Authority is the power to assign duties to subordinates and to ensure that they are carried out, and involves the acceptance of accountability for the proper exercise of this authority. The precise extent of the authority must be clearly defined to the holder and he/she must act only within those limits. Authority, unlike responsibility, can be delegated, and flows downwards through the organization structure. At all times authority must be commensurate with the accountability imposed, and all subordinate staff subject to the authority must be made aware of it and of its extent.
H. Fayol regarded authority as ‘the right to give orders and the power to exact obedience’. H.A.Simon regarded it as ‘the power to make decisions which guide the actions of another’.
It is obvious that authority over people can be effective only when they accept it. Many instructions are obeyed because of custom, but acceptance of authority may in some cases, be ensured only by resorting to the use of power. Authority is not power. Power is the product of personality in a specific situation.
Authority can be regarded as the right or power to delegate responsibility and it emanates in a company from the shareholders to the board of directors, and down the scalar chain.