DEPARTMENTATIO

SHRUTHIKA.G
INTRODUCTION
Departmentation or Departmentalization, is grouping of
organizational activities into jobs. Thereafter combine jobs into
effective work groups and coordination of these groups into
divisions. In other words, it is a process of grouping activities of an
organization into a number of separate units for the purpose of
efficient functioning.
MEANING
Departmentation refers to the grouping of operating tasks into jobs, the combining of
jobs into efficient work groups and combining of groups into divisions called as
‘Departments’.

Departmentation refers to the horizontal differentiation in an organization. It is a

method of arranging activities and employees to facilitate the accomplishment of
overall objectives.

Departmentation, in short can be said to be a part of organization process. This

process involves dividing and grouping of activities of an enterprise into viable
divisions or departments for improving the performance in the organization.
DEFINITIONS
According to Koontz and O’Donnell, “A department is a distinct area, division or
branch of an enterprise over which a manager has authority for the performance of
specified activities”.

According to Terry and Franklin, “Departmentalization is the clustering of individuals

into units and of units into departments and larger units in order to facilitate achieving
organizational goals.”

According to Pearce and Robinson, “Departmentalization is the grouping of jobs,

processes and resources into logical units to perform some organizational task.”
BASES
1.Functional basis -The basic enterprise functions generally consist of production,
marketing, finance, etc. This method is more logical and hence present in almost all
enterprises at some level.
2.Territorial basis -When the organization is large and geographically dispersed,
departmentation on territorial basis is the best. This is also considered suitable where the
branches produce the same goods or perform similar services at various locations.
3.Process basis -It is also called equipment departmentation. Large retail or marketing
enterprises may also have process departments for receiving goods in stores,
transportation, wrapping and delivery.
BASES

1.4.Product basis -To departmentalize on product basis means to establish each product or group of
closely related products in a product line as a relatively autonomous integrated unit within the overall
framework of the company.

2.5.Customer basis -Under this method, the customers are divided into separate categories, such as
distributors, retailers and consumers, and the task of satisfying the needs of different categories of
customers assigned to specific departments.

3.6.Time basis -Under this method, the activities performed in each shift are similar and almost identical.

4.7.Number basis -In case of departmentation by number, activities are grouped on the basis of their
performance by certain number of persons.
TYPES
1. Functional Departmentation.
2. Product wise Departmentation.
3. Territorial or Geographical Departmentation.
4. Customer wise Departmentation.
5. Process or Equipment wise Departmentation.
6. Combined or Composite Form of Departmentation.
 IMPORTANCE AND NEED
1.Specialization – Departmentation enables the enterprise to avail the benefits of specialization. The work is
divided into different departments. When every department looks after one major function, it leads to increase in
operational efficiency of the organization.

2. Administrative control – Grouping of activities into manageable units facilitates administrative control. The
standards of performance of each department can be precisely determined, against which actual performance can be
measured and corrective measures can be taken.

3. Fixation of responsibility – Each person knows the specific task that they have to perform in the organization.
The responsibility of the work can, therefore, be precisely fixed and the individual can be made accountable for his
performance.
IMPORTANCE AND NEED

4. Expansion – One manager can effectively supervise a limited number of subordinates. Departmentation
makes it possible for the enterprise to grow and expand. In the absence of departmentation, the size of the
organization will be limited to the manager’s span of control.

5. Appraisal – When the tasks allotted to individuals are clearly specified, appraisal of managerial performance
is simplified. The skills and competence required for managerial decisions can be easily identified.

6. Managerial development – It provides opportunities for the training and development of the executives.
They can exercise initiative and take independent decisions. The managers can improve their skills, leading to
their development in the organization.
IMPORATANCE AND NEED

7. Autonomy – Departmentation results in the division of organization into small units. Every
manger is given the adequate freedom to run these units or departments. The feeling of autonomy
provides job satisfaction and motivation leading to higher efficiency in operations.
LEVELS OF MANAGEMENT
1. Primary departmentation – Initial break up of organizational functions into basic activities
such as production, finance, marketing etc.

2. Intermediate departmentation – Creating departments in the middle levels of the

organization.

3. Ultimate departmentation – Dividing activities into separate units at the lower level to create
sections and sub-sections.
MAIN PURPOSES
I. To promote the attainment of overall organizational objectives.

ii. To simplify co-ordination

iii. To effect economics of scale and exploitation of special opportunities.

iv. To assist in executive development.

STEPS INVOVLED
1. To identify task or duties,

2. To analyze details of each task,

3. To describe the functions or to group similar activities,

4. To entrust the grouped activities to departmental heads, and

5. To define the authority and responsibility of departmental heads.

PRINCIPLES
Specialization

Coordination

Control

Interdepartmental Cooperation

Cost Benefit

 Duplication of Work

Special Attention
PRINCIPLES

Human Consideration

Flexibility

Utilization of Resources
MERITS
1. When jobs are well defined and responsibilities are clearly mentioned it is easier to fix
accountability for the results.
2. The efficiency of management and enterprises because everyone knows his duties and
authority, well defined jobs and limits of authority help the individual’s better performance.
3. Departmental managers are given the opportunity to take initiative. Departmentation is a
training device for them. They, can learn managerial skills which helps them, going higher in
the hierarchy of management.
4. Departmentation facilitates better control because objectives of various departments are well
known. Budgets which are one of the control mechanisms can be prepared to control the
income and expenditure of different departments. Departmentation also provides a basis on
which top management can co-ordinate the activities.