Departmentation

Introduction

Organizations are formed when a group of individuals unite to accomplish a specific goal. They are responsible for creating a work environment that best utilizes resources such as people, tasks and technology. But, in order to meet this objective, they will need to create an organizational structure or design. Organizational structure and design include work specialization, departmentalization, chain of command, span of control, centralization and decentralization and common organizational designs. Departmentalization is discussed here.

Need and importance

The basic purpose of departmentation is to make the size of each departmental unit manageable and to secure advantages of specialization. It is necessary on the account of following reasons:

Specialisation:

Departmentation enables an organization to avail the benefits of specialisation. When every department looks after one major function, expertise is developed and efficiency of operation increases.

• Expansion
• Fixation of responsibilities
• Appraisal
• Administrative control

Types of departmentation:

The following patterns may be used for grouping activities into departments:

Functional departmentation:

Functional Departmentalization groups jobs by the functions that they perform. Hence each major or basic function is organized as a separate department. The basic or organic functions are the functions the performance of which is vital and essential to the survival of the organization. For example, key functions of a manufacturing company include production, purchasing, marketing, accounting, and personnel. The functions of a hospital include surgery, psychiatry, nursing, housekeeping, and billing.

If necessary, a major function may be divided into minor or sub-functions. A production department’s activities may classified into quality control, processing of materials and repairs and maintenance. The process of functional differentiation can continue as long as there exists a sound basis for further differentiation. It is the widely used basis for grouping activities and exists almost in every organization at some level.

Product departmentation

Product Departmentalization jobs are grouped by product line in which each major product area is placed under the authority of a manager whom is responsible for all aspects of the product line. It is useful when product expansion and diversification, manufacturing and marketing characteristic of the product are of primary significance. It is generally employed when the product line is relatively complex and diverse requiring specialized knowledge and a great deal of capital is required for plant and equipment. A I company with diversified product line may have the following divisions-

Territorial departmentation

Organizations that are spread over a wide area may find advantages in organizing along geographic lines so that all the activities performed in a region are managed together. Bank, insurance companies, transport companies, distribution agencies are examples of such enterprises. The activities are divided into zones, divisions and branches. It is obviously not possible for one functional manager to manage efficiently such widely separated activities this makes it necessary to appoint regional managers for different regions.

Customer departmentation

An organization may find it advantageous to organize according to the types of customers it serves. For example, a distribution company that sells to consumers, government clients, large businesses, and small businesses may decide to base its primary divisions on these different markets. Its personnel can then become proficient in meeting the needs of these different customers. This figure depicts an organization grouped by customers and markets.

Process or equipment departmentation:

Here activities are grouped on the basis of production process or equipment involved. For example: The Plant Superintendent would work in conjunction with the managers of the Materials Department, Assembling Department, Finishing Department and the Inspection Department.