departmentalization

Introduction
1.When two or more people work together to achieve a group result, it is an organization. After the objectives of an organization are established, the functions that must be performed are determined. Personnel requirements are assessed and the physical resources needed to accomplish the objectives determined. These elements must then be coordinated into a structural design that will help achieve the objectives. Finally, appropriate responsibilities are assigned. 2.Determining the functions to be performed involves consideration of division of labor; this is usually accomplished by a process of departmentalization. Definition

3.Departmentalization or departmentalization refers to the process of grouping activities into departments. Departmentalization is the process of breaking down an enterprise into various departments. How jobs are grouped together is called departmentalization. Rationale for Departmentalization

4.A Department is an organization unit that is headed by a manager who is responsible for its activities. Departmentalization and division of labour are same things. However technically both are different. Both emphasize on the use of the specialized knowledge, but departmentalization has higher management level strategic considerations while the division of labour has a lower level operating considerations. This is the basis by which jobs will be grouped together, and every organization can have its own way of doing so depending on the business operations and company objectives.

Departmentalization is a process resulting out of choice to group tasks according to some criterion. The resultant process of departmentalization includes decisions regarding segregating organizational work, allocation of work to persons, telling all involved who is in charge and provide for the support needed by those. Given the nature of these choices and decisions, departmentalization and the criteria or bases used for creating departments can have serious impact on the organization’s effectiveness. Bases/Types for Departmentalization

5.Departmentalization subdivides work and workers into separate units responsible for the completion of specific tasks. Grouping related functions into manageable units to achieve the objectives of the enterprise in the most efficient and effective manner is departmentalization. A variety of means can be utilized for this purpose. The primary forms of departmentalization are by function, process, product, market, customer, geographic area, and even matrix. In many organizations, a combination of these forms is used. The bases or types for departmentalization are: (a)Functional Departmentalization.

The most widely used form of departmentalization is to group activities by function.. Functional departmentalization defines departments by the functions each one performs such as accounting or purchasing. Every Organization must perform certain jobs in order to do its work. For example, Manufacturing, Production, R & D, Purchasing etc. Same kinds of jobs are grouped together in departments. This kind of departmentalization includes persons with same knowledge or skills (like Accounting Department having persons of commerce, Marketing Department having MBA persons). As in department people with same skill and knowledge are there.

Their focus becomes narrow and they cannot appreciate each other’s work in the same department. Functional departmentalization is a method that has been and still is successful in most organizations. It makes sense since it is a natural and logical way of arranging activities. Functional departmentalization also facilitates coordination since a supervisor is in charge of one major area of activity.

(i)Advantages.Efficiencies from putting together similar specialist and people with common skills, knowledge, and orientations. In-depth specialization. Co-ordination within functional area. (ii)LimitationsPoor communication across functional areas. Limited view of organizational goals (b)Product or Service Departmentalization.Many companies utilize product or service departmentalization. To departmentalize on a product basis means to establish each major product (or group of closely related products) in a product line as a relatively independent unit within the overall framework of the enterprise. For example, a food products company may choose to divide its operations into a frozen food department, a dairy products department, a produce department, and the like. Product departmentalization can also be a useful guide for grouping activities in service businesses. For example, most banks have separate departments for commercial loans, installment loans, savings accounts, and checking accounts. Many home maintenance firms have separate departments for carpentry, heating, and air conditioning services.

(i)Advantages.Allows specialization in particular products and services. Managers can become experts in their industry. Closer to customers. (ii)Limitations Duplication of functions. Limited view of organizational goals. (c)Geographic (Territorial, Locational) Departmentalization.It groups jobs according to geographic region. Another way to departmentalize is by geographical considerations. This approach to departmentalization is important for organizations with physically dispersed activities. Geographical departmentalization is an arrangement of departments according to geographic area or territory.

It divides works well for international business. Geographical Departmentalization is beneficial when Organization are spread over a wide area. Even each part or areas have different requirement or interests. For example, marketing a product in Western Europe may have different requirements than marketing the same product in Southeast Asia. Market area is broken up into sales territories like Northern, Southern, West, East. The Salesman appointed for each territory report to their regional or territorial manager. These manager again reports to the sales manager who is head of the sales department.

(i)Advantages.More effective and efficient handling of specific regional issues that arise. Serve needs of unique geographic markets better. (ii)Limitations.Duplication of functions. Can feel isolated from other organizational areas. (d)Customer Departmentalization.Many organizations find it advisable to group activities based on customer considerations. Customer divisions are divisions set up to service particular types of clients or customers. Some companies or organization divides the different units based on customers or markets. For example, any PC manufacturing company like HP has different divisions like Consumer PC, Commercial PC, and Workstations etc. Nokia previously had three divisions like Consumer Phone, Business Phone & Smart Phone. Recently Nokia had changed their departmentalization from customer to process base. Now there are only two divisions : Hardware and Software base departmentalization. They will also sell their software to other mobile company. Another example is an educational institution offers regular and extension courses to cater to the needs of different students groups.

(i)Advantages.Customers’ needs and problems can be met by specialists (ii)Limitations.Duplication of functions. Limited view of organizational goals (e)Process and Equipment Departmentalization.It groups jobs on the basis of product or customer flow. Departmentalization is done on the basis of processing. In manufacturing organizations, the location of manufacturing plant or department can be at different location due to cost of raw material and even labour charges. Even departmentalization can be done depending on the types of machines required. The similar types of machines can be kept at one place e.g. all lathes, all drilling machines, all shapers etc. Activities are grouped into separate sections, each kept at one place.

(i)Advantages.More efficient flow of work activities.
(ii)Limitations.Can only be used with certain types of products (f)Time Departmentalization Another way to departmentalize is to group activities according to the period of time during which work is performed. Many organizations are engaged in round-the-clock operations and departmentalize on the basis of time by having work shifts. Activities are departmentalized by time (day, afternoon, night shift), although the work operations of all the shifts for the most part may be the same. Here, too, there may be an overlap in the departmentalization process. Where time is a partial basis for departmentalization, it is likely that other factors will be involved. For example, a maintenance division—based on function and services—may be further departmentalized by shifts, such as the maintenance night shift).

(g)Mixed/Combined Departmentalization.In order to achieve an effective structure, a supervisor may have to apply several types of departmentalization at the same time. This is referred to as “mixed” departmentalization. For example, there may be an inventory control clerk (functional) on the third floor (geographic) during the night shift (time). In practice, many organizations have a composite departmental structure involving functional departmentalization, geographic departmentalization, and other forms. However, supervisors of departments of considerable size may find it necessary to divide various jobs and skills into different groups under a lead person or foreman, who in turn will report to the supervisor. Whatever structure is chosen, the purpose of departmentalization is not to have a beautiful, well-drawn organization chart. The purpose is to have a sound structure that will best achieve the objectives of the department and the entire organization.

(h)Number Departmentalization.In number departmentalization, separate departments are made after analyzing and judging the maximum limit up to which number of persons can be managed or educated or supervised or taken care of. This method of departmentalization is generally used in schools and colleges for making division of classes. For example, students having numbers from 1 to 50 are made to sit in A division of their class and so on. Military forces also use this method.