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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It renders the task of fixation of accountability for results very easy since activities are well defined and responsibilities are clearly laid. Division of work means the identification of activities which oragnisation to be done for the achievement of organisational goals. Before adopting this basis of departmentation, therefore, benefits must be weighed against costs. It creates opportunities for the departmental heads to take initiative and thus develop managerial facilities.

Production department, for example, has sub-departments to manage purchase, production planning and control, manufacturing etc. Departmentation by Function 2.

Notes on Departmentation: Meaning, Importance and Basis | Organisation

Business Jargons A Business Encyclopedia. Various regional departmentatoin may become so engrossed in short term competition among themselves that the overall long term interests of the organisation as a whole may be overlooked.

For example, if the product does not earn profits, top managers cannot say with assertion whether the problem lies with production department or sales department.

These departments are headed by senior executives, called as managers of the respective department. When organisation has a number of projects, it forms task forces which consist of people from different units having different skills to complete those projects.


As the organisation grows in size, the work is divided into units and sub-units. A department is a distinct section of the business establishment concerned with a particular group of business activities of like nature.

If planned performance is not achieved, the department responsible becomes answerable. Since departments are widely dispersed, top managers find it difficult to control and co-ordinate their activities. Finance department creates departments to look into capital budgeting fixed assets and current assets, cash management and budgets.

What is Departmentalization? definition, objectives and methods – Business Jargons

Step 1, Step 2, and Departmentatio 3. They focus on a narrow set of activities and repeatedly performing the same task increases their ability to perform more speedily and efficiently. Specialisation promotes efficiency, lowers the cost of production and makes the products competitive. Grouping of activities and personnel into manageable units departmentqtion administrative control.

For example, a job requires three steps for its completion. If there are no departments, it will be difficult to keep track of who is doing what and who is accountable to whom.

This is possible through shift duties. If different departments work at different speed, co-ordination amongst different processes organksation difficult. Functional departmentation is not suitable in such cases. Factors Influencing the Span of Supervision. Departmentation increases the levels of management which is more expensive and it also increases the gap between the top management and the workers. Since workers in one functional area focus on that area only, they acquire expertise and specialised skills in performing their duties.

Departmentation by Process 6.

6 Different Basis of Departmentation in an Organisation

While marketing strategies for cosmetics need to be intensive, it is not so in case of stationery or pharmaceuticals. During boom conditions, the demand increases and, therefore, extra organisatoin has to be borne by machines.


Efficiency can be achieved if departments are created for each process as each one has its peculiarities.

This method of departmentation results organsation optimum utilisation of machines as they work continuously which otherwise may remain idle. The goal of an organisation is to earn profits by customer satisfaction. Another factor that influences the assigning of activities should be grouped in such a manner that it does not become very difficult to co-ordinate the different activities of the business.

It economizes operations and makes possible the adoption of logical and comprehensible structure. Departmentation facilitates control by departmental manager over the activities of his department only. Thereafter, some other basis of departmentation has to be used.

Managers are able to promote sales as they are aware of the local conditions of the area where they are operating. This departmentation is most widely used basis for organising activities and is present in every organisation at some level Fig.

The maintenance of plant can be done in better way and manpower can be utilised effectively. He cannot adapt the organisation to its internal and external environment. The goals of the business are common and everybody should try to achieve them in their respective organlsation. Creating departments focuses on departmental activities and facilitates co-ordination.

If there are no departments, organisational resources; physical, financial and human, will be commonly shared by different work units.