CONTROLLING, DELEGATION AND INTERDEPARTMENT COORDINATION

INTRODUCTION

Tourism management, as well as tourism operations, require extra-ordinary care in order to satisfy the tourists. This means that the operations not only have to be managed well but they require certain other necessary inputs. Keeping this in view, we introduce to you in this Unit management functions like controlling, delegation and inter-department coordination. Whether it is a tour operator, a travel agency, a hotel, a government tourism organisation or any other firm operating in the tourism sector, it has to devise certain methods for controlling; authority and responsibility has to be delegated and a lot of inter-department coordination is required not only to earn profits for the firm but also to provide better services to the customers.

The Unit starts with a discussion on various aspects related to control and then goes on to discuss the various issues related to delegation of authority. Further, it also takes into account inter-department coordination and conflict. We hope you will be able to apply them in relation to tourism management and operations.

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13.2 CONTROL : PREREQUISITES, CHARACTERISTICS AND PROCESS

Control is the process of assuring the efficient accomplishment of enterprise objectives. In the turbulent environment faced by management, control is necessary to anticipate problems, measure performance against standards, take corrective actions for deviations from plans and if necessary, modify plans. The term control may have some negative connotations for some. But, in the management process, it is a facilitating function aiding the organisation to accomplish the set objectives.

The primary responsibility for exercising control rests with every manager charged with the execution of plans. As Henry Fayol said, “In an undertaking, control consists in verifying whether everything occurs in conformity with the plans adopted, the instructions issued and principles established. Its object is to point out weaknesses and errors in order to rectify them and prevent recurrence. It operates on everything, things, people, actions”. It is wrong to assume that only top management has the responsibility for control and that there is little need for control at lower levels of management. While the scope for control may vary to some extent depending upon the position of an employee in the hierarchy, all those who have responsibility for the execution of plans need to exercise control too.

The major prerequisites of control are two : a plan and a structure.

a) Plan : controls must be based on a plan. The more clear and concrete the plans are the more effective controls can be; plans become the standards by which the actions are measured.

b) Structure : There is need for a structure to know where the responsibility rests for deviations and corrective action, if needed. As in the case of plans, the more clear and complete the organisation structure is, the more effective control can be. Controls, to be effective, should share the following basic characteristics :

• Appropriate : Controls should correspond to an organisation’s plans. Controls designed for a general manager are inappropriate for a supervisor. Similarly, control systems suitable for a line department may be inappropriate for a staff department.

• Strategic : Control should serve a strategic purpose and provide spotlight on positive and negative executions at critical points.

• Acceptable : Controls will not work unless people want them to. They should be acceptable to those to whom they apply.

• Reliable and objectives : Controls should be accurate and unbiased. If they are unreliable and subjective, people will resent them.

• Cost-effective : The benefit from control should be greater than the costs. Control devices should yield tangible benefits.

The control process involves three steps :

i) Establishing Standards : Standards mean criteria of performance. They can be based on past performance, managerial judgement or scientific analysis. They are used to measure performance and judge success or failure. Standards may be of many kinds and include verifiable goals set in qualitative or quantitative terms. An organisation can establish standards in such areas as :

• Profitability

• Productivity

• Market Share

• Worker Performance

• Quality

• Innovation

• Customer Care

• Social Responsibility, etc.

ii) Measuring of Performance : Essentially, it is a comparison between “what is” and “what should be” the performance. Ideally, measurement should be done on a forward-looking basis to predict 172

probable deviations from standards rather than merely be used as a post mortem exercise. To the extent prediction becomes possible, control becomes effective because appropriate actions can be taken well in advance of their actual occurrence.

iii) Reinforcing Success/Correcting Deviations : When plans and organisation structures are clear, it is easy to reinforce success and avoid failures. When deviations are noticed or apprehended based on warning signs, the reasons can be analysed and appropriate corrective actions taken promptly.

13.3 CONTROL AS A FEEDBACK SYSTEM

Management control is usually viewed as a feedback system. This is seen more clearly by looking at the process involved in control system, as shown in Figure 1. Control is more than a matter of establishing standards, measuring performance and correcting for deviations. To initiate corrective action, there should be a programme (or a plan of action) which needs to be implemented and monitored as to whether such implementation will give the desired performance.

Identification Comparison of Measurement Actual

of actuals against of actual performance

deviations standards performance

Analysis of Programme of Implementation Desired

Causes of corrective of corrections performance

Deviations action

Figure 1 : Feedback System in Control Process

Source : Koontz Harold (1981), “Management”, Auckland, McGraw-Hill

In the simple feedback system there is a time lag in the control process. The old notion is to look at planning as looking forward and control as looking backward. But good management requires future-directed control where it is possible to get feedback somewhat ahead of actual happening than after the event. As Harold Koontz observed, “Since the past cannot be changed, effective control should be aimed at preventing present and future deviations from plans”. Computers make it possible now to get feedback on a real-time basis, i.e., as of now or on a here-and-now basis. Where there are time lags in a system, corrective steps should be taken on a proactive basis predicting or anticipating efforts. As such, effective control systems should seek to overcome the deficiency of common or simple feedback systems to be modified as ‘feedforward systems’. Feedforward systems monitor inputs into a process to ascertain whether the inputs are as planned; if they are not, the inputs, or perhaps the processes, are changed in order to ensure the desired action. As shown in Figure-II a feed forward control system is really one of feedback. The only difference is that the information feedback is at the input side of the system so that corrections can be made before the system input is affected.

