Fourteen Signatures for Bearing Grease: Delegation at Sri Sakthi Pumps
Sri Sakthi Pumps Pvt Ltd, a Coimbatore pump manufacturer with 320 workers and turnover of ₹46 crore, has grown from a 40-worker workshop in eight years. Managing Director R. Ranganathan still signs every purchase order above ₹2,000, so a routine order for bearing grease collects fourteen signatures before the stores clerk can release the material. On the shop floor, production supervisor Murugan reports to both the Production Manager and the Quality Manager, who regularly give him conflicting instructions on rework priority; last month 1,800 castings were rejected while the two managers argued over who had authorised a change in machining tolerance. Sales executives cannot approve even a 2% discount for a repeat dealer without the MD's signature, and three dealers have moved to a competitor. Meanwhile the newly appointed Works Manager has been told he is 'fully responsible' for the new CNC line but cannot sanction ₹10,000 of spares, so the maintenance team still routes every request to the MD's office.
1. Identify three principles of management that are being violated and support each with specific evidence from the case.
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1. Unity of command (Fayol). Murugan takes orders from two superiors. The cost is measurable: 1,800 rejected castings arose not from a technical failure but from two managers issuing conflicting rework priorities. Unity of command means one subordinate, one boss; where production and quality genuinely conflict, the decision must be escalated to a common superior or settled by a written rule, not left to the supervisor to guess.
2. Parity of authority and responsibility. The Works Manager is 'fully responsible' for the CNC line but cannot sanction ₹10,000. Responsibility without matching authority is a sham: the manager will either stop acting or keep dumping decisions upward, which is exactly why maintenance requests land on the MD's desk. Authority must be delegated in the same measure as the task.
3. Management by exception (Taylor) and excessive centralisation (Fayol). Fourteen signatures for a ₹2,000 grease order and MD-level approval of a 2% dealer discount apply the same scrutiny to trivial and significant decisions alike. If the MD reserved himself for orders above, say, ₹1,00,000 and discounts above 3%, the routine flow would clear in a day and the top would see only exceptions.
A fourth symptom is the loss of initiative: three dealers left because a sales executive could not act.
2. The MD asks you to redesign the approval system. State the delegation limits you would set, the control mechanism that replaces his signature, and one risk of your own proposal.
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Limits (illustrative, to be fixed after reviewing the value distribution of past orders): purchase officer up to ₹25,000; Works Manager up to ₹1,00,000 including spares; MD above ₹1,00,000 and for any new supplier. Dealer discount: 0–3% approved by the regional sales manager, above 3% by the MD. Capital expenditure and bank mandates stay with the MD - delegation should not touch the things that can sink the company.
Control that replaces the signature: (i) a weekly exception report listing every purchase above ₹25,000, every rejection above 0.5%, and every discount above 3%; (ii) separation of duties - the person who approves an order must not also release payment; (iii) a monthly audit of a 10% sample of orders. This gives the MD assurance at a fraction of the time cost of signing everything.
Cost–benefit: a purchase officer at roughly ₹4.5 lakh a year is cheap against three lost dealers and 1,800 rejected castings, but quantify the dealer loss before claiming the saving.
Risk of my proposal: delegation without competence. A purchase officer with a ₹25,000 limit can be captured by a favoured supplier, and the Works Manager may lack the technical judgement for spares. Mitigation: written procurement rules, training, and a probation period during which the MD reviews all exceptions weekly rather than monthly.
3. How should the Murugan conflict be resolved in the short run, and how does Fayol's 'gang plank' apply here?
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Short run: the two managers and Murugan should agree a written SOP for tolerance changes - who may authorise a change, what test must be run, and which manager's instruction prevails on rework priority (normally quality, because a rejected casting cannot be sold). Until the SOP exists, any conflict must be escalated to a common superior, not left to the supervisor.
Gang plank: Fayol's scalar chain requires communication to travel up and down the hierarchy, but he allowed a horizontal shortcut - the 'gang plank' - between employees of the same rank, provided superiors are informed. Murugan and the quality inspector are effectively at that level for routine technical matters. They may therefore settle day-to-day rework priority directly and record it in the shift log, copying both managers, instead of climbing the chain each time.
The limits matter: the gang plank is for routine, time-critical matters, not for policy, price, or disciplinary issues, and it never authorises bypassing a superior on a decision that superior owns. Used properly it cuts the delay that produced 1,800 rejections while preserving the chain of command.