the impact of delegation on a business

7.1 Organisational Structure – Delegation and Accountability

Learning objective

Explain how delegation influences performance, motivation and control, and how it is shaped by the formal features of an organisation’s structure. Relate this to the purpose and attributes of organisational structures required by the Cambridge International Business (9609) syllabus.

1. Relationship between Business Objectives and Organisational Structure

Businesses choose a structure that best supports their strategic aims. The syllabus expects students to link objectives with the purpose (e.g., flexibility, growth, intrapreneurship) and attributes (e.g., span of control, hierarchy) of the structure.

• Rapid product innovation → flat or matrix structure to speed decision‑making and encourage cross‑functional collaboration.
• Strict cost control and risk management → tall hierarchical structure that provides clear lines of authority and close supervision.
• Global expansion into distinct markets → divisional (geographic or product) structure so each division can adapt to local conditions while the corporate centre coordinates overall strategy.
• High‑risk, highly regulated environment → centralised structure where key decisions (e.g., compliance, safety) remain at senior level to ensure uniform standards.
• Need for intrapreneurship and flexibility → network/virtual structure that links independent units through technology, allowing rapid re‑configuration of resources.

2. Types of Organisational Structure

3. Reasons Structures Change

• Growth – new markets, products or increased volume require additional layers or new divisions.
• Delayering – cost‑reduction or speed‑driven strategies lead to fewer management levels.
• Diversification – entering unrelated industries often prompts a shift to divisional or matrix forms.
• Technological change – new IT/AI systems enable flatter or network structures.
• Mergers & acquisitions – integration of differing cultures and processes necessitates restructuring.
• Regulatory / legal pressures – compliance, health‑and‑safety or data‑protection legislation can force centralisation of certain functions.

4. Formal Features of Structure

• Levels of hierarchy: Number of management layers from top to bottom.
• Chain of command: Vertical line of authority showing who reports to whom.
• Span of control: Number of sub‑ordinates a manager can supervise effectively.
  Formula: Span = Number of sub‑ordinates ÷ Number of managers
• Responsibility: Duty to perform a task or achieve an outcome.
• Authority: Power to make decisions and allocate resources to achieve the responsibility.
• Delegation: Transfer of *authority* (not responsibility) for a specific task to a subordinate.
• Accountability: Obligation to answer for the results of a delegated task; it always remains with the delegator.
• Centralisation vs. Decentralisation:
  • Centralised – decision‑making authority retained at top levels; delegation is limited.
  • Decentralised – authority pushed down the hierarchy; extensive delegation is required.
• Line vs. Staff functions:
  • Line – directly involved in producing the organisation’s primary output (e.g., production, sales). They have authority to make decisions that affect the core product/service.
  • Staff – provide specialist support, advice or services to line managers (e.g., HR, legal, R&D). They usually have no direct authority over line activities, which can create tension if priorities differ.

Comparison of Authority, Responsibility and Accountability

5. Centralisation vs. Decentralisation – Impact on Decision‑Making Speed & Control

• Centralised – fewer people involved in decisions → slower response but tighter control and consistency.
• Decentralised – many people can decide → faster response to local conditions but risk of inconsistent standards.

Case example: A multinational retailer uses centralised purchasing for global brand items (ensuring uniform quality and price) while allowing individual stores to order local merchandise decentralised, giving them speed to respond to regional tastes.

6. Delegation, Authority, Responsibility & Accountability – Relationship

Delegation is the *transfer of authority* for a defined task. The employee retains *responsibility* for completing the task, while *accountability* stays with the delegator who must monitor, evaluate and answer for the final outcome.

7. Why Delegate?

1. Free senior managers to concentrate on strategic issues.
2. Develop skills, confidence and career progression of lower‑level staff.
3. Speed up decision‑making at the operational level.
4. Increase employee motivation, job satisfaction and retention.
5. Enhance organisational flexibility and adaptability.

8. Potential Risks of Delegation

• Loss of control if authority is not clearly defined.
• Miscommunication leading to errors or duplicated effort.
• Over‑burdening staff who lack competence or resources.
• Inconsistent standards or quality across departments.
• Reduced accountability when the delegator fails to monitor progress.
• Conflict between line and staff functions if delegated tasks cross reporting lines.

9. Impact of Delegation on Business – Structured View

10. Delegation Within Different Structures

• Hierarchical (tall) – delegation follows a step‑by‑step chain of command; slower but provides strong supervision.
• Flat (horizontal) – authority is pushed down quickly; managers rely on trust, clear guidelines and wide spans of control.
• Matrix – delegation must be coordinated across functional and product lines; dual reporting can cause ambiguity if authority is not explicitly allocated.
• Functional – delegation usually stays within the same department, reinforcing expertise but limiting cross‑functional flexibility.
• Divisional – each division can delegate within its own profit centre, allowing rapid local decisions while the corporate centre retains strategic control.
• Network/virtual – delegation often involves external partners; clear contracts and service‑level agreements are essential to maintain control.

11. Calculating Span of Control

Simple ratio:

Span of Control = Number of sub‑ordinates ÷ Number of managers

Example: 30 staff supervised by 3 managers → average span = 10. A larger span usually requires greater delegation; a smaller span indicates a more hierarchical approach.

12. Steps to Effective Delegation

1. Identify tasks suitable for delegation (routine, non‑core, or developmental).
2. Select the appropriate employee based on competence, experience and development needs.
3. Define the level of authority to be transferred and the expected outcomes.
4. Provide necessary resources, information and training.
5. Set clear deadlines, performance standards and measurement criteria.
6. Monitor progress, give constructive feedback and intervene only when necessary.
7. Hold the employee accountable for the results; the delegator retains ultimate responsibility.

13. Case Study Snapshot – GreenTech Ltd.

Company: Mid‑size renewable‑energy manufacturer.

Before delegation:

• Senior manager approved every purchase order.
• Average order‑processing time: 5 days.

After delegating purchasing authority to the Procurement Officer:

• Order‑processing time reduced to 2 days.
• Procurement Officer’s accountability measured by on‑time delivery rate (target ≥ 95 %).
• Senior manager freed to focus on product development and strategic partnerships.

14. Control, Authority and Trust

• Control – maintained through clear reporting lines, performance standards and regular monitoring.
• Authority – the power to act; must be matched with adequate resources.
• Trust – essential for delegation; managers must trust employees to use authority responsibly, and employees must trust they will receive support and fair evaluation.

15. Key Takeaways

• Delegation transfers authority, not responsibility**; accountability always stays with the delegator.
• Effective delegation improves decision‑making speed, motivation, skill development and strategic focus.
• Risks are minimised by clear communication, appropriate training, defined authority levels and regular monitoring.
• The chosen organisational structure determines how much delegation is practical and how control is exercised.
• Changes in structure (growth, delayering, diversification, technology, regulatory pressures, M&A) require a re‑assessment of delegation practices.
• Understanding line vs. staff functions, and the distinction between centralisation and decentralisation, is essential for answering exam questions on 7.1.