Desired values

of

Outputs

(standards)

---------information ………. Corrective action

Inputs

Process

Outputs

Feedforward

Simple

Feedback

Source : Koontz Harold (1981), “Management”, Aukland, McGraw-Hill, p.730

Figure II : Comparisons of Simple Feedback and Feedforward Systems 173

13.4 METHODS OF CONTROL

Aurthur Bedeian discusses nine methods of control and classifies them into three categories based on their frequency of use :

1) Constantly used controls : Self-control, group control and policies, procedures and rules.

2) Periodically used controls : Management Information Systems, External Audits and Budgets.

3) Occasionally used controls: Special reports, personal observation and project control. The nine methods of control mentioned in Figure -III are briefly discussed hereunder.

Hourly

Daily

Weekly

Monthly

Quarterly

Semiannually

Constant Periodic Occasional

Self Control

Group Control

Policies Procedures Rules

Management Information Systems

External Audits

Budgets

Special Reports

Personal Observation

Project Controls

Source : Bedian – AG – (1986), “Management”, New York, Dryden Press, p.553.

Figure III : Nine Methods of Control and Their Frequency of Use

1) Constant Controls

Self-control : Managers need to exercise more self-control to minimise the need for other control methods and making control in the organisation acceptable and effective. Self-control means giving a fair day’s work for a fair day’s pay, reporting to work on time, discharging duties and responsibility properly and respecting the rights of others in the organisation. Respect for self-control in an organisation can be a motivating factor. A sense of appreciation for self-control can be promoted among employees through training in behaviour modification.

Group Control : Work groups are a source of control. Group-defined norms exert greater influence in organisations than the norms that managements may choose to set unilaterally and thrust on groups. Group norms and group control can aid or hinder formal authority. Organisations would do well to develop and use group control processes to reinforce formal authority. While in some organisations group control processes helped increase output and improve quality, in others they resulted in restricting output. For group norms to contribute to organisational goals, there should be a climate of trust and openness, a culture of cooperation than confrontation. Quality circle, quality of worklife programmes and work redesign experiments being taken up in some organisations are examples that point to organisational thrust towards reinforcing group control processes for achieving organisational goals through integration of members’ interests with those of the organisation.

Policies/Procedures/Rules : These are essentially bureaucratic control mechanisms referred to in the discussion on control strategies. They reflect past managerial experience and include a variety of aspects concerning how to make certain decisions, deal with resources, etc. If the policies, procedures and rules are properly formulated, clearly communicated and implemented consistently throughout the organisation, they can be effective in controlling individual and work group behaviour.

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2) Periodic Methods

Management Information Systems : A Management Information System is a mechanism designed to collect, combine, compare, analyse and disseminate data in the form of information. As such, management information systems link the various decision-making centres within an enterprise and serves a useful function in providing feedback for control purposes.

External Audits : The annual financial audit by an outside accounting firm is one form of external audit, mainly of the finances of an organisation. Forward looking progressive private companies have in the past sought to have a social audit, not for evaluating financial performance, but to find out whether and how well they have been discharging their social obligations.

Budgets : Budgets are plans that deal with the future allocation and utilisation of various resources to different enterprise activities over a given period of time. Budgets help establish plans and also serve as the basis for measuring or evaluating the standards of performance. Budgetary control is a good example of bureaucratic control strategy.

3) Occasional Controls

Special Reports : These have a special role. Special reports can be commissioned by an organisation when its normal control systems point to the need for detailed investigation or study of a particular operational aspect. When major policy decisions of strategic importance are taken, special reports may be commissioned. These include situations where the organisations find the need for overcoming the existing difficulties, moderanisation, expansion, diversification, merger, acquisition etc. Special reports vary in content and style depending upon the purpose. They could be prepared internally by managers in the organisation or by consultants or outside institutions. Special reports are a valuable method for controlling in turbulent environments, warranting changes in products and markets, technology and production processes, organisational structure, etc.

Personal Observation : Managers can know what is happening in an organisation by relying on information provided by others as also by finding out for themselves. First hand knowledge has to be critical to be effective.

Project Controls : Various methods have been developed for controlling specific enterprise projects. The best example is the network analysis using the PERT tool. PERT is an acronym for Programme Evaluation and Review Technique. It is a diagram showing the inter-relationships between the events and activities that comprise a project. It is a detailed, easy-to-communicate means for determining current status of a project, stimulate alternative plans and schedules and controlling activities.

13.5 POLICIES AND DESIGN CHOICES IN CONTROL

Organisations have three options in exercising control :

• Centralisation or delegation,

• Formal or informal, and

• direct or indirect.

Preferences for one or a mix of all options are matters of judgement. Judgement in turn could be based on theory, practice or premonition. Each option has relevance in a particular situation. Here we shall briefly consider the three options mentioned above.

1) Centralisation or Delegation

Centralisation is an approach where control is exercised by the chief executive or the top management group (comprising a few individuals). Others in the lower rungs of hierarchy cannot act on their own or use their discretion. Thus, in such cases functional autonomy will be lacking at operating levels.

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Delegation, on the contrary, manifests transfer of decision-making authority downward and outward within the formal structure. For example, regional managers may take decisions without having to seek prior consent of head office on financial matters involving a sum of not more than Rs.2 lakhs in each transaction. This is an instance of delegation of financial powers. If a transaction involves an expenditure of Rs.2.5 lakhs, the regional manager will have to refer to the head office which exercises control over the decision. Sometimes, decision-making power is transferred downwards in a hierarchy prescribing limits on the scope and type of decisions. For example, a branch manager is allowed to spend upto Rs.5000 per month on consumables, without referring upwards for approval, so long as it falls within the monthly budget. Here although the decision-making power is transferred, overall control is incorporated into the arrangement. Where delegation occurs in an organisation-wide context, it becomes decentralisation.

