Delegation of authority is one vital organizational process.

It is
inevitable along with the expansion and growth of a business
enterprise. Delegation means assigning of certain
responsibilities along with the necessary authority by a
superior to his subordinate managers. Delegation does not
mean surrender of authority by the higher level manager. It
only means transfer of certain responsibilities to subordinates
and giving them the necessary authority, which is necessary to
discharge the responsibility properly. Delegation is quite
common in all aspects of life including business. Even in the
college, the principal delegates some of his authority to the
vice-principal.
In delegation, an attempt is being made to have meaningful
participation and cooperation from the subordinates for
achieving certain well-defined results. Due to delegation, the
routine responsibilities of the superior are reduced. As a result,
he concentrates on more urgent and important matters.
Secondly, due to delegation, subordinate becomes responsible
for certain functions transferred to him. Delegation is a tool,
which a superior manager uses for sharing his work with the
subordinates and thereby raising his efficiency.

Delegation is not a process of abdication. The person who

delegates does not divorce himself from the responsibility and
authority with which he is entrusted. He remains accountable
for the overall performance and also for the performance of his
subordinates. Delegation is needed when the volume of work
to be done is in excess of an individual's physical and mental
capacity.

To create a team of experienced and matured managers for

the Organisation. It acts as a technique of management and
human resource development.
To improve individual as well as overall efficiency of the
Organisation.
Delegation of authority is a process in which the authority and
powers are divided and shared amongst the subordinates.
When the work of a manager gets beyond his capacity, there
should be some system of sharing the work. This is how
delegation of authority becomes an important tool in
organization function. Through delegation, a manager, in fact,
is multiplying himself by dividing/multiplying his work with the
subordinates. The importance of delegation can be justified by
1.

Through delegation, a manager is able to divide the

work and allocate it to the subordinates. This helps in
reducing his work load so that he can work on
important areas such as - planning, business analysis
etc.

2.

With the reduction of load on superior, he can

concentrate his energy on important and critical
issues of concern. This way he is able to bring
effectiveness in his work as well in the work unit. This
effectivity helps a manager to prove his ability and
skills in the best manner.

3.

Delegation of authority is the ground on which the

superior-subordinate relationship stands. An
organization functions as the authority flows from top
level to bottom. This in fact shows that through
delegation, the superior-subordinate relationship
become meaningful. The flow of authority is from top
to bottom which is a way of achieving results.

4.

Delegation of authority in a way gives enough room

and space to the subordinates to flourish their
abilities and skill. Through delegating powers, the
subordinates get a feeling of importance. They get
motivated to work and this motivation provides
appropriate results to a concern. Job satisfaction is an
important criterion to bring stability and soundness in
the relationship between superior and subordinates.
Delegation also helps in breaking the monotony of the
subordinates so that they can be more creative and
efficient.

Delegation involves the following three basic elements:

Assignment of duties to subordinates,
Granting of authority to enable the subordinates to perform
the duties assigned, and
Creation of obligation on the part of subordinate to perform
duties in an orderly manner.

squareDefinitions of Delegation of Authority

According to F.C. Moore, "Delegation means assigning work to

the others and giving them authority to do so."

Delegation of authority is not only helpful to the

subordinates but it also helps the managers to
develop their talents and skills. Since the manager
get enough time through delegation to concentrate
on important issues, their decision-making gets
strong and in a way they can flourish the talents
which are required in a manager. Through granting
powers and getting the work done, helps the manager
to attain communication skills, supervision and
guidance, effective motivation and the leadership
traits are flourished. Therefore it is only through
delegation, a manager can be tested on his traits.

According to O. S. Miner, "Delegation takes place when one

person gives another the right to perform work on his behalf
and in his name and the second person accepts a
corresponding duty or obligation to do that is required of him."
According to Louis Allen, "Delegation is the dynamics of
management, it is the process a manager follows in dividing
the work assigned to him so that he performs that part which
only he, because of his unique organizational placement, can
perform effectivelly, and so that he can get others to help him
with what remains."

squareObjectives of Delegation of Authority

To reduce the excessive burden on the superiors i.e.,

executives and managers functioning at different levels.
To provide opportunities of growth and self development to
junior executives.

5.

Delegation of authority is help to both superior and

subordinates. This, in a way, gives stability to a
concerns working. With effective results, a concern
can think of creating more departments and divisions
flow working. This will require creation of more
managers which can be fulfilled by shifting the
experienced, skilled managers to these positions. This
helps in both virtual as well as horizontal growth
which is very important for a concerns stability.

Therefore, from the above points, we can justify that

delegation is not just a process but it is a way by which
manager multiples himself and is able to bring stability, ability
and soundness to a concern.

