Internal Delegated Authority Policies: Why Clarity Isn’t Optional

In any business, when the wrong person signs something off (or the right person is not given clear authority to take a decision) the result can be costly. A simple example, based on our experience, is where an employee receives incoming correspondence or an invoice asking for a countersignature on a recurring software subscription or licence renewal, and signs it without checking the terms. Months later, the business is locked into an unnecessary spend that no one intended.
That’s why a clear delegated authority policy isn’t just best practice, it’s a vital safeguard. It sets out who can commit the business to what, prevents avoidable costs and liabilities and gives everyone the confidence to act within their limits.
What Is Delegated Authority?
A delegated authority policy sets out who within an organisation can approve which actions. It typically includes guidance on which roles can enter into financial commitments (usually with different financial limits depending on seniority), who can enter into contracts, who can hire staff and who has signature authority for different types of documents. It ensures everyone knows:
- What decisions they’re empowered to make
- What signatures or approvals are required, and who can give them
- What limits are in place (financial, operational, reputational) to protect the organisation from acting outside its budget or business plans or exceeding its risk appetite.
Why It Matters for Employers
For employers, clarity around delegated authority helps to:
- Avoid financial risk – preventing unauthorised spend or commitments.
- Protect reputation – ensuring only appropriately senior people sign contracts, NDAs or external agreements.
- Increase efficiency – avoiding bottlenecks where senior leaders are dragged into small approvals unnecessarily.
- Empower staff – giving people confidence in the scope of their decision-making.
- Support compliance – ensuring regulatory, client and insurance obligations are met.
Ultimately, a delegated authority policy protects both the business and its people, ensuring no individual is unfairly exposed and decisions are taken at the right level with the right oversight.
What Happens Without It?
Here’s what we see all too often when organisations don’t have a clear policy:
- Confusion and Delay: People waste time checking who has the right or responsibility to make a decision.
- Risk Exposure: Unauthorised commitments could expose the organisation to liability or financial loss.
- Morale Issues: Inconsistent delegation of authority – picking out people rather than roles, especially on a random basis – can create resentment.
- Compliance Breaches:
without guidelines and controls, it is difficult to show that risk and compliance are managed effectively or spot when individuals are acting outside their powers.
In contrast, organisations with well-defined frameworks experience smoother operations, clearer accountability and better risk management.
Boardside’s View
At Boardside, we see delegated authority policies as an underused but powerful governance tool. They are:
- A risk mitigator, reducing the likelihood of costly mistakes.
- A leadership enabler, freeing senior partners and directors to focus on strategy, not micromanagement.
- A cultural signal, demonstrating fairness, consistency, and accountability across the organisation.
We also see that the best policies are simple, readily accessible, and regularly reviewed (and if necessary refreshed).
A robust delegated authority policy should include:
- Defined levels of authority for Board, Executive and other management roles, and specialists (e.g.IT, customer-facing teams, procurement).
- Financial thresholds linked to role.
- Documented sign-off processes for contracts, client agreements, HR and vendor commitments.
- Clear role boundaries so staff understand both their powers and limits.
- Training and communication ensuring everyone knows where to find it and how to use it.
- Audit trails to evidence decision-making.
- Regular reviews to keep it relevant.
We regularly work with boards to develop clear delegated authority policies as part of our corporate governance and strategy work. If you would like to discuss this in relation to your business please contact us.
Please share Boardside's expertise and insights with colleagues and associates. Thank you.
Working closely with you, we can navigate the hurdles you face, to build a stronger business and to achieve commercial advantage. Call us for an initial conversation on 0330 0949338










