Departmentalization is the grouping of activities and responsibilities by sub-units of the organization. These sub-units are called departments. The division of labor or degree of departmentalization is driven by the need for specialization whether by process or purpose within an organization. The most common way of process departmentalization is the division of the firm into business functions, such as purchasing, manufacturing, sales, accounting, etc. Show
Departmentalization specifies how employees and their activities are grouped together. It is a fundamental strategy for coordinating organizational activities, because it influences organizational behavior in the following ways:
Departmentalization by function is a method of organizing work by grouping together people who perform similar or closely related tasks. One of the main advantages of departmentalizing by function is the development of localized expertise, or unit specialization. Each person within a functional unit gains knowledge and experience from working on one task for a long period of time. For example, a manufacturing company may create a production department, sales and marketing department, an accounting department, and a human resources department. Departmentalization by purpose is a method of organizing work by grouping together people who are responsible for achieving a single purpose. The employees in a given department are not necessarily doing the same tasks, but all of their work focuses on a common objective. Such departments are usually set up (1) to cater to a particular geographic region; (2) to produce, market and sell one particular product from a broaden family of products; (3) to serve one particular client or group of clients.
A disadvantage of departmentalization by purpose is that because each department is somewhat self-contained, stuff is often duplicated. This is an added cost. Matrix organization is a departmentalization by two dimensions such as function and purpose, simultaneously. Matrix organizations are found in all types of settings. Originally developed in aerospace companies, the idea of the matrix spread rapidly to such diverse companies as General Electric, Citibank, and Shell Oil and is used in government agencies as well. One of its most prevalent uses has been in universities, where academic departments such as accounting, marketing and finance often form a “matrix” with undergraduate, masters, doctoral or executive programs. Faculty members in such a university are responsible to both the department chair and the program director or administrator. Matrix organizations are not limited to the combination of function and purpose. Any two dimensions could be combined. The primary advantage of the matrix organization is that it takes advantage of the best aspects of the other methods of departmentalization. The matrix organization is not without problems. Because each employee reports to two supervisors, he or she may receive conflicting directives. Because of this, many managers prefer the one-boss reporting relationships in simpler organization structures. Disclaimer: We sometimes use affiliate links in our content, meaning, at no additional cost to you, we will earn a commission if you click through and make a purchase. For more information, visit our Disclaimer Page. Departmentalization is a process organizations use to divide their work into specific departments. Each department has its own particular goals and objectives that it needs to achieve to succeed. There are many different types of departmentalization, each with its benefits and drawbacks. Let’s take a closer look at some of the most common types. What is departmentalization?It is typically used to describe different company areas or discuss the various departments within a company. Departmentalization divides an organization into other departments to improve communication, coordination, and productivity. It also helps to clarify who is responsible for what tasks and allows for better delegation of duties. Related: Departmentalization by Function What Are the objectives of departmentalization?Departmentalization has expanded in today’s age. As a result, several organizations have recognized the importance of this approach and implemented it for various purposes. The objectives of departmentalization include:
Related: Teamwork in the Workplace Types of departmentalizationThere are different types of departmentalization, each with its advantages and disadvantages. To make the best decision for your organization, it’s essential to understand the different types of departmentalization and what they entail. Functional departmentalizationThe goal of this organizational structure is to group activities into functional departments. In this departmentalization strategy, the department’s structure is based on activities related to each department member’s function or expertise. This way, companies can pursue economies in scale and use shared skills or specialized knowledge across departments that match up well according to the company’s needs. If a company is developing a new product, it might have one group of the marketing department, another team of software designers, and yet another human resource. These groups work within their teams to complete their focus areas and expertise. Department members share a common goal when departmentalizing by function to achieve shared organizational objectives. This departmentalization strategy is often used in large organizations because the company can benefit from diverse experiences and skillsets for one business objective. Many departmentalization strategies focus on the department’s structure and activities, but this departmentalization strategy focuses more on employees’ skills and abilities. The main disadvantage of functional departmentalization is that department members may not work on other projects outside their department. Additionally, this departmentalization strategy can be challenging to implement in smaller organizations because they may not have the human resources or need multiple specialized teams. Product departmentalizationWith product departmentalization, the company organizes employees’ by-products instead of functions. Each department is responsible for all aspects of design and production associated with one or more products (or even a specific product type). For example, department A might be responsible for designing and manufacturing cell phones, while department B is only focused on developing and producing tablets. Product departmentalization makes designing products tailored to each product line’s needs easier. By having separate departments