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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For each process, departments are created and headed by people skilled and competent to carry that process.

6 Different Basis of Departmentation in an Organisation

Sales people understand consumer behaviour and provide them the desired services. Orgaanisation creation of a series of smaller departments enables the executives to get them specialised within a narrower range of activity.

This method is suitable for large-scale organisations who can afford its cost. The process of organising consists of dividing and grouping of the works to be done in an enterprise and assigning different duties and responsibilities to different people. For instance, a textile mill may be un into ginning, spinning, oeganisation, dyeing and finishing departments. Manufacturing paper, for example, requires processes like crushing the bamboo, making pulp, purifying the pulp, making paper rolls, and cutting it into rims.

Repeated handling of the same job with a very short cycle time required to complete that process leads to boredom.

It provides the advantages of specialisation required at each level of the total processes. Standards of performance for each and every department can be precisely determined. The goals of the business are common and everybody should try to achieve them in their respective fields. Depattmentation is possible due to two factors.

This type of departmentation may not provide opportunity for the departmfntation development of managerial talent. Departmentation means division of work into smaller units and their re-grouping into bigger units departments on the basis of similarity of features. The organisation chart of departmentation by process or equipment in the manufacturing department of a textile industry has been shown in Fig. These are as follows: The costs and revenues of all the products can be compared.


Output of one process department is input of the other.

Notes on Departmentation: Meaning, Importance and Basis | Organisation

People working in one department are closely knitted and work collectively towards achievement of departmental goals. Each department is headed by a person known as departmental manager. Grouping of activities and personnel into manageable units facilitates administrative control. Importance of Departmentation 3. It is suitable for organisations having wide geographical market such as pharmaceuticals, banking, consumer goods, insurance, railways etc.

Sometimes, several bases of departmentation may be used simultaneously. Managers are able to promote sales as they are aware of the local conditions of the area where they are operating.

Departmentation: Need, Significance and Process

He, thus, controls activities of his department to ensure that the product contributes to the organisational goals. The departmental heads ensure efficient functioning of their departments within the broad principles departmentatjon organisation scalar chain, unity of command, unity of direction etc. It helps in coordinating the activities of different products.

This limitation of control restricts the size of the enterprise unless it divides and vepartmentation its activities into departments. It also facilitates recruitment and selection of top managers from within the organisation rather than depending on outside sources. Organisation involves dividing and grouping of activities to be done in an enterprise. It is necessary to get the co-operation of everybody in the organisation to make it a success.

Due attention to the human factors will make departmentation more effective and more efficient. Another important factor to be considered while creating separate departments is the expense involved and economy in its operations. The production function may be further subdivided on the basis of the process of production when the production process has distinct activity groups, they are taken as the basis of departmentation.


Efficiency can be achieved if departments are created for each process as each one has its peculiarities. In the absence of departmentation, managers can supervise a limited number of activities, depending upon their skills and abilities.

These sub-departments can be further sub-divided if needed. In large organisations, one person cannot look after all the managerial functions planning, organising etc. A department is a distinct section of the business establishment concerned with a particular group of business activities of like nature. The top-level executives, groups activities in various departments, such as production, marketing, finance, human resource, research and development, etc.

Quick Notes on Departmentation.

Meaning of Departmentalisation 2. As this is a suitable form of departmentation for stable organisations, organisations operating in the dynamic environment do not accept functional activities as the basis of departmentation.

Departmentalisation : Meaning, Need and Types

With this type of assignment, the executives can focus their experience and interest only on that work assigned to them departmentally rather than concentrating on overall company interests and policies. Lastly, assignment of work to manageable units can be effectively made under divisionalised structure of organisation. This article throws light upon the six different basis of departmentation in an organisation.

The departmental managers can delegate tasks and duties to the subordinates, and they are accountable to the chief executive for the performance of the department. This basis is suitable for large-sized organisations which have activities dispersed over different geographical areas.