Centralised Control :

• makes it easier to coordinate the activities of various subunits/departments in an organisation,

• seeks to achieve balance among various functions because the top management can be expected to have a broad organisation-wide perspective,

• proves more useful because control will be in the hands of senior, experienced top executives,

• is necessary to meet extraordinary situations, and

• is economical since duplication in activities and resource use can be avoided.

Delegation and decentralisation too have positive features :

• they relieve the top management from overload,

• motivate individuals to give better performance due to opportunities for individual freedom, discretion and control,

• contribute to the personal and professional development of managers,

• people at operating levels are more knowledgeable about the dynamics in decision-making situations and can be expected to take appropriate actions to suit local conditions. This is particularly true in the case of large and widely dispersed units,

• affords prompt actions and provides flexibility.

As seen above, both are beneficial, but each one is appropriate for specific conditions and situations. The option is to be exercised at two levels :

• in respect of different types of decisions which vary in importance,

• the contingencies and capabilities of managers in the total context of the organisation.

Strategic decision-making and control can be centralised. Routine operational matters can be delegated and decentralised. Large organisations with widely dispersed units find a greater need for delegation.

ii) Formal or Informal

Formalisation refers to establishing written policies, procedures, rules etc. which prescribe the do’s and dont’s. As organisations grow, formalisation grows. Formalisation renders activities more predictable in a desired direction and facilitates coordination and control. In large organisations where it is no longer possible to retain high degree of centralised control, formalisation helps to retain consistency and continuity by restraining the negative effects of delegation and decentralisation. Formalisation is appropriate for large organisations operating in conditions of stability. But, in today’s fast changing environments, complete formalisation may not be desirable and practicable. Excessive formalisation vitiates the climate for initiative and employee freedom in performance, results in employee resistance and may even become counterproductive.

Formalisation can be effective in so far as policies, procedures, and rules are flexible enough and reviewed periodically to make them appropriate to current changing situation.

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iii) Direct or Indirect

There are two ways of controlling. One way is to supervise subordinates’ activities closely, trace deviations to the persons responsible and get them to correct their practices. This is called indirect control. The other way is to develop high quality managers who will properly understand and apply managerial principles, functions, techniques and philosophy, make few mistakes and initiate corrective actions, wherever necessary, themselves. This is called direct control. The higher the quality of managers and their subordinates, the less will be the need for indirect controls.

Exercising close supervision through indirect controls adds to overhead costs and reduces employee motivation. Modern management practices call for a greater degree of ‘self control’ (which in effect means direct control) by those who perform work. With the revolution in information technology using computers, control can be exercised through real-time information i.e., gathering information on what is happening as events are occurring. This has made it easy for organisations to combine direct controls with indirect controls. But here indirect control is exercised not through close personal supervision, but through modern technology and hence several of the negative features of close personal supervision of superiors such as infringement on freedom of operation and subjectivity in evaluation are involved.

Direct control hastens corrective actions, lightens the burden caused by indirect control and subordinates feel less concerned about superior’s subjectivity in rating their performance because in indirect control one would feel a close relationship between performance and measurement.

13.6 STRATEGIES OF CONTROL

John Child discussed four types of control strategies in his book “Organisation : A Guide to Problems and Practice”. He stressed that any strategy will utilise one or more of the features listed under the control heads below :

1) Personal centralised control

1) centralised decision-making

2) direct supervision

3) personal leadership : founded upon ownership or charisma, or technical exercise

4) reward and punishment reinforce conformity to personal authority

2) Bureaucratic control

1) breaking down of tasks into easily definable elements

2) formally specified methods, procedures and rules applied to the conduct of tasks

3) budgetary and standard cost-variance accounting controls

4) technology designed to limit variation in conduct of tasks with respect to pace, sequence and possibly physical methods

5) routine decision-taking delegated within prescribed limits

6) reward and punishment systems reinforce conformity to procedures and rules

3) Output control

1) jobs and units designed to be responsible for complete outputs

2) specification of output standards and targets

3) use of ‘responsibility accounting’ systems

4) delegation of decisions on operational matters : semi-autonomy

5) reward and punishment linked to attainment of output targets

4) Cultural control

1) development of strong identification with management goals

2) semi-autonomous working : few formal controls

3) strong emphasis on selection, training and development of personnel

4) rewards oriented towards security of tenure and career progression 177

1) Personal centralised control : This strategy is usually adopted in small owner-managed enterprises. Control is centralised in the proprietor or chief executive who combines the rights of ownership with one’s unique personal qualities and expertise. In such a system reward and punishment are based more on loyalty to the leader than competence. The system makes it easy to breed favouritism and distorts feedback so vital for control.

2) Bureaucratic control : This strategy is the most common feature in large organisations in both private and public sectors. The main thrust of bureaucratic control strategy is to ensure predictability through the specification of how people in the organisation shall behave and carry out their work. Formalisation in the sense of written definitions of jobs and procedures is the most characteristic feature of the bureaucratic control strategy. Division of work in modern industrial organisations lends itself to simplification and standardisation. The focus in highly bureaucratic organisations is to seek compliance and ‘keeping your nose clean’. Rules, then, become more important than goals. Compliance results in job security and other benefits and non-compliance leads to sanctions and punishments.

The accounting control systems are perhaps the best examples of bureaucratic control strategy. One advantage of bureaucratic control strategy is that the delegation becomes easy in such systems. Managers can easily delegate without losing control over what is going on so long as such delegation occurs within formalised limits to discretion.

3) Output control : This strategy is appropriate in case of activities where it is easy to identify tasks which are complete in themselves and their outcomes measurable in definite terms. Common criteria of achievement, applied to individuals or groups, product lines and whole units respectively, are quantity of items processed, value added, profitability, etc. Once outputs or criteria for overall achievement have been identified, it is possible for management to specify output standards and targets. Reward and punishment systems can be linked with actual performance vis-à-vis standards and targets. Measurement is the most important activity in the job of a manager. It is also one of the weakest areas. Output control strategy becomes relatively difficult to apply in such office jobs where the relationship between effort and outcome is not easy to establish. In production jobs, on the other hand, output control is easy and effective. Once output standards are agreed upon mutually by the management and work group or individual work, it is easy to grant semi-autonomy to the worker or work group and hold the worker or work group responsible for the output. Thus output control strategy too, like bureaucratic control strategy, facilitates delegation and at the same time is free of negative features of bureaucratic control.

One major problem with output control strategy, however, is the possible resistance from work groups for improving the methods of working, norms of output, etc. Thus, it can even stand in the way of introducing technological changes and introduction of improvements based on work study and work simplification. The other major and practical problem is related to establishing suitable and agreeable measures of output.

4) Cultural control : This strategy refers to an approach of maintaining control by ensuring that members of an organisation accept as legitimate, and willingly comply with, the managerial requirements. This requires strong professional identification and high degree of loyalty to the organisation. To the extent that employees and subordinates in any organisation accept management’s right to give executive instructions, one may say that a degree of cultural control already exists. This is reinforced further through conscious efforts to develop this pragmatic effort into a more enthusiastic support for management’s purposes and organisational goals. According to John Child “Cultural control combined with personal autonomy to follow strongly internalised norms of competence and conduct has long been the mark of the professional”. Professionals resent administrative controls. They accept controls comparable with the mode of self-control within agreed cultural parameters worked out through discussion and negotiation. Experiments in ‘autonomous work groups’, ‘quality circles’ and ‘quality of work life programmes’ are examples in this direction. Cultural control fosters closer identification with organisation and induces high degree of motivation towards result oriented behaviour. This type of control may prove to be an apt strategy in hospitality and tourism organisations.

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Check Your Progress-1

1) Discuss the various methods of control.

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

2) What kind of strategies are used for control ?

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13.7 DELEGATION OF AUTHORITY AND PROBLEMS

The process by which authority passes from one managerial level to another is known as delegation. As organisations grow in size and complexity, no one person can perform all the tasks or exercise all the authority that is needed to accomplish goals. Delegation of authority is not the same as division of work. As Henry Fayol pointed out : “Division of work permits reduction in the number of objects to which attention and effort must be directed and has been recognised as the best means of making use of individuals and of groups of people”.

Delegation of authority denotes the superior vesting decision-making power in his or her subordinate. No one can delegate an authority which one does not have.

Delegation is one of the most important skills a manager must possess. The overworked managers are often those who do not know how to delegate and they lack the skill to get results through others. An individual can perform limited work in a day, all by himself or herself. But through delegation – through dividing the load and sharing one’s responsibilities with others – one can accomplish much more. No manager and no organisation can run smoothly and effectively without delegation.

The amount of delegation marks the effectiveness of the manager and influences the relationship between the superior and the subordinate.

Delegation is the process where a manager divides the work assigned to him or her so as to get help from others in accomplishing the same. It involves the following four steps that are indivisible :

• determination of results expected,

• assignment of tasks,

• delegation of authority for accomplishing these tasks, and

• exaction of responsibility for their accomplishment.

Looked at differently, these four steps have three elements : responsibility, authority and accountability. Delegation is the entrustment of responsibility and authority to another and the creation of accountability for performance. Let us briefly consider these three elements :

i) Responsibility : Responsibility refers to the activities which must be performed to carry out the task assigned. Responsibility can be delegated.

ii) Authority : Authority refers to the powers and rights entrusted to enable performance of the task assigned or delegated. Certain authority is imperative to shoulder a given responsibility. In organisations people derive authority mainly from two sources : a) position and b) personal. Position authority is related to powers of decision-making, reward and punishment. Personal authority refers to the expert knowledge and certain qualities which are part of the personality of an individual 179

manager. Position authority can be delegated, but not personal authority. Authority could be formal or informal. Here we refer to formal authority that is clear, structured and communicated to all.

ii) Accountability : Accountability is the obligation to carry out responsibility and exercise authority as per established standards or norms. It is an obligation to account for, and report upon, the discharge of responsibility or use of authority. Accountability can not be delegated. The person who delegates continues to be responsible to his or her superior for what had been delegated by him or her.

Since accountability cannot be delegated, the accountability of superiors for the acts of their subordinates is absolute. By the same token, we see that the delegatee is accountable to the delegator to the extent he or she is delegated responsibility and authority. For example, if a tour manager (escort) is not given the responsibility to instruct the driver of a tourist coach, he or she cannot be held accountable for the driver’s proficiency.

