The distributor where every decision waits for one signature
Sri Balaji Pumps and Spares, a family-run distributor in Coimbatore, employed 9 people in 2016 and 46 in 2024. The managing partner, R. Meenakshi, still personally approves every purchase order above ₹5,000, every credit sale, and every staff leave application. Three assistant managers report to her, and each supervises 13 to 15 clerks and godown staff. Symptoms are piling up: purchase orders wait an average of nine days for her signature, four customers moved to a rival last quarter because credit approval was slow, the same supplier invoice has been paid twice, and two clerks cannot explain who authorised a discount. Leave applications for March are still pending in June. Meenakshi is willing to change but fears losing control of cash and credit. A consultant has suggested creating separate purchase, sales and accounts sections with a supervisor in each, and giving each supervisor written authority limits.
1. Using evidence from the case, identify which principles of organisation are being violated. Do not just name the principles - show the symptom that proves each violation.
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Span of control. Each assistant manager directly supervises 13–15 subordinates doing varied clerical and godown work. At that width, supervision becomes nominal: the manager can sign attendance but cannot check the discount a clerk allows or the order a clerk places. The unexplained discount and the duplicated payment are the visible result.
Delegation without authority. Meenakshi has delegated work but not authority. Clerks prepare orders and credit notes; only she may approve them. Responsibility for the delay therefore sits at the bottom while authority sits at the top - the classic reason for a nine-day backlog and four lost customers.
Absence of departmentation. Purchase, sales and accounts are mixed in one undifferentiated group. There is no specialisation, so the same invoice can pass through two hands without either owning the check - hence the double payment.
Violation of the scalar chain's purpose. A routine leave application travels all the way to the managing partner. The chain is being used for decisions that should stop at the first level.
Unclear unity of command. If two clerks cannot say who authorised a discount, more than one person may be issuing instructions on pricing, or none is accountable at all.
2. Recommend a structure and a written delegation scheme. State specifically what Meenakshi should keep, and why keeping those items does not defeat the purpose of delegation.
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Structure: three sections - Purchase and Stores, Sales and Credit, Accounts - each headed by one supervisor reporting directly to Meenakshi. This gives her a span of three, which she can genuinely supervise, and gives every clerk exactly one boss.
Written authority limits (example):
- Purchase supervisor: orders up to ₹25,000 against an approved supplier list and an approved annual budget; anything above goes to Meenakshi.
- Sales supervisor: credit up to ₹15,000 to existing accounts with a clean 12-month record, repayment within 30 days; new accounts and higher limits to Meenakshi.
- Accounts supervisor: payment released only against a three-way match of purchase order, goods received note and invoice; payments above ₹20,000 need a second signature.
- Leave: up to three days sanctioned by the section supervisor; longer leave to Meenakshi.
What she keeps: capital expenditure, bank operations and cheque signing rights, credit policy and limit ceilings, pricing and discount policy, appointment and transfer of supervisors. Retaining policy and exceptions is not the same as retaining every transaction - that is the distinction she is missing. Routine cases flow down the chain; only exceptions come up, and they come up as an exception report, not as a pile of files.
3. What risks does the proposed change carry, and what safeguards would you build in before the first supervisor is appointed?
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Risk 1 - real loss of control. Meenakshi's fear is not imaginary. If limits are written but not monitored, a supervisor can split one large order into several small ones to stay under the ceiling. Safeguard: monthly exception reports, a rule that split orders are treated as one order, and random checking of ten files per section per month.
Risk 2 - supervisors who are not ready. Promoting the senior clerk to supervisor does not automatically create a supervisor. Safeguard: job descriptions issued in writing, a short training period on the limits and on the three-way match, and a three-month probation during which Meenakshi reviews every decision above half the delegated limit.
Risk 3 - authority overlap at the start. If the sales supervisor and the accounts supervisor both believe they control credit notes, the old confusion returns in a new form. Safeguard: publish a one-page authority chart signed by Meenakshi, so each decision has one named owner.
Risk 4 - staff resistance or fear of blame. Clerks may still refuse to act without her initials. Safeguard: announce the change formally, confirm that anyone acting within the written limit will be supported, and review the limits after six months rather than leaving them frozen.