Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman

Exercise 3

It is sometimes argued that empowerment can be successful only if managers learn to live with decisions made by lower level employees. Managers are to set clear boundaries within which employees can make decisions (for example, allowing a salesperson to set prices between $15,000 and $20,000). Managers should never overturn a decision if it is within the boundaries. Rather, good decision making should be encouraged through proper incentives and training. Do you agree that for empowerment to work, managers should always set clear boundaries and live with decisions within these boundaries Explain.