Therefore every manager,i.e.,the delegator has to follow a

system to finish up the delegation process. Equally important
is the delegatees role which means his responsibility and
accountability is attached with the authority over to here.
Relationship between Authority and Responsibility
Authority is the legal right of person or superior to command
his subordinates while accountability is the obligation of
individual to carry out his duties as per standards of
performance Authority flows from the superiors to
subordinates,in which orders and instructions are given to
subordinates to complete the task. It is only through authority,
a manager exercises control. In a way through exercising the
control the superior is demanding accountability from
subordinates. If the marketing manager directs the sales
supervisor for 50 units of sale to be undertaken in a month. If
the above standards are not accomplished, it is the marketing
manager who will be accountable to the chief executive officer.
Therefore, we can say that authority flows from top to bottom
and responsibility flows from bottom to top. Accountability is a
result of responsibility and responsibility is result of authority.
Therefore, for every authority an equal accountability is
attached.

Delegation of authority is the base of superior-subordinate

relationship, it involves following steps:1.

Assignment of Duties - The delegator first tries to

define the task and duties to the subordinate. He also
has to define the result expected from the
subordinates. Clarity of duty as well as result
expected has to be the first step in delegation.

2.

Granting of authority - Subdivision of authority

takes place when a superior divides and shares his
authority with the subordinate. It is for this reason,
every subordinate should be given enough
independence to carry the task given to him by his
superiors. The managers at all levels delegate
authority and power which is attached to their job
positions. The subdivision of powers is very important
to get effective results.

3.

Creating Responsibility and Accountability - The

delegation process does not end once powers are
granted to the subordinates. They at the same time
have to be obligatory towards the duties assigned to
them. Responsibility is said to be the factor or
obligation of an individual to carry out his duties in
best of his ability as per the directions of superior.
Responsibility is very important. Therefore, it is that
which gives effectiveness to authority. At the same
time, responsibility is absolute and cannot be shifted.
Accountability, on the others hand, is the obligation of
the individual to carry out his duties as per the
standards of performance. Therefore, it is said that
authority is delegated, responsibility is created and
accountability is imposed. Accountability arises out of

cent history has shown that construction firms are not too big
to fail even though they may have annual revenues ranging
from hundreds of millions to several billions of dollars.

While there are bonding safeguards to protect project owners

and others when a contractor fails, there are no such
safeguards for the contractors themselves. Such an event
affects not only the employees and shareholders of the firm
that fails, but also the industry as a whole. During the past few
decades, there have been dozens of large contractors that,
after many years of growth and apparent prosperity,
experienced notable financial disasters, resulting in
bankruptcy or a reincarnation of the business in a much
different form.

WHY DO SUCCESSFUL CONTRACTORS SELF-DESTRUCT?

The industry has regularly witnessed smart leaders
making what appear to be the same fatal mistakes
others have made before them. Frequently cited
mistakes are:

STRATEGIC
responsibility and responsibility arises out of
authority. Therefore, it becomes important that with
every authority position an equal and opposite
responsibility should be attached.

Unrealistic growth, over expansion, unfamiliar new markets or

entry into new types of construction
Volume obsession

Unrealistic promises, bad contracts or poor project selection

ORGANIZATIONAL
Insufficient capital or profits
Lack of business knowledge, poor financial management, poor
sales skills or inadequate marketing
Poor leadership or poor leadership transfer
Project losses or poor field performance
Owner court battles or owner bankruptcy
UNCONTROLLABLE
Industry or economic weakness
Banking and surety changes
While helpful, this list of mistakes provides insufficient clarity
regarding the causal roots of failure. In order for firms to have
stronger preventive guidance, leaders need to understand the
causes behind the causes. There are four major categories.

GENERAL ECONOMIC CONDITIONS

Specific economic forces affect contractors through many
paths, including bonding issues, demographics, government
policy, tax law, consumer confidence and even material
shortages. For example, contractors may blame their financial
disaster on a lack of available work due to a suppression of
construction plans that is caused by an increase in interest
rates. The fact that not all contractors fail during difficult
economic times indicates that there are other, more relevant
causes. In fact, many seasoned industry executives
emphatically reject the notion that luck or other extraneous
forces are responsible for a companys decline. Nonetheless,
research indicates that these external factors quicken the pace
of demise for companies that suffer in other areas of concern.

THE NATURE OF THE CONSTRUCTION INDUSTRY

Many of the characteristics that are unique to the construction
industry are key contributors to a contractors financial
difficulties.

