Only System Administrators or a profile with the permissions of "Customize Application" and "View Setup and Configuration" can setup a Delegated Administrators (DA) or multiple Delegated Administrators.
Please follow these steps in order to setup a Delegated Administrator (DA):
1. Click on:
Setup | Administration Setup | Security Controls | Delegated Administration.
2. Create the DA group. Under Manage Delegated Groups click "New" next to Delegated Group.
3. Specify who your Delegated Administrators (DA) will be. In the Delegated Administrators section click "Add" and select the Salesforce.com user.
4. In the User Administrator section click "Add" to specify the roles and subordinates for which Delegated Administrators (DA) of this group can create and edit users. Note: they can only create and edit users in the roles specified in this step, they can not modify the role hierarchy.
5. In the Assignable Profiles section click "Add" to determine which profiles the Delegated Administrators (DA) can assign to users. Please note, you can not choose profiles with the permissions Modify All Data because Delegated Administrators (DA) can't change the profile of Modify All Data users in their delegated roles.
6. You can choose to allow delegated administrators to serve as administrators for certain custom objects and their associated tabs. In the Custom Object Administration section click on Add to add the custom object. Note: custom object relationships cannot be created or edited by the Delegated Administrator (DA).
For further information on Delegated Administration