficiency and productivity: Decentralization can lead to greater efficiency and productivity
because people take great care to fulfil their responsibilities.
Disadvantages of decentralization
• Difficult to coordinate
• Delayed decision making
• Higher costs- Decentralization can increase administration expenses because it requires trained
personnel to accept authority. It can also be harder to save costs and share resources in decentralized
systems.
• Loss of control- Decentralization can lead to loss of control and coordination of resources.
• Misuse of authority- Decentralization can lead to misuse of authority.
• Communication gap- Decentralization can lead to a communication gap between different hierarchical
levels of the organization.
• Lack of uniformity- Decentralization can lead to a lack of uniformity in the policies followed.
• Duplication of effort- Decentralization can lead to duplication of effort, such as staffing, applications,
equipment and documentation.
• Unfunded mandates- Decentralization can lead to unfunded mandates, which can negatively impact
economic growth.
• Lack of capacity- Decentralization can lead to a lack of capacity and systems at both central and local
levels.
Process of delegation

1. Assessing Task Suitability

• Consider the nature of the task and whether it aligns with the skills and expertise of your team members.
Confirm that the task is well-defined.
2. Selecting the Right Individual or Team
• Choosing the right person or team for the delegated task is essential. Consider the strengths and weaknesses
and skills of the person you're delegating.
3. Evaluating Ability and Training Needs
• Ensure that the individual or team selected for the work has the necessary ability to carry it out effectively.
Clarify their understanding of the task requirements and assess if any additional training or support is required
to enhance their capabilities.
4. Communicating Purpose and Importance
• Clearly explain why the activity is being delegated and why it's essential for the individual or team to undertake
it. Emphasize the importance and relevance of the task within the broader context of company goals.
5. Defining Expected Results
• Clearly define the expected results and outcomes of the delegated task. Establish measurable objectives and
performance indicators to track progress and success after the end goal is achieved. Ensure that the individual
or team understands the expectations and how their performance will be evaluated.
6.Allocating Necessary Resources
• This may include personnel, equipment, materials, and other related resources.
Ensure that adequate resources are allocated to support the successful completion
of the task.
7. Setting Clear Deadlines
• Establish clear deadlines for completion. Take into account any dependencies or
constraints.
8. Providing Support and Guidance
• Support the individual or team throughout the delegated task by providing
guidance, encouragement, and resources as needed. Encourage open
communication and address any challenges or concerns that arise promptly.
9. Offering Constructive Feedback
• Provide timely and constructive feedback on the performance and outcomes.
• Acknowledge success and achievements, and address any areas for improvement
openly. Use feedback as an opportunity for learning and development.
The Principles of Delegation

• Principle of functional definition: The objective of this principle is to define the task
clearly that an individual is required to accomplish. It also focuses on the clarity of
methods, expectations, goals and targets.
• Principle of unity of command: This principle focuses on an individual getting
directions from only one supervisor, as receiving instructions from several
supervisors may make the process of delegation perplexing. With this, the individual
also remains answerable to their leader.
• Principle of parity of authority and responsibility: This principle involves authority
corresponding to responsibility, as the former without the latter may result in an
individual's inefficiency. By implementing this principle, a manager may ensure a
proper balance between both components.
• Principle of absoluteness of responsibility: A supervisor can only grant authority to
their team members but not responsibility. The latter is the commitment of an
individual for which both managers and team members are accountable.
• Principle of delegation by results: This principle focuses on supervisors determining
the final result of a process and, based on that, assigning tasks and delegating
authority. Managers may achieve this by coherently defining organisational goals
and ensuring that team members align their efforts with these goals.
• Principle of limitations of authority: To prevent misuse of authority, supervisors
may limit the powers of an individual so that they do not misemploy their
authority. An efficient way for managers is to develop a written set of guidelines to
provide their team members with clear directions.
• Principle of proper motivation: Even with authority, an individual may not perform
tasks that a supervisor delegates to them. With the help of this principle, managers
may introduce incentives, helping team members to feel motivated and fulfil their
responsibilities with accountability.
• Principle of effective control: When supervisors establish a system for control, they
may be better able to measure the performance of their team members. This
allows them to evaluate how an individual implements their authority.
Types of delegation

1. General or specific delegation

• General delegation is when a manager gives a subordinate the authority to perform all functions in
their department. Some of the functions may include organising, planning and directing. The
manager exercises overall control and can offer guidance to the subordinates when needed.
Comparatively, specific delegation is when a manager assigns a subordinate a specific task or
function. The tasks assigned are precise. For example, an HR manager may ask an HR assistant to
conduct interviews for a certain department for a particular period.
2. Formal or informal delegation
• Formal delegation is a part of an organisational structure. Whenever a person gets assigned a
certain task, they also receive authority. This means that everyone automatically gets authority as
per their duties. Informal delegation occurs due to circumstances. For example, an individual may
perform a certain task not because it's their duty, but because it's necessary to perform their job.
3. Lateral delegation
• Lateral delegation occurs when authority gets delegated informally. Sometimes, an individual may
require help in accomplishing a certain task that a manager has delegated to them. It may take
time to get help from these people. The individual can indirectly contact them to solicit help in
completing the tasks without getting permission from their supervisor.