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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These sub-departments can be further sub-divided if needed.

The departmental managers, therefore, must have specialised skills to determine the consumer needs. But once the various activities have been identified, it is necessary to group them together on some logical basis so that a team can be organised. The organisation chart for customer departmentation for a lending company appears as follows: Each department is headed by a person known as departmental manager.


For example, activities carried by a manufacturing organisation are production, finance, personnel and sales. It is useful for organisations which are engaged in the manufacture of products which involves several processes. The machine cannot be stopped in orgahisation steel and workers, therefore, have to work in shifts. They may not specialise in all the functional activities. There are several bases of Departmentation.

Ogganisation are placed in different departments according to their specialised skills. Clear identification of responsibility and authority increases efficiency of the departmental activities. An organisation where the basis of departmentation is to sell goods according to customer needs justifies its existence.


What is Departmentalization? definition, objectives and methods – Business Jargons

Demand for the same product for same set of consumers differs during different times. It economizes operations and makes possible the adoption of logical and comprehensible structure. Departmentation creates difficulties of communication among the various departments of the organisation and renders planning and control more difficult. Clear identification of customers and their needs is the basis of customer departmentation.

Supervisors and managers are appointed to manage these departments. In the absence of departmentation, managers can supervise a limited number of activities, depending upon orgahisation skills and abilities. Departmentatioon functions related to particular product are bought together under the umbrella of product manager.

Creating departments and departmental heads makes an organisation flexible and adaptive to environment.

In fact, many large companies are diversifying in different fields and they prefer product departmentation. Similarly, funds required for each product line are different. One manager may not have skills to carry out all operations for different product lines. An alternative to this is parallel pattern of process departmentation against the serial pattern work moves in a series of steps as described above.

After reading this article you will learn about: The following factors are to be taken into consideration while assigning activities into departments: By creating departments where each departmentationn department looks after one product or product line only, ij, fixing responsibilities and assessment of performance can be done efficiently.


A large industrial buyer for one product, for organisaton, may be a small buyer for another product.

Essential services like hospitals and fire stations deal with emergencies and, thus, people work in shifts. It enables the personnel to become experts.

Departmentation: it’s Meaning and Definition – Explained!

If there are no departments, organisational resources; physical, financial and human, departmentaiton be commonly shared by different work units. When responsibility is clear, authority can also be delegated to managers. They develop understanding with the consumers and build clientele for the organisation.

Role, Steps for Designing and Its Features. Thereafter, some other basis of departmentation has to be used. Each product manager is in charge of his product line though general managers of various functional areas provide them the necessary support.

He, thus, controls activities of his department to ensure that the product contributes to the organisational goals.

Notes on Departmentation: Meaning, Importance and Basis | Organisation

Departmentation helps in the development of managerial skill. Division of work into departments leads to specialisation as people of one department perform activities related to that department only. 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.