DELEGATION: Understanding the Difference between Entity and Management Delegations

Organizations typically have many employees, often spread across many different departments, divisions and even global locations. Therefore, they need to distribute responsibilities and powers for making decisions. The executive body has the role of giving responsibilities to their subordinates. Delegations usually go from the board to the people in the company and give them the authority and accountability to act. But there are two different yet related types of delegations and authorities that move down into the organization:

• Legal entity delegation, which is established by applicable law, regulations, contracts or constitutional documents of the appropriate legal entity.
• Management delegation, which is established by the organization to conduct its day-to-day activities and deliver its strategy and business operations.

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In exercising delegation of authority, individuals must act in the best interests of the company, for the purpose delegated only, and in compliance with relevant laws and regulations. They must also act in accordance with all applicable internal standards, policies, and processes.

The accurate recording of organizational obligations and consistent distribution of tasks is important in this context, so that neither gaps incompetence nor any other obstructions exist. Accountable employees should be clearly named. Legally-compliant, delegated decision-making requires that:

• The performance of a task is done voluntarily and is the individual's specific responsibility. In addition, delivery and completion of the required task must be feasible.
• The delegated task is clearly understood. The delegating manager has the duty to brief, train and instruct the subordinate appropriately.
• The financial resources necessary are available to the individual.

The transfer of the task and decision-making power to the individual is obvious. It must be clearly evident in writing who had which task and which decision-making     authority at what time.

If a task or decision-making power is delegated, the delegating managerhas accountability for selecting the right individual, the instruction of thatindividual and appropriate monitoring.  In crisis situations, thedelegating manager must intervene immediately. Legal charges and any liabilityagainst the delegating manager will be dropped if negligence cannot be proved.If, however, the organizational task or duty is delegated to several employeesat the same time, nobody is accountable except the delegating manager.

Given the complexity and importance of delegation of authority, it is essential to manage and maintain a proper policy that reflects the current structure and needs of the organization. A static policy document or spreadsheet can be effective at documenting a point in time, but often fails to effectively cascade authority to all of the proper individuals in a way that is actively acknowledged. Moreover, policies are often tedious and difficult and time consuming to interpret, leading to confusion and lack of compliance.

That is why Aptly offers a smart and simple solution that can help you manage and maintain your delegation of authority policy and framework with ease and confidence. Aptly is a cloud-based solution that helps streamline delegation of authority management and ensure it is properly administered and maintained. With Aptly, you can:

• Define and update your delegation of authority policy in a simple and intuitive interface
• Assign roles and levels of authority to individuals or groups across your organization
• Track and monitor delegation issuance, acceptance and redelegation in real time
• Provide clear and consistent guidance to employees on who can approve what and when
• Generate reports and audits on your delegation of authority activity and compliance