While accountability always moves upward, responsibility and authority move downward in a hierarchy. A person can be accountable only to one superior for delegated responsibility and authority. Accountability is easy to establish if the standards and measures of performance are predetermined.

So far we have discussed about formal delegation in the exercise of authority defined by organisational role. Formal delegation is effective to the extent of the acceptance and respect for formal authority.

Informal delegation : It occurs because people want to do something on their own and not because they are told to do. It cuts red tape. It is something that is not formally required to be done. When there is problem in the exercise of formal authority, informal delegation may become handy.

Bottom-up-delegation : Delegation takes place, in fact, not to the extent delegated, but to the extent that the subordinate is willing to carry out the orders received. It may be possible to enforce willingness to do the job itself, but not to comply with the standards of performance established by supervisor. In large organisations, informal group leaders, without formal authority, assume authority to restrict output and workers accept such informal delegation. The people in the group will bring down production to the level they consider fair rather than comply with the orders of their superior.

Lateral Delegation : In modern organisations, few jobs are independent and teamwork may result in members of a group entrusting, informally, their responsibility and authority to others in the group at their level. The process of entrustment that occurs when teamwork develops among members of a group is called lateral delegation.

Delegation is not without problems and we shall examine here four key problems in this regard :

• What to delegate ?

• How much to delegate ?

• How far down to delegate ?

• How to deal with employees resistance to accept delegation ?

i) What to delegate ?

If a manager does not delegate, he or she will end up doing what the subordinates must be doing. On the other hand if one delegates what one should be doing himself or herself, one’s leadership position would be in jeopardy and there would be conflict among subordinates.

The first step in effective delegation is for the manager to analyse the job and to determine, in principle, what should or should not be delegated. No manager can effectively delegate responsibility and authority for initiating and making final decisions on planning, organising, coordinating and controlling the activities and positions that report to him or her. Such responsibility and authorities should be reserved for his or her own performance. A large part of the work in every management position consists of activities that are routine and repetitive. These lend themselves readily to delegation. Once delegated these form the main tasks that the subordinates perform.

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ii) How much to delegate ?

Usually the dilemma is how much authority to delegate than that of responsibility. A salesman appointed to sell the products of the company should have the authority to approach customers in the name of the company, offer them the products for sale at a certain price and assure growth and delivery. Beyond this minimum authority, the supervisor should decide on other matters, if any, that arise like whether the salesman can rent a car for commuting, whether the salesman can hire people to assist him, whether the salesman can offer discounts or credit. The authority of the salesman, on each of the probable issues, needs to be clarified preferably before he is asked to shoulder the responsibilities. While one can have rules and procedures laid down for routine questions that arose in the past, as and when new questions crop up prompt decisions need to be taken.

There is a popular misconception that “authority should always be delegated equal to responsibility”. But people with responsibility for coordination and control, usually withhold a part of the authority and delegate only such authority as is commensurate with responsibility.

iii) How far down to delegate ?

To what levels in a hierarchy can responsibility and authority be delegated ? People who do the work should have the responsibility. Those with responsibility should have commensurate authority. Taken together, it means that it is necessary to delegate authority to all those who do the work at the operating levels.

iv) How to deal with Employee Resistance ?

An employee may resist accepting delegated authority for a variety of reasons :

• lack of proper job information,

• lack of skills, training, supportive tools and equipment or self-confidence,

• uncertainty about the authority vis-à-vis responsibility,

• lack of proper reward or sense of personal gain for the individual, and

• inertia and avoidance.

Managers have the formal authority to direct others, and can invoke reward and punishment systems to enforce this formal authority. But to exercise informal authority to delegate, they should earn the confidence and respect of their subordinates. To be sure it is imperative that managers check what their subordinates are capable of doing and remove the aforementioned inhibiting factors.

13.8 PREREQUISITES FOR EFFECTIVE DELEGATION

Delegation is an art, not a science. It depends on the personality, skills and attitudes concerning two actors : delegator (one who delegates) and delegate ( one who was delegated). The following are some of the essential prerequisites for effective delegation.

a) Climate of openness, trust and confidence among employees at all levels and a culture of team work and cooperation.

b) The two psychological hurdles in delegation, namely lack of faith in the competence of subordinates and fear that the subordinates may outshine them deter managers from delegating. The managers should not have any feeling of insecurity that by delegating they would be making themselves redundant.

c) Goals should be established and made clear : Every person in an organisation should know what his or her contribution to the organisation is. In accomplishing the goals, one can formulate the objectives of delegation too so that delegation is done with a purpose and becomes effective.

d) People who carry out work should have clearly defined responsibility and authority. Job descriptions or position guides should clearly state the objectives, responsibilities, relationships and limits of authority of each position. Clear definition of responsibility and authority at each position eliminates the scope for confusion that duplication and overlap in entrustment of duties would cause.

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e) Motivation is important because the manager who wants to delegate should be able to motivate people to do what he or she wants to do, willingly and enthusiastically.

f) Make delegation complete : Delegation is supposed to reduce a manager’s workload. But, if not properly done, it may increase the workload. There are often problems as to whether, at what stage and how often should the subordinate check back with the boss. The problem can be resolved if :

(i) the assignment is clear cut,

(ii) subordinate is told how the assignment will be coordinated and motivated by the boss,

(iii) the boss specifies to the subordinate at what stage, in what form and how often he or she should provide him or her with feedback on the progress, and the boss provides counselling and guidance.

