DEPARTMENTATIONModule-4

Meaning

• Departmentation means the process by which similar activities of business are grouped into units for the purpose of facilitating smooth administration at all levels.

Need and Importance of Departmentation

• It increases the operating efficiency of the employees.

• It makes the executive alert & responsible in his duties.

• It increases the prestige & skill of the departmental heads.

• It helps in better co-ordination among the managerial personnel

Basis for Departmentation

• Maximum use: optimum utilisation of resources

• Interest: supervising new activities generates interest among people.

• Competition: single person handling same kind of job will eliminate competition

• Policy matter: e.g. finance department may handle the monetary aspects of sales dept.

• Separation: complicated activities can be handled efficiently when separated

• Proper attention: activities should be assigned to those who have the skill and can devote attention

• Co-ordination: team work

Types of Departmentation

Functions product or service regions

Customers process

time Typesnumbers

Marketing channels

Departmentation by Functions

General Manager

Production Sales Accounts Finance Purchase

• Activities are grouped on the basis of functions which are to be performed.

• Principle of specialization and division of labor• One of the simplest methods of departmentation.

Departmentation by Product/Service

General Manager

Sports goods division Hosiery Division Plastics Division

Production Sales Accounts Finance Purchase

• Made by large scale business-units• Functional units for each product are created within the general

structure.

An Example of Organisation by Product/Activity

Imaging andPrinting Group

PersonalSystems Group

EnterpriseSystems Group

HP ServicesHP Financial

Services

Hewlett Packard

Departmentation by Regions/Area

Board of Directors

Managing Director

General Manager

Manager Manager Manager Manager north zone east zone West zone South zone

Organisation by AreaHewlett-Packard’s Headquarters Worldwide

• All activities in an given area are grouped under one manager.E.g. Indian Railways, Continent wide market, country wide markets

AmericasHouston, Texas

Europe, Middle East, AfricaGeneva, Switzerland

Asia PacificHong Kong

Hewlett Packard

Departmentation by CustomersBoard of Directors

Managing Director

General Manager

Marketing Manager

Consumer sales Industrial Buyers Exports

Departmentation by Customers

• Specialised attention & service to every customer

• Improves goodwill and sales.

Departmentation by Process/ Equipment

General Manager

production dept. Marketing dept Finance dept

Lathe Grinder Assembly Superintendent Superintendent Superintendent

Departmentation by Process

• Grouping activities into departments on the basis of processing or technologies involved in the production of a product.

• There is no duplication of costly and heavy equipments.

Textile Mill

Ginning Spinning Weaving Dyeing Printing Packing Sales

Departmentation by Process

Sugar plant

Crushing Refining Finishing

Departmentation by Time

• Activities are grouped together on the basis of the time of the performance.

• 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)

Departmentation by Numbers

Departments made on the basis of allotment of number of men to them.

Principle of span of Management is used under this type of departmentation

Example: Army soldiers are classified intoSquadsbattalions( 300-1200)companies( 80-225)Brigades

Regiments