In many companies an employee asks: May I approve this amount? Who signs this contract? And the answer differs depending on whom they ask. This ambiguity slows work down on the one hand, and on the other opens the door to decisions that exceed the limits of authority. The delegation of authority matrix is the document that ends this ambiguity.
What Is a Delegation of Authority Matrix?
It is a table approved by the board of directors or the partners that sets out, for each type of decision, who proposes, who reviews, who approves, and the financial limits for each level. It translates the powers contained in the bylaws or articles of association and board resolutions into practical rules everyone can understand.
What Does It Usually Cover?
- Financial matters: approving expenses and payments, opening bank accounts and financing.
- Contracts and procurement: signing contracts with customers and suppliers, with their financial limits and terms.
- Human resources: hiring, promotions, bonuses and terminations.
- Assets: purchasing, selling or mortgaging assets.
- Legal matters: filing lawsuits, settlements and issuing powers of attorney.
Steps to Build the Matrix
- Map current authorities as they are actually exercised, not as they are assumed to be.
- Review the bylaws or articles of association and board resolutions to confirm the permitted limits of delegation.
- Classify decisions by risk and value, and determine the appropriate approval level for each.
- Have the matrix approved by the competent body and circulate it to the relevant employees.
- Link it to the company's electronic systems wherever possible, so that it is applied automatically.
Principles That Make It Effective
- Segregation of duties: the person who requests a payment should not be the one who approves and makes it.
- Clarity: direct wording that does not allow more than one interpretation.
- Controlled flexibility: a clear mechanism for temporary delegation when the authority holder is absent.
- Periodic review: updating it as the company grows or its structure changes.
Common Mistakes
- Granting authorities in the matrix that exceed what the bylaws or board resolutions permit.
- Issuing broad powers of attorney that are inconsistent with the matrix's limits.
- Leaving an old matrix in force after the organisational structure has changed.
- Failing to document temporary delegations, making it difficult later to prove a decision was valid.
A good delegation of authority matrix protects both the company and its managers, and speeds up decision-making because everyone knows their limits. Our firm can help you prepare one or review your current matrix in line with your company's documents and the applicable regulations.