(iv) once an assignment is delegated the boss should intervene only to provide guidance but not withhold his approval for specific actions involved in completing the task. To delegate complete assignment or task requires certain sense of faith and self-control on the part of boss in not intervening but giving counsel and advice. Likewise, the subordinate should exercise discipline in making choice of a course of action in carrying out the task. Delegating complete tasks relieves managers from detail and provides opportunities to subordinates to learn to be independent and feel a sense of fulfilment in work.

g) Train : Managers should help in preparing their subordinates to accept delegation. Such need is all the more felt in case of subordinates who show a tendency to depend on the bosses than be independent. Managers should, therefore, carefully identify the weaknesses, develop potential and attitudes conducive to accepting and making a success of delegated authority. Training in delegation should include appraisal of current performance, counselling for improvement and coaching on the job.

h) Establishment controls : Even after delegation the manager continues to be accountable. So there is need for him or her to control without limiting the effectiveness of delegation. The more complete is the delegation the more comprehensive should the system of control be. Self-control is the best in establishing controls for delegation. The person to whom responsibility and authority are delegated should participate in setting standards that are to measure his or her performance so that one can understand and accept them.

13.9 CENTRALISATION, DECENTRALISATION AND COORDINATION

Centralisation and decentralisation are extensions of delegation. Delegation refers mainly to entrustment of responsibility and authority from one person to another. Down ward transfer of responsibility and authority at individual level is referred to as delegation and when the same is done organisation-wide in a systematic way it is known as decentralisation. Decentralisation refers to systematic delegation of authority in an organisation. An organisation is considered centralised to the degree that authority is not delegated, but concentrated at higher levels of management. In juxtaposition, to the degree that authority is delegated, an organisation is considered decentralised. As Henry Fayol puts it, “Everything that goes to increase the importance of the subordinate’s role is decentralisation, everything which goes to reduce it is centralisation”.

The terms centralisation and decentralisation are meaningful only in a relative sense. No organisation can operate on a completely decentralised basis since all authority to make decisions would rest at the lowest managerial levels and make it difficult to achieve coordination. Similarly, except very small firms, no organisation can be completely centralised.

Factors Influencing Centralisation

An organisation or a manager needs to have some reserve authority to integrate the efforts in an organisation and achieve the desired degree of coordination and control required to accomplish the specific goals. Centralisation also facilitates personal leadership when the company is small, to provide for integration and uniformity of action, and to handle emergencies.

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Factors Influencing Decentralisation

Decentralisation becomes important and imperative when an organisation grows bigger. The main purpose of decentralisation is to ease the burden of top executives. The warning signals that point to a need for decentralisation can be had from the problems in planning and control of operations, neglect of proactive strategies in preference to routine fire-fighting operations, proliferation of personal staff around top executives and mushrooming of committees. Decentralisation facilitates diversification and divisionalisation and is in fact a necessary accompaniment, if not a prerequisite.

Decentralisation also encourages and motivates managers towards better performance because it affords them opportunities to take more important decisions and gives them the flexibility and autonomy in their functioning.

How to Decentralise ?

Clearly, as organisations grow, expand or diversify, the need for decentralisation increases. The moot question then is, ‘How to decentralise’?

The first step in decentralisation, though it may sound paradoxical, is centralisation. As in the case of delegation, here again, there is need for some reserve authority for coordination and control at the nerve centre of the organisation, i.e., the corporate headquarters. Planning, overall guidance and direction for each subunit or division or department of the organisation needs to be formulated, coordinated and controlled at the headquarters.

If the organisational activities are somewhat homogeneous (say, confined to one industry such as hotels) it is relatively easy to develop sound policies and control systems for all the decentralised work units or profit centres in the organisation. But when the organisation is highly diversified and deals in a variety of businesses such as hotels, tour operators and travel, it is difficult to develop uniform policies and control systems for all the work units or profit centres. Thus the design of the administrative structure should take into account the needs of the organisation and of its operating units as competitive units in their own markets.

Effective decentralisation requires a balance of the necessary centralisation of planning, organisation, coordination and control, while decentralised units should be developed as autonomous business units operating as individual profit centres, with provision for effective coordination and communication. The central management team should have a well-established system for measuring, recording and reporting operating results.

Organising involves not only division of jobs into separate work units through division of labour, decentralisation and delegation, but also relating the work units – be they divisions or departments – to ensure that they put together and work in harmony. Linking or relating various parts and activities of an organisation to one another is known as coordination. In the smallest of the smaller organisations where all activities are performed by one or two persons in just one unit, there is little need for coordination. But, as activities spread and organisations grow large and complex the need for coordination becomes imperative and assumes greater significance. Lack of coordination is a common complaint against most large organisations. “The right hand does not know what the left hand is doing” is an often heard reaction among employees, customers and suppliers. Lack of coordination results in break-down of operations, delays, wastages and frustrations.

Why is Coordination a Problem ?

Any organisation will have certain objectives. People are grouped in an organisation, usually, into separate departments such as production, finance, marketing, personnel, etc. Each department is allocated different tasks. One deals with production of goods and another deals with their distribution. One department may plan, a second may develop new products and a third carries out actual production. There are a number of service functions such as finance, maintenance, materials, personnel, etc., each with a different task, though all are collectively directed to accomplish the organisational goals. The process of internal specialisation and task differentiation grows with the overall size of the organisation. Over the years, modern organisations acquired centrifugal tendencies, with individuals and departments straining to pursue different paths toward functional autonomy. As a sequel, loyalty of managers today is generally more

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toward their own specialisation or department than to the organisation. Within the departments there may be a high degree of homogeneity and commitment to the functional tasks but the more such homogeneity and commitment the greater the problems in achieving integration between and among departments.

