Delegation of authority

When this week’s blog post is published, I will be enjoying some vacation and may be slower to respond to comments.  The topic is loosely labelled “delegation of authority” and is a collection of thoughts and observations on the subject.

A quick blast through definitions and the basics.  Once an organization gets above a certain size it is impossible for one single leader to make all the decisions.  Even if it were possible, it is not ideal because the leader’s time is better served in other activities.  For this reason, companies delegate authority to make decisions and approve actions.  The general principle is to delegate down to the lowest appropriate level whilst ensuring that you have robust controls to mitigate risk.

I was recently thinking about a current work issue, and it helped create the following framework.  Objectives (i.e. what the organization is aiming for) can never be delegated.  These can be cascaded and supplemented, but direction of travel cannot be decided at any level of the organization without reference to the primary corporate objectives.  Strategy (i.e. how we intend to achieve the objectives) can be delegated, but approval of strategy can’t be because the organization needs to confirm that the strategy is in line with the objectives.  Execution and delivery against strategy can be delegated provided that a framework is in place to confirm it is successful.

The problems that emerge are either that the authority has been delegated when it shouldn’t have been, delegated to the wrong individual(s) or that the controls framework isn’t robust to mitigate the risks.  Let’s give an example.  If you are working on a big investment project which includes some large cost outlays, how should authority be delegated?  The investment case represents the strategy.  This will be worked on by numerous individuals but can only be signed off by senior management, that sign-off cannot be delegated.  However, the decision to secure a specific vendor or service provider can either be considered part of the strategy (if the whole project depends on it) or is part of the execution of the project and can be delegated to the project lead who would have the expertise and knowledge to define requirements.  The senior leaders are not close enough to the details to make this decision, but exercise control through the overall budget approval process and can approve recommendations if this is a core part of the strategy.  The project leader can’t exercise this authority on their own because the legal department will have a better understanding of whether the rights and obligations under the terms of the agreement align with company policies.  Separately, the Finance team will have a greater knowledge of whether the payment terms are consistent with available cash and can advise on the accounting treatment for the contract.  So, authority is often delegated and shared, and each delegated party has the required expertise to fulfil their roles.

If your organization believes that expenses, pricing, hiring or other routine process should be reviewed and approved by managers with a specific level of authority, it would be inappropriate to delegate these to a direct report or personal assistant.  The reason is that the systems of approval are a key part of the control framework and there are no other effective controls in place.  To delegate these would place too much reliance on trust.  If your company expects you to review and approve work-related expenses, and you don’t and there is a breach of policy, you will be held responsible for the breach.

Here are some issues I have observed with delegated authority.  Firstly, the leader delegating authority absents themselves completely from the approval process to the point that they can’t fulfil their role as leader.  When information comes to them, they pass it through, and the company proceeds under the misapprehension that a review has taken place.  This always ends in the same way with embarrassment for the leader.  On the other end of the scale, I once had a manager who chose to review the work of the department at the same time as their boss.  This may seem more efficient, but it usually results in the review meetings getting tied up in small details that could have been covered earlier in the process.  In most cases it isn’t a good look for the manager as their manager may start to wonder what value they are providing.

The other issues are regarding the effectiveness of those who have had authority delegated to them.  The worst case is when perceived power goes to their heads and they become gatekeepers or mini office tyrants.  This can be amusing to watch, but if there is favoritism and pettiness, it can get tiresome, erode morale and should be stamped out quickly.  Sometimes other team members choose not to respect the delegated authority and the employee finds it challenging to do the job they have been asked to do.  There is often some blame on both sides, but the leader is ultimately responsible for coaching and cajoling the team to make it work because if it doesn’t work, they will be unable to delegate when they need to.

Next week I plan to post about authenticity in the workplace.