Meaning After having discussed

6 June 2017

Meaning After having discussed organisation, its importance and principles in the previousunit, now we shall explain the meaning and importance of the term “Departmentation” which forms the very basis of the organisation structure of any enterprise. You have already noticed that organisation involves the dividing and grouping of the works to be performed in the enterprise on some logical basis so that team spirit can be developed. This grouping of activities and employees into various units for the purpose of administration is called departmentation.

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Concept and importance Departmentation is a means of dividing the large functional organisation into smaller, flexible administrative units. It makes grouping of activities into units and sub-units created through departmentation which are known as department, division, section, branch etc. The process of departmentation takes place at all levels in the organisation. At the top level, the break up of functions into activities is called “Primary Departmentation”.

Grouping activities into separate units at the middle level is called “Intermediate Departmentation” and at the lower level it is called “Ultimate Departmentation” or “Secondary Departmentation”. Let us discuss some definitions of Departments. 1 . According to Louis Allen, “Departmentation is a means of dividing the large and monolithic functional organisation into smaller flexible administrative units. ” 2. According to koonts 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. In short, we need departmentation in an enterprise to divide the activities along with authority, responsibility and accountability with sole objective to get the work done smoothly and in the best possible way. Importance of Departmentation The importance of departmentation is to facilitate successful operation and to create an environment for effective performance. Grouping of activities and employees into departments makes it possible to expand an organisation to a large extent.

It enables the organisation to recapture some of the advantages of the small functional organisation while minimising the disadvantages of that which comes with increasing size, diversity and dispersion. The importance of departmentation may be stated in the following way: Specification : Departmentation helps to grow specification in various activities which eads to improving the efficiency of operation. Feeling of autonomy : Departmentation gives independent charges to managers. The feeling of independence provides satisfaction and in turn increases their responsibilities and efficiency.

Fixation of responsibility : Through departmentation, responsibilities of the work can be precisely and accurately fixed. The authority and responsibility of each department is defined precisely. Development of Management : The managers of each department perform specialised functions. They take independent decision and develop themselves for igher positions. Departmentation facilitates the development of managerial personnel by providing them opportunities for exercising initiatives. Facility in Appraisal : Since the managers perform specified Jobs, their performance appraisals become easier.

Departmentation facilitates administrative control as standards of performance are laid down separately for each department. Budget Preparation : It makes the preparation of budget for departments easier as well as for the organisation as a whole easier. Proper Supervision : As the authority for making decisions is diffused to the anagers of the departments and works are assigned to each individual department wise, supervision and control become easier. Principles In this sections we will discuss the following principles of Departmentation 1 .

Principle of attainment of organisational objectives : It implies that departments are designed or created to provide all the facilities to achieve organisational objectives in an effective and efficient manner. 2. Principle of comprehensive departmentation : It implies that the entire functions of the enterprise are to be covered while creating the departments. 3. Principle of inter-departmental co-operation : It implies that departments should be designed in such a way that maximum inter-departmental co-operation is possible. 4.

Principle of promotion of specialisation : It should help in enhancing both managerial and operational specialisation so that organisational efficiency can be achieved. 5. Principles of cost-benefit analysis : It should be designed and developed in a manner to get the maximum benefit with minimum possible costs. 6. Principle of special attention to key-result areas : Key-result areas are those areas which determine the long term growth and survival of an organisation. It may include profitability, market standing, public relation etc.

According to this principle while creating departments the key-result areas should be given special attention. 7. Principle of flexibility : It implies that there should be sufficient scope to change the design or set of departments as per the requirements of changing situation. 8. Principle of human consideration : Human consideration such as needs, values, attitudes, expectation, feelings etc. must be taken into consideration while creating Departmentation by Functions in management On the basis of functions undertaken by an enterprise, departments are created;

This is a process of uniting people with similar activities to perform. This is based on specialised functions like production, marketing, finance and personnel. This type of departmentation is suitable for small and medium business where the chief executive can coordinate the functional specialists. A high degree of centralisation of power with the chief executive is the chief character of this structure. Some of the advantages of this structure are 1 . Benefits of occupational specialisation 2. Easier inter-departmental- coordination 3.

Simple and understandable structure Limitations of this structure are: 1. Excess centralisation. 2. Unsuitable when geographical. 3. Unsuitable when emphasis on product line in called for. 4. Lower scope for promotional avenues. Popular Types of Departmentalization[edit] Functional departmentalization – Grouping activities by functions performed. Activities can be grouped according to function (work being done) to pursue economies of scale by placing employees with shared skills and knowledge into departments for example human resources, IT, accounting, manufacturing, logistics, and engineering.

Functional departmentalization can be used in all types of organizations. Product departmentalization – Grouping activities by product line. Tasks can also be grouped according to a specific product or service, thus placing all activities related to the product or the service under one manager. Each major product area in the corporation is under the authority of a senior manager who is specialist in, and is responsible for, everything related to the product line. LA Gear is an example of company that uses product departmentalization.

Its structure is based on its varied product lines which include women’s footwear, children’s footwear and men’s’ footwear. Customer departmentalization – Grouping activities on the basis of common customers or types of customers. Jobs may be grouped according to the type of customer served by the organization. The assumption is that customers in each department have a common set of problems and needs that can best be met by specialists. The sales activities in an office supply firm can be broken down into three departments that serve retail, wholesale and government accounts.

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