Such problems accumulate and aggravate in situations where allocation of different objectives, targets and resources to departments causes perceptual difficulties and misunderstanding. Sometimes the reactive approaches of top management may reinforce the centrifugal tendencies and quest for functional autonomy than promote what is known in current management literature as “superordinate goals” that promote and preserve awareness of an overriding organisational objective. For example, in one organisation the Chairman of a company issued directives to plant managements that they should stop overtime payments with immediate effect. Three months later, when the Chairman noticed that overtime is still being paid in some departments he issued another directive, this time to the finance department, not to make overtime payments even if the time managers authorise such payments. This new directive strained the relations between finance and production departments.

When each of the several departments in an organisation have different objectives to follow, some of them at least may conflict with those of other departments in the day to day operations. The vigorous pursuit of sectional objectives continues if reward systems encourage such behaviour.

13.10 WARNINGS ON INTERDEPARTMENTAL CONFLICT

Common warning signs of interdepartmental conflict include the following :

a) Persistent conflict between departments : When the same matters of conflict keep recurring between or among departments, conflict becomes embedded and persistent. If this is not diagnosed and dealt early enough, the departments involved start accepting it as normal and the outcomes arising out of such conflict tend to be taken for granted.

b) Proliferation of committees : While committees are constituted in organisations to bring about effective coordination on important issues affecting more than one department, their proliferation may paradoxically reveal the basic weakness in the organisation, viz., lack of coordination. Proliferation of coordination committees fudge inter-departmental disputes and delay the resolution of inter-departmental conflict.

c) Overloading of top management : One common tendency among departmental heads is to expect the general manager or the chief executive to intervene in matters requiring coordination between departments. If issues are not resolved often enough by departmental heads among themselves, the top management will be preoccupied more with such matters than deal with their main function of policy, planning and relationships with important constituents outside the organisation. Top management overload is another sign of inadequate coordination.

d) The ritual of ‘red tape’ : Coordination can take place through use of formal procedures. For example, the procedure may require that the two concerned departments should consult each other on certain specified matters. But managers may not follow this or take it seriously. When procedures are not followed or cut short, problems may aggravate. The purpose of adhering to procedures is not to perpetuate the red tape as a ritual. Where procedures are redundant or inappropriate, they need to be modified, than being ignored.

e) Empire-building : Once coordination is provided at a level higher than the departments, the persons performing the role of coordinators may like to perpetuate the institution of coordination and strengthen their role by consciously endeavouring to avoid direct cooperation and coordination among departments. Where coordination seeks to monopolise and block initiatives at departmental level to achieve harmony in goals and actions at peer level, the writing on the wall is clear.

f) Complaints from constituents : Lack of inter-departmental coordination leads to unsatisfactory performance and affect the quality of service and relations between the organisation and its constituents like the customers, suppliers, Government, etc. When different departments of an organisation provide conflicting information, it affects the credibility of the organisation.

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13.11 APPROACHES TO COORDINATION

Interdepartmental cooperation and coordination are imperative for the success of any organisation. Coordination is easy, if the degree of differentiation among different departments is less. Successful companies evolve effective mechanisms and procedures to strike a balance between the requisite degree of differentiation and requisite degree of inter-dependence among departments/functions.

James D Thompson classified internal interdependence of work units/functions into three types : Pooled indirect interdependence, sequential (one-way) inter-dependence and reciprocal (two-way) interdependence.

Pooled Indirect Interdependence is a situation where the activities of different departments or divisions are not directly dependent on each other. For example, the advertising department of a hotel is essentially independent from front office and house keeping departments. Yet, they are inter-dependent in the sense that each is part of the same enterprise. Failure of either could threaten the entire company and thus other departments. Each department makes a discrete contribution to the organisation and is, in turn, supported by it. The degree of coordination required here is minimum.

In cases where the outputs from one department become the inputs for the other, sequential (one-way) interdependence exists.

Reciprocal (two-way) interdependence occurs when output from one becomes input for the other and vice-versa. For example, such two-way interdependence occurs between maintenance and operations units in a tourist transport company. Here close coordination is needed because problems in either will be quickly felt by the other.

Thompson lists three main categories of integrated mechanisms to achieve coordination :

a) Integration through standardisation. This involves establishing rules or procedures that channel the actions of each job holder or department into a direction consistent with the actions of others.

b) Plans and schedules can be established to integrate the actions of separate units. Integration through planning is somewhat more flexible than standardisation in that the plans can be modified quickly.

c) Integration can also occur through “mutual adjustment”. This involves transmission of information directly between people and the mutual adjustment of their actions in the light of that information.

The traditional bureaucratic approach which is common to most of our organisations relies heavily on coordination through standardisation and planning. Three mechanisms are available for the purpose. Firstly, an elaborate system of rules and procedures is worked out to deal with recurrent problems. Secondly, non-routine problems are handled by referring up to the hierarchy. Where matters of policy and procedure requires some deliberation; committee meetings are held. These committee meetings are scheduled at regular intervals in stable conditions. They are also held at short notice, if the need arises.

The advantage of a bureaucratic system is that it operates smoothly and effectively in normal and predictable conditions. But it is inadequate to meet the requirements of an organisation in an ever changing turbulent environment. Often managers complain, “If we had to go through the formal channels, we would never be able to get things done on time”. This could well be an exaggeration. Carefully structured bureaucratic systems of formal coordination minimise the dependence on informal systems. There is need for a balance rather than excessive reliance on formal or the informal system.