Leverage. Leveraging working capital or leveraging equity is

what is meant by leverage in the construction industry. High
leverage for contractors typically refers to the amount of
revenue pushed through the pipeline compared to the
underlying equity base or level of working capital. Contractors,
especially in the building market, can do a large amount of
business with a little bit of equity.
Workforce issues. The construction industry is a people
business, and without the right people in the right places,
contractors are bound to get into trouble. Where are these
people going to come from, and where will a construction firm
find technically qualified people to do the work in the pipeline
now and in the future?
The cyclical nature of the industry. Construction activity rises
and falls faster than the overall economy. Such fluctuations
lead to being over-committed or scrambling for work to keep
people busy. Both can lead to problems.
The hard-bid process. The way work is procured in a large part
of the construction industry is different from the way most
businesses work. The owner wants a building and wants to
know exactly how much it is going to cost before the project is
built. Increasing complexity of projects, fluctuating materials

costs and labor concerns all conspire to make this a dangerous

get-work practice for contractors. While the predominance of
this method is changing with new delivery methods, it is easy
to see how contractors still get into trouble here.
Project timing. Dictated by owners schedules, contractors
have little control over project start dates. Sometimes project
opportunities become available at the same time, leading to
over-commitment of company resources. In other cases,
project start dates slip, creating staffing and financing
challenges for the contractor. Backlogs can fluctuate widely. A
related issue is long project durations, which can result in
project impacts due to material, labor, weather and related
issues.
Derived demand. Most businesses think they have the ability
to affect the demand for their service or product. If a company
wants more business, then it conducts more marketing to
create the demand for its product or service. On the other
hand, contractors are always responding to opportunities.
Ninety-nine percent of the work done in the construction
industry comes from contractors responding to available work.
Therefore, contractors are at the mercy of the work that comes
their way.
The hyper-competitive construction industry. Construction is an
easy business to get into; low barriers to entry and pricedriven competition lead to a very competitive industry. In
addition, when every project is unique, contractors dont get to
practice. The learning curve can be expensive and not all
learning is portable to the next project.
CULTURE AND SYSTEMS OF THE ORGANIZATION
Corporate culture issues have gained recognition in recent
years as being more important than historically thought. This
area is especially notable when clashes in corporate culture
are cited as leading to a companys end. Ethical and moral
issues are some of the more serious areas of corporate culture
failures, but a companys culture also affects decisions about
its strategy and hiring needs. The strength of the companys
culture dictates not only its ability to hold firm on the practices
needed to maintain a financially disciplined organization, but
also its capacity to change and meet the evolution of the
market and the competition.

Financial discipline. Some contractors are not good business

people. They are good builders, but they dont give the
financial side of the business the attention it deserves. Lack of
financial discipline generally means the business is not being
managed like a real business. For example, at some firms the
financial people arent involved in decision-making; instead,
they are relegated to bookkeeper status with the thinking that
the only real work of a construction business is construction.
In addition, companies that do not maintain adequate capital
reserves are running on the razors edge. One misstep can
cause them to fall into a cycle of failure. This management
aspect is a critical area that affects the long-term sustainability
of a contractor. It is often sabotaged by other corporate and
personal demands, leading to the companys demise.
Decision-making. Many contractors do not have a well-defined
process for making go/no-go decisions when deciding whether
to take on a project. In a highly competitive business, one bad
project can mean an unprofitable year, or worse.
Succession planning. Ensuring that a strong leader is replaced
with another strong leader when the time is right assures the
continuity of the business and future growth. This does not
happen often enough in the construction industry.

Innovation. There is often a sense that construction is a

business that never changes. If that was ever true, it isnt
anymore. Innovation is required to win work and to build it
profitably.
Strategic planning. Many construction companies do strategic
planning, but dont have very good strategies. They tend to be
so caught up in the process that they forget that their task is
really to determine what kind of company they are and where
the company should be headed. Instead, their strategic
planning becomes an operational fix-it list.
THE MIND OF THE CONTRACTOR
Most contractors are by nature driven to grow their business.
They want to build the biggest job or perform the most
volume. They readily buy into the if youre not growing,
youre dying mentality. If the firm is public, the market
expects it to grow. Part of that expectation is the belief that
profits will grow along with revenues. In construction, this
result is often not the case.

Additionally, contractors often are rapid decision-makers who

sometimes act too quickly when a more deliberate approach is

needed. Most leaders in the construction industry came from

the operations side of the business. While this is a critical
background for a construction executive, the CEOs job is to
run the business, not the projects. A project focus to the
business can lead to a feast or famine mentality. Getting the
next project and building the backlog seems to overshadow all
other considerations frequently leading to taking the wrong
job for the wrong reasons.

In addition, construction is a high-risk industry, so it is not

surprising that those who venture into this business are numb
to its inherent risks. Many people outside the industry consider
it crazy that contractors would assume such risk compared to
the low margins gained. Yet, the people running construction
companies dont see it that way. Instead, they sign personally
for bank loans and bond guarantees thinking it is no big deal.
They believe they can control the risks. They have strong egos
and a can-do attitude. This supreme confidence can be a great
characteristic for a contractor, but it also can lead to the
downfall of the business.