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Management by Objectives (MBO)

AUTHORITY the task; be clear in the objectives of the task; encourage
Authority is seen as the legitimate right of a person to questions; explain why the task is important; determine if
exercise influence or the legitimate right to make deci- the person has the appropriate resources—time, budget,
sions, to carry out actions, and to direct others. For exam- data, or equipment—to get the job done on a deadline;
ple, managers expect to have the authority to assign work, create progress reviews as part of the project planning; and
hire employees, or order merchandise and supplies. be prepared to live with less than perfect results. Authority
should be delegated in terms of expected results. Generally,
As part of their structure, organizations have a formal
authority system that depicts the authority relationships the more specific the goal, the easier it is to determine how
between people and their work. Different types of author- much authority someone needs.
ity are found in this structure: line, staff, and functional Some employees resist delegation for a variety of rea-
authority. Line authority is represented by the chain of sons. Initiative and responsibility involve risk that some
command; an individual positioned above another in the people try to avoid. People tend to play it safe if risk
hierarchy has the right to make decisions, issue directives, results in criticism. Those who feel they already have more
and expect compliance from lower-level employees. Staff work than they can do avoid new assignments. Some peo-
authority is advisory authority; it takes the form of coun- ple doubt their own abilities and lack the self-confidence
sel, advice, and recommendation. People with staff to tackle new assignments. Delegation is an excellent pro-
authority derive their power from their expert knowledge fessional development tool so long as it expands a worker’s
and the legitimacy established in their relationships with expertise and growth. Delegation can also compensate for
line managers. Functional authority cuts across the hierar- a manager’s weakness. A successful team is developed by
chical structure to allow managers to direct specific building on the strengths of its members.
processes, practices, or policies affecting people in other People develop most when stimulated to broaden
departments. For example, the human resources depart- themselves—when challenged. More authority can add
ment may create policies and procedures related to pro- challenge, but too much challenge can frustrate people
moting and hiring employees throughout the entire and cause them to avoid new responsibilities. Delegation
organization. should involve acceptable challenge—enough to motivate
Authority can also be viewed as arising from interper- but not so much as to frustrate.
sonal relationships rather than a formal hierarchy. Author- In today’s workplace, managers are compelled to rely
ity is sometimes equated with legitimate power. Authority more on persuasion, which is based on expert and referent
and power and how these elements are interrelated can power rather than reward, coercive, or inappropriate use
explain the elements of managing and their effectiveness. of power. A manager who shares power and authority will
What is critical is how subordinates perceive a manager’s be the one with the greatest ability to influence others to
legitimacy. Legitimate authority occurs when people use work toward the goals of the organization.
power for good and have acquired power by proper and
SEE ALSO Management; Management/Leadership Styles
honest means. When people perceive an attempt at influ-
ence as legitimate, they recognize it and willingly comply.
Power acquired through improper means, such as lying, BIBLIOGRAPHY
withholding information, gossip, or manipulation, is seen Bartol, Kathryn M., and Martin, David C. (1998). Management.
as illegitimate. When people perceive the authority of oth- Boston: McGraw-Hill.
ers as illegitimate, they are less likely to willingly comply. Hirschhorn, Larry (1997). Reworking Authority. Cambridge,
MA: MIT Press.
Lucas, James R. (1998). Balance of Power. New York: AMA-
DELEGATION COM, American Management Association.
In order for managers to achieve goals in an efficient man- Marshall, Don R. (1999). The Four Elements of Successful Man-
ner, part of their work may be assigned to others. When agement. New York: AMACOM, American Management
work is delegated, tasks and authority are transferred from Association.
one position to another within an organization. The key to
effective delegation of tasks is the transference of decision-
Cheryl L. Noll
making authority and responsibility from one level of the
organization to the level to which the tasks have been del-
egated. In order to effectively delegate work, some guide-
lines should be followed: Determine what each worker can MANAGEMENT BY
most effectively accomplish; decide whether the worker
should just identify a problem or also propose a solution; OBJECTIVES (MBO)
consider whether the person can handle the challenge of SEE Human Resource Management; Strategic Management

472 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION