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DEPARTMENTATION. Introduction Departmentation is a part of the organization process. It involves the grouping of common activities on the basis of a function of the organization under a single person’s control.
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Introduction • Departmentation is a part of the organization process. It involves the grouping of common activities on the basis of a function of the organization under a single person’s control.
Departmentation refers to the classification of activities on operations of an undertaking into functionalized categories. It is created in product wise, process-wise or area wise. It ensures proper direction to and control on them.
Process of Departmentation Identification of Fixing the scope of Work authority and responsibility of the departmental heads Analysis of details Of each work Entrusting the function Description of the to a separate person function of the who has specialized organization. in the respective field.
Why Departmentation is necessary? • It increases the operating efficiency of the employees. • It makes the executive to be alert and efficient in his duties. • It increases the prestige and skill of the departmental heads. • It makes the departmental heads efficient. • Further expansion of the organization is possible. • It gives advantages like facilitating budget preparation, effective control of expenditure, attaining specialization, better coordination etc.
Dangers of Departmentation • It makes co-ordination very difficult. • It creates difficulties of communication among various departments of the Organisation. • It increases the levels of management which is more expensive.
Basis of Departmentation • Departmentation by Function • Departmentation by Product or Service • Departmentation by region or area • Departmentation by Customers • Departmentation by Process • Combined or composite form of Departmentation
Deparmentation by Function Advantages: • It is scientific and time tested method. • It follows the principles of specialization and division of labour • Ensures performance control • Preserves the importance of each of activities. • Due weightage and prestige are given to managers and respected • Facilitates coordination activity within departments • Economical, simple and easy to understand • Helps utilization of manpower and other natural resources
Departmentation by Function Disadvantages: • It makes management control work more difficult • Increases work load and responsibility of managers • Does not offer scope for training for overall development of managers • Managers may be experts but may not understand the problems of other departments.
Departmentation by Product or Service Advantages: • Maximum utilization of personnel efficiency of workers. • Gaining economy in manufacturing and marketing of products • Better services to customers • Profitability of each product is known. • Proper attention is given • New line of product can be introduced without difficulty
Departmentation by Product or Service Disadvantages: • Danger of duplication of work • Increases number of personnel that leads to heavy cost • Additional cost for maintaining a sales force for each product • Control becomes more difficult • Machines and equipment may not be used fully. • Only for large scale diversified groups
Departmentation by region or area Advantages: • Effective span of control. • Reduces the cost of operation and gains saving in time. • Intimate knowledge about the taste and preference of customers Win the confidence of customers and reduce the competition • Profitability of each area can be known. • Gives opportunities to managers to improve their skills • More suitable for large scale business unit • Control process very easy to manager
Departmentation by region or area Disadvantages: • Increases number of personnel and heavy cost of operation • Control of head office is less effective one • Involves duplication of work • Small business can’t manage the high cost.
Departmentation by Customers Advantages: • It fulfills the expectations and needs of customers • It develops specialization among the organizational staff. • Out of fashion products can be dispensed with • Each section of customers gets better services.
Departmentation by Customers Disadvantages: • Duplication of activities. • Achievement of coordination is very difficult • Wastage of available of resources and facilities. • Production activities can’t be done under this method due to heavy cost
Departmentation by Process Advantages: • Costlier machines can be used effectively. • Economy of operation • No duplication of activities • Principle of specialization and division of labour is followed • It helps top management to have effective performance control • This is more suitable for a product manufacturing passes through more processes.
Departmentation by Process Disadvantages: • Heavy cost of operation • More specialist are essential to each process • Lack of overall development of managerial talents
Composite form of Departmentation Chief Executive North Division South Division T.V Deptt. Radio &Computers Transistors Production Marketing
Composite form of Departmentation In practice, no single pattern may suit all situations. The big enterprises may use a composite or combinations of method as shown in example. The functional Departmentation may be used at top level, sales department may be at territorial level, etc.
Factors taken into account while selecting method of Departmentation • Specialisation • Control • Co-ordination • Cost • Avoiding duplication of activities • Human considerations
