Banks, insurance companies, transport companies, distribution agencies etc. The responsibility for results cannot be fixed on any one functional head. For a trader, the major activities are buying and selling. If the co-ordination is absent, group members may be pulled in different directions and work at cross purposes. This helps in eliminating the unprofitable products and promoting the profitable ones thereby increasing organisational efficiency. Geographic proximity of subordinates Nearer the subordinates to supervisor, greater the span.
Specially, this method is used in large scale manufacturing concerns such as textile, cement, chemical, medicine etc. Production department, for example, has departments to handle purchasing, production planning and control, manufacturing etc. When a broader function is divided into small segments and a particular segment is assigned to each manager, the area to be appraised is clearly known; the factors affecting the performance can be pointed out more easily. Merits of Product Departmentation : Departmentation on the basis of product has the following merits: i Better performance: One manager may not have skills to carry out all operations for different product lines. It is suitable for organisations where limited number of products are produced. Organization Life Cycle Like other living things, organizations have life. Outsourcing means contracting business functions to outside contractors or suppliers.
Under this form, various departments are created on the basis of nature of functions to be performed like production, marketing, finance, personnel etc. Departmentation on the basis of product is made where the business has produced a number of products. The foundation of matrix is a set of functional departments. Specialisation: The activities of an organisation should be grouped in such a way that it leads to specialisation of work. Thus if the managerial function is conceived as a set of activities facilitating the work of the organisation, these activities can be carried out more efficiently and effectively through the division of work leading to a specialisation of managerial function. Given the nature of these choices and decisions, departmentation and the criteria or bases used for creating departments can have serious impact on the organization's effectiveness.
It also facilitates recruitment and selection of top managers from within the organisation rather than depending on outside sources. Concept of Departmentation : Departmentation refers to grouping of jobs, identified earlier, into work units on some logical basis. These sub-departments can be further sub-divided if needed. It is a process that enables a person to sort out issues and reach to a. The local managers are more familiar with the local customs, preferences, styles, fashion, etc.
Nature of work similarity or dissimilarity of jobs, degree of needed interaction, and the extent of standardised procedures in use. Thereafter, some other basis of departmentation has to be used. Thus he enjoys satisfaction of being important to the organisation. After reading this article you will learn about: 1. This is more important to the organisation which operates in different geographical areas. Departmentation means division of work into smaller units and their re-grouping into bigger units departments on the basis of similarity of features.
Customer Departmentation In customer-based departmentation, departments are created around the markets served or around marketing channels. C Departmentation by Territory: Territorial or geographical departmentation is specially useful to large-scale enterprises whose activities are widely dispersed. Production department, for example, has sub-departments to manage purchase, production planning and control, manufacturing etc. Moreover it is important to know how many specialized persons are there on a group instead of skilled and unskilled total no. This principle affects everyone every day. Workers work in shifts; morning, afternoon and night, so that work can progress continuously.
Accountability: Top managers find it difficult to hold accountability of any one department for failure of the product in the market. In departmentalization, works are divided into different departments on the basis of their nature and responsibility is entrusted to skilled and efficient manager. Airlines, where flights arrive and depart, work throughout the day. Territory or Geographic Departmentation : In territorial departmentation, organisation creates departments: i Close to its customers because they are geographically dispersed over different areas, or ii Near the sources of deposits. There are two broad forms of departmentation: a.
Product departmentation Product Departmentalization jobs are grouped by product line in which each major product area is placed under the authority of a manager whom is responsible for all aspects of the product line. Departmentation by Task Force : 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. Process of forming employees into groups to accomplish specific organizational goals. Organizational structure and design include work specialization, departmentalization, chain of command, span of control, centralization and decentralization and common organizational designs. This all helps to manage the data, drive efficiency, and ensure integrity Schlumberger Human Resource Organization, 2010.
When both responsibility and authority are clearly specified, a manager knows what exactly he has to do in the organisation. Article shared by Departmentation permits an organization to take advantage of specialization and makes managerial control easier. Rather, employee takes their skills, abilities and experiences to other projects, one after the other. The basic aim of functionalization is to simplify complexity by grouping all the work to be done into major functional departments. References Organizing Function of Management. Departmentation by Time : This method of departmentation is used in situations where work is done round the clock because: 1. F Departmentation by Time and Numbers: Under this method of departmentation the activities are grouped on the basis of the time of their performance.