written by | September 27, 2022

Departmentation: An Enterprise to gain Coordination

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Table of Content


Different tasks are divided and given to different persons as part of the organisational process. All developing organisations place a high priority on segmenting and organising their activities. The scale of the firm would be constrained by the span of management, or the cap on the number of staff that can be supervised directly. In order to assist the company's growth, the activities and employees should be split and organised. Departmentation is the division of the workload and the organisation of the workforce into groups that make sense. 

Did you know? There are a total of 23 departments in RBI! 

Meaning of Departmentation 

The practice of departmentation is used to organise activities into divisions for the benefit of management at all levels. Through this process, an organisation's staff and operations are separate departments.

Naturally, dividing the job entails identifying distinct tasks that must be completed in order to achieve the company's goals. The different activities must then be grouped together logically once they have been recognised. This process of grouping is known as departmentation.

The administrative entities that are now in place may be referred to as branches, divisions, or by various names. A manager will be granted power over and responsibility for each division or department as a separate area of operations. The departments are administrative entities that streamline management tasks into manageable time frames. 

Also read: What are the Top Food Business Ideas in 2022?

Need and Importance of Departmentation

Making each departmental group manageable in size and securing the advantages of knowledge are the fundamental requirements of departmentalization. A firm can grow to any size thanks to the assortment of operations and, consequently, human departments. 

The following factors make the departmentalisation necessary: 

Advantages of expertise

Departments make it possible for a business to gain experience. The firm grows and operations become more efficient when each department addresses a crucial function and ultimately helps in becoming an expert in that particular area of work. 

Sense of Autonomy

Throughout the company, departments are typically established with a certain level of independence and autonomy. Within the framework of the organization's general structure, department managers have the freedom to make their own decisions. Having a sense of autonomy increases motivation and job satisfaction, which boosts productivity. 

Expansion

Only a select few employees can be managed and directed by a manager. The department's team of employees and assortment of operations enable the company's growth and development. 

Fixation of Responsibility

Departmentalisation helps every individual able to understand his or her specific place in the larger company. An individual could be held accountable for carrying out his responsibility by providing a clearer, more exact, and more accurate definition of what constitutes accountability for results. 

Enhancing Managerial Skills

Aids in the development of managerial abilities inside departments. Development is made possible by two things. Managers first concentrate their efforts on a few particular issues that are useful in giving employees on-the-job training. Second, since managers have specific responsibilities and training can give them the chance to perform better in their field of competence, the need for more managerial training can be easily detected. 

Facility in Appraisal

When distinct tasks are given to departmental staff, evaluating managerial performance is much simpler. The department assists them when specific activity areas and performance benchmarks are established and organised. 

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Administrative Council

A department is a way to break up a big, complicated organisation into more manageable administrative parts. The organisation of tasks and people into controllable units makes operational management easier. It is possible to correctly identify the performance criteria for every department. 

Bases of Departmentation 

There is no one optimum departmentalisation method that works for all organisations or in all circumstances. The strategy that will be applied will rely on the specific circumstance and what the management thinks would produce the best outcome for them in that circumstance. There are, nevertheless, a few fundamental strategies for allocating duties within an organisation. 

Departmentation by Function 

This is the most basic departmental structure. Focused on functional roles including personnel, research and development, sales and marketing and finance.

These tasks fall under the purview of the vice president of every function. Because it effectively utilises specialised resources, it is primarily utilised by smaller businesses with a constrained product offering. 

A functional organisation also facilitates supervision because every manager simply needs to be an authority in a small set of competencies. Furthermore, a functional organisation facilitates the mobilisation of specialist abilities and their application whenever they are most required. 

One of the drawbacks is that functional managers must answer to central headquarters and may be required to wait for a long time before a call for assistance is responded to. This makes it harder to acquire timely judgments or action on a problem. 

Furthermore, it is frequently more difficult to assess responsibility and evaluate performance. Finally, top managers may run into difficulties synchronising the tasks performed by all of the organization's members. 

Departmentation by Product: 

This strategy gives one management complete control over all the assets and power needed to manufacture and promote a good or service. In this case, units are created based on the product type. 

Every autonomous department works to develop and broaden its own product portfolio, and each division's general manager is accountable for the division's revenues, shortcomings, and achievements.

It makes it easier to quantify managerial and operational performance, and it allows you to assess how much every product line contributes to the organization's overall earnings.

The primary drawbacks of this kind are that it stimulates intense internal competition, that may or may not be beneficial, and that there is an absence of coordination between different departments unless the central administration retains the capacity to make policies and handle finances. 

Departmentation by Customers: 

When serving several customer segments with effective service is of utmost importance, this organisational framework is employed. For instance, the demographic profiles and demands of business programme students who are enrolled full-time during the day Vs those who are enrolled part-time during the evening at institutions typically differ. Buyers of commercial products and buyers of consumer products can both be found in an organisation. 

Departmentation by Area: 

The distinctions might be made based on location. For big, geographically dispersed organisations, it is very helpful. For instance, in the context of multinational organisations, the finance and insurance divisions may occasionally be in different nations as well as different areas of the same country. 

Departmentation by Time: 

Organizations that operate 24 hours a day are typically divided into departments based on shift labour. Healthcare and telecommunications, for instance. There may be three shifts at a telephone company: day, evening, and night. For every shift, a dedicated department could exist.

Decisions are made quickly in this sort of departmentalisation since they are made close to the operation. It makes divisions more adaptable to potential changes, frees up top management to focus on more crucial central choices, and makes development simpler because any additional facilities may be added as needed.

Due to the fact that every department will employ its own personnel and experts, these options entail a number of drawbacks. Additionally, since every department is in charge of profit and loss, occasionally divisional interests may come before organisational objectives. 

Departmentation by Process: 

It describes how an organisation is set up in accordance with technology or work procedures. A business that is departmentalized by process could have shipment and delivering, foundry, inspection, and so on. 

Departmentation by Territory

When territorial division seems practical based on some regional market segmentation, territorial departmenting is particularly common for sales. Additionally, it offers a solid framework for training and development since the executive may show proficiency in a particular region and therefore earn promotion to a more significant area.

This approach is used when being close to local circumstances seems to give benefits like reduced operational costs and chances to take advantage of desirable regional circumstances as they develop. 

Also read: How to Grow Your Business? 10 Key Steps

Conclusion 

The number of workers grows along with an organization's size. The total number of people that an organisation may govern directly is constrained. If an organisation chooses not to use the mechanism of departmentation, this restriction limits the size of the organisation. 

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FAQs

Q: What is departmentalisation? Explain with an example.

Ans:

When a company organises its departments according to the market it intends to serve, this is known as "market departmentalisation." Markets are big collections of consumers, each with a different set of wants. For instance, a life insurance firm may include divisions for covering people, non-profits, and big businesses.

Q: What are the essentials of Departmentation?

Ans:

The main goals of departmentalisation are to ensure that the organisation benefits from specialisation and to manageable organizational unit sizes. Regardless of the departmentalisation strategy chosen, there may be several demands to add more departments over time.

Q: What is Departmentation and why is it needed?

Ans:

Every individual may realize their unique position in the overall organisation thanks to departmentation. An employee can be held accountable for carrying out his task by providing a clearer, and much more exact interpretation of the responsibility for results.

Q: What is Departmentation in an organisation?

Ans:

An organisation can be divided into distinct departments, each of which is responsible for carrying out certain responsibilities in line with its area of expertise. Departmentalisation within an organisation can take place along operational, geographical, manufacturing, and customer/market divisions.

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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.