Authority what is it?

In words of Louis Allen, authority is defined as The sum of Powers and Rights entrusted to make possible the performance of work delegated.

Louis Allen classification of Authority

Authority of Knowledge
Authority of Position Legal Authority

Sources of Authority
Formal Authority Theory Acceptance Theory

Competence Theory

Formal Authority Theory

According to this theory, all authority originates in the Formal Structure of the organisation. The ultimate authority in a joint stock co. lies with the Shareholders ; who entrust the mngt to the BoD and delegate to it most of their authorityand it goes further down the formal structue of the company.

Acceptance Theory
This theory states that authority is the power that

is accepted by others. Formal authority is reduced to Nominal authority if it is not accepted by the subordinates. The subordinates accept the authority if the advantages to be derived by its acceptance exceeds the disadvantages resulting from its refusal. But what advantages??

Competence Theory
This theory states that an individual derives authority because of his personal qualities and technical competence. Many persons derive informal authority because of their competence.thats why it is said by great Baba Ranchoddas Success ke peeche mat baago, Excelence ke peeche baago, Success jhak maarke tumhare peechhe aegi.

Types of Authority
Rational legal Authority Traditional Authority Charismatic Authority

RATIONAL-LEGAL AUTHORITY
Based on formal organizational structure and the positions appointed to individuals based on their competence, knowledge, training

and experience. It is associated with legal legitimacy and bureaucracy. Completely impersonal in nature.

TRADITIONAL AUTHORITY
This form of authority has its roots in customs and traditions. It has no legal legitimacy.
Individuals tend to occupy positions of power

due to age-old customs or through family leverage. Tends to be irrational and illogical many times.

CHARISMATIC AUTHORITY
It is associated with the personality of an individual, something that sets the person apart from others. It comes through the willingness of followers to take orders from such leaders.
It is a very rare and unusual form of authority

and is mostly found in religious groups.

DELEGATION OF AUTHORITY
Delegation is about entrusting someone else to do parts of your job. Delegation of authority can be defined as subdivision and

sub-allocation of powers to the subordinates in order to achieve effective results. Delegation of Authority means division of authority and powers downwards to the subordinate.

CENTRALIZATION
Centralization, is the process by which the activities of an organization, particularly those regarding planning and decision-

making, become concentrated within a particular location and/or group. Reservation of decision making power at different levels of management. It is the systematic and consistent reservation of authority at central points in the organization.

Decentralization
Decentralization of authority means dispersal of

decision making power to the lower levels of the organization retaining some at Top. Thus, decentralization means reservation of some authority (power to plan, organize, direct and control) at the top level and delegation of authority to make decision at points as near as possible to where action takes place.

Basis of Difference Cause and Effect How it takes place

Delegation of Authority Delegation is the Cause of Decentralization Delegation takes place from superior to subordinate

Decentralization Decentralization is the Effect of Delegation Decentralisation take place from the top level management to the different departments. It is a wider concept as it involves all the Departments of the organization In Decentralization controlling is done by Departmental heads. Top level mngt keeps minimum control. In Decentralisation, ultimate responsibility lies in hands of Head of Depts (HoD) Decentralization is Optional.

Narrow and Wide

It is a narrow concept as it involves Individuals In Delegation final control lies in hands of the superior

Control

Accountability (ultimate responsibility) Essential and Optional

In Delegation, Ultimate responsibility lies with the superior Delegation is very essential for

Basis of Difference
Acceptance

Delegation of Authority
Delegation may be refused by subordinates

Decentralization
Decentralisation is mostly welcomed by the Heads of Depts (HoD)

Withdrawal of Authority

After Delegation it is very easy to withdraw the authority from the subordinate.
Delegation is the Technique of getting things done.

After Decentralization it is very difficult to withdraw the authority from the department.
Decentralization is a philosophy of Management.

Technique and Philosophy

Factors determining the extent of Decentralization

Size of Operations
Costs of Decisions Higher Differentiated Product lines Availability of Managerial Manpower Top Management philosophy Environmental influence

Advantages of Decentralization
Reduction in Burden of Chief Executive
Diversification of activities Quick Decisions Development of managerial personnel Improvement in Motivation Effective control and supervision

Limitation of Decentralization
Inconsistency
Increased administrative expenses Difficult autonomation Uncertainties are difficult to deal with Difficult coordination