John Child lists the various forms of coordination through lateral relationships as below in order of increasing sophistication, difficulty in design and overhead cost. Usually managements adopt the more sophisticated mechanisms as additions to rather than simply substitutes for those mentioned higher up the list :

a) Bring about direct contact between managers or employees who share a problem.

b) If departments are required to have a substantial amount of contact, one or more of their staff will have special responsibility to liaise with their counterparts in other departments.

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c) In case of special situations or problems where several departments need to conflict until the matter is resolved, temporary task forces would be set up to deal with it, with members from those departments.

d) If such inter-departmental problems recur, permanently constituted task forces or committees provide the coordination.

e) If lateral relationships become a problem, a coordinating department may be created to perform the task of coordinating.

f) Another method of coordination is through creation of product managers in multi-product organisations with overall responsibility to coordinate operations required to market, develop, produce and service a product.

g) The most elaborate method is to establish a matrix organisation. Here, an attempt is made to combine integration of personnel within functionally specialised departments with their integration around a common contribution to products.

Van de Ven et al discuss three principal modes of coordination :

• Impersonal mode, i.e., coordination through setting programmes and procedures

• Personal mode, i.e., coordination through feedback

• Group mode, i.e., committee, task force, meetings, etc.

The choice of the modes is dependent upon conditions of certainty, problems of inter-dependence and size of work units (in terms of number employed). As uncertainty increases, group mode becomes appropriate since coordination requires discussions at lateral levels in a hierarchy. As inter-dependence increases, there is greater need for personal and group modes. As the organiation grows large and complex, the structure needs to be more formal with greater stress on impersonal mode.

Whatever be the approach, wherever the organisation chooses to vest a manager in a coordinating role, it should ensure that he or she is given proper authority. Only then can the exercise influence meaningfully over departmental heads. There should be clarity about the role, responsibilities, authority and accountability. The coordinators should be non-controversial and acceptable to the departments or groups they are called upon to coordinate. Coordinators should have the resources and staff.

For effective inter-functional coordination and integration of departments with different goals and criteria of performance, there is need for a climate of openness and trust, the inter-personal relationships among employees, and the careful cultivation of open confrontation for resolving conflict through a process of mutual adjustment than aggression. Before inter-functional conflict reaches a point where it affects organisational performance, organisations should initiate such organisation development programmes as would promote teamwork and cooperation. The people in the organisation need to realise that, “united we stand, divided we fall”. This can occur, not so much by zealously cultivating narrow loyalties to one’s function and specialisation, but by developing superordinate goals for the entire organisation.

Check Your Progress-2

1) Discuss the pre-requisites for effective delegation. ……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

2) Discuss some common warning signals for inter-departmental conflict.

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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3) What are the approaches to coordination ?

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

13.12 LET US SUM UP

We have observed that control is the process of assuring the efficient accomplishment of enterprise objectives. It is the primary responsibility of every one who has responsibility for execution of plans. Controls should be based on plans and there is need for a structure to know where the responsibility lies. Controls should be appropriate, strategic, acceptable, objective and cost-effective.

The control process involves three steps : establishing standards, measuring performance and reinforcing success or correct deviations. Controls can be constant, periodic or occasional. As a matter of policy organisations may prefer control to the centralised or dispersed and delegated, formal or informal and direct or indirect. Large organisations need delegation, certain amount of formulisation and direct control systems. The control strategies can be classified as personal and centralised, bureaucratic, output oriented or cultural. The appropriateness of strategies varies from organisation to organisation.

We observed that delegation is one of the most important skills a manager must possess. It has three elements : responsibility, authority and accountability. There is need for balancing formal and informal delegation and the latter should reinforce the former. The key problems in delegation include : what, how and how far to delegate ? It is important to deal with employee resistance to delegation through counselling and guidance. We observed the distinction between delegation, decentralisation and centralisation. We also noted the factors influencing centralisation and decentralisation and the approach to decentralisation.

In the latter part of the Unit, we have examined the problem of inter-functional coordination, analysed the warning signs of conflict and studied the various approaches to coordination.

13.13 KEY WORDS

Accountability : Obligation to account for, and report upon the discharge of responsibility and/or use of authority.

Authority : Powers and rights entrusted to enable performance of task assigned

Budgetary Control : Measuring performance against plans and expected results expressed in numerical terms.

Centralisation : Centralisation of authority at higher levels of management.

Controlling : The managerial function of measuring and correcting performance of activities of subordinates in order to assure that enterprise objectives and plans are being accomplished.

Coordination : Linking or relating various parts and activities of an organisation to one another.

Direct Control : The concept that the most direct of all controls is to assure high-quality managers on the premise that qualified managers make fewer mistakes requiring other (or indirect) controls, perceive and anticipate problems, and initiate appropriate actions to avoid or correct for deviations.

Feedback : An informational input in a system transmitting messages of system operation to indicate whether the system is operating as planned. Information on operations is relayed to the responsible persons for evaluation.

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Feedforward Control : A control system that attempts to identify future deviations from plans, early enough to take action before the deviations occur.

13.14 CLUES TO ANSWERS

Check Your Progress-1

1) See Sec.13.4.

2) See Sec.13.6.

CheckYourProgress-2

1) See Sec.13.7.

2) Read Sec.13.9.

3) Base your answer on Sec.13.11.

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