dedicated to the business development process behind every product line, teams can more easily build a product that matches customer needs. On the other hand, product departmentalization can lead to less communication and coordination between teams. If each team is only responsible for a small portion of the product line, they may not be as invested in seeing the entire project through to completion. This can cause problems when different departments have conflicting ideas about how a product should look or function. In addition, departmentalization can be an expensive process. The company must support and maintain many employees to design and produce its product lines. If one department is not productive or efficient enough, it could prove costly for the entire business model. Related: Team Communication Customer departmentalizationCustomer departmentalization divides the company by customer groups or segments. Each department has its own strategic goals, processes, and procedures to serve customers in a particular segment well. This departmentalization strategy can be beneficial because it keeps each department focused on serving one customer group. In addition, since everyone is working toward the same goal, product development and production will likely run more smoothly than other departmentalization strategies. In addition, departmentalization can help with communication because everyone is on the same page and working toward achieving one goal. However, departmentalization can lead to conflict between departments. For example, department A might want to serve customers in segment B because there are more opportunities for growth and revenue. In contrast, department C may disagree with this strategy because the company’s current processes aren’t well-suited for serving those customers yet. This departmentalization strategy can lead to customer overlap if the company serves multiple customer segments. In this case, customers might be confused about which department they should go to for help or support. Matrix departmentalizationMatrix departmentalization combines the organizational structures of product and functional. The company divides its employees into product-based teams, each of which has a team leader who reports to both the functional and product managers. This type of departmentalization allows for more communication between different types of employees while still encouraging departmental autonomy. The matrix departmentalization is especially useful when multiple product lines are being developed at once because employees can share knowledge and expertise across department boundaries to work more efficiently together. The main disadvantage of matrix departmentalization is that it can be challenging to balance the demands of multiple bosses. As a result, employees may feel pulled in different directions, and conflict can arise when team members have other priorities. Additionally, this type of departmentalization can confuse employees who are not used to working in a matrix structure. Related: The Benefits of Working Together Geographic departmentalizationGeographic departmentalization is the grouping of employees based on their physical location. This type of departmentalization can be helpful when an organization has geographically dispersed customers. For example, a company might have separate departments for North America, Europe, and the Asia Pacific. This allows the company to tailor its products and services to meet each region’s customers’ needs. The disadvantage of geographic departmentalization is that it can be expensive to maintain multiple departments in different locations. Additionally, it can be difficult to coordinate activities between departments located in other parts of the world. Process departmentalizationProcess departmentalization is a way of grouping activities by the production processes. In this type of departmentalization, the departments require a workforce and materials to carry out operations. This is often used in manufacturing businesses, where products move through several stages before completion. For example, a company might have a department for cutting materials, assembling parts, and packaging. This type of departmentalization can be helpful when an organization wants to ensure that each team member understands what goes into their specific task. It can also be helpful when an organization wants to change a process, as it can do so without impacting the rest of the business. However, process departmentalization can also have some disadvantages. First, it can be difficult for employees to move between departments. Second, it cannot be easy to track inventory and production processes when they are departmentalized. To decide whether departmentalization is right for your business, consider the advantages and disadvantages listed above and what you think will work best for your organization’s needs. Divisional departmentalizationDivisional departmentalization is when the firm develops independent lines of business that operate as separate companies, all contributing to the corporation’s profitability. The advantage of departmentalization is focusing on different types of customers (or even individual needs within each type). For example, department A might deal with customers with low technical knowledge, and department B might deal with customers with high technical knowledge. Department C might deal with customers in the middle. This specialization allows the company to develop products and services tailored to each customer’s needs. It can also shorten product development cycles, which means that it might be helpful for businesses that are managing multiple projects at the same time. The main disadvantage of departmentalization is the potential for inefficiencies. For example, department B might be highly efficient at servicing customers with high technical knowledge, and department A might be highly efficient at servicing customers with low technical knowledge. However, department C might not be as efficient at either servicing high or low-tech customers and might need to rely on the other two departments for help. This can lead to coordination problems and inefficiencies across the company. Planning Task ForcePlanning task forces can help develop plans because they bring together people with different perspectives. For example, the line managers on the task force have a vested interest in seeing the plan succeed, and they can provide valuable insights into how to make it work. Additionally, members from other departments can offer their perspectives on the plan and how it will impact their areas of the organization