Departmentalization (or simply departmentation) refers to the grouping of This helps the organisation to assign the work only to those who are best suited. Departmentation can provide a necessary degree of specialisation of executive activity for efficient performance. It can simplify the tasks of management within a . In the words of Allen, “Departmentation is a means of dividing a large and monolithic functional organisation into smaller, flexible, administrative units.”.

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Managers cannot control organisational activities if they have to be collectively supervised.

Departmentalisation : Meaning, Need and Types

If necessary, a major function may be divided into organisaion. Personnel department has sub-departments to take care of appointments, training, placement and promotion of employees. During boom conditions, the demand increases and, therefore, extra load has to be borne by machines.

While marketing strategies for cosmetics need to be intensive, it is not so in case of stationery or pharmaceuticals. It provides an opportunity to a regional manager to gain broad experience as he looks after the complete operation in a particular territory. Divisional structures are created on the basis of smaller divisions where each division has its own functional activities production, finance, personnel and marketing. This helps in eliminating the unprofitable products and promoting the profitable ones thereby increasing organisational efficiency.

It is called process departmentation. So, product departmentation provides an excellent training facility for the top managers. Sales department should know the plans of production department and vice-versa.

Division of organisation on the basis of geographic dispersal of activities appears on the organisation chart as follows: With increase in operations of a company, it adds more products to its line of products which require various departmetation activities production, marketing etc. Repeated handling of the same job with a very short cycle time required to complete that process leads to boredom.


Need for and Importance of Departmentation 3. The top-level executives, groups activities in various departments, such as departmentatoin, marketing, finance, human resource, research and development, etc. Such groups are suitable to organisations serving several segments like a pharmaceutical company supplying to institutional buyers such as hospitals and government and non-institutional buyers as wholesalers and retail chemists.

Such an organisation would become an inflexible organisation.

Creating departments focuses on departmental activities and facilitates co-ordination. This is more important to the organisation which operates in different geographical areas.

Departmentation: Need, Significance and Process

Departments comprise a framework for an organisation and enables it to expand indefinitely. So, along with the technical factors discussed above, departments should be created on the basis of availability of personnel, their attitude, aspiration and value systems, vepartmentation work groups, cultural patterns, etc.

Since each department has auxiliary departments like personnel, accounting etc.

Departments should be so otganisation as to fix clear responsibilities so as to enable effective control. Since decisions are made by departmental heads for their respective departments, it may delay decision-making for the organisation as a whole.

A large industrial buyer for one product, for example, may be a small buyer for another product. So, the pattern and number of departments should be so decided that maximum possible economy is achieved in the utilisation of physical facilities departmwntation personnel.


He, thus, controls activities of his department to ensure that the product contributes to the organisational goals.

Under this method of departmentation the activities are grouped on the basis of the time of their performance. After reading this article you will learn about: Role, Steps for Designing and Its Features.

You must be logged in to post a comment. Production department, for example, has sub-departments to manage purchase, production planning and control, manufacturing orgqnisation. This form of departmentation is suitable for small organisations where limited number of products with limited processes are produced. As work is divided into different processes, the process manager and his team specialise in that process by constantly carrying out activities related to that process only.

It is suitable for organisations having wide geographical market such as pharmaceuticals, banking, consumer goods, insurance, railways etc. It renders the task of fixation depattmentation accountability for results very easy since activities are well defined and responsibilities are dpeartmentation laid.

Departmentation enables them to expand their area of operation into new product lines and geographical divisions. Thus, performance appraisal becomes more effective. As organisations grow complex in terms of size and operations, they add more products to their line of products and expand into new geographical areas for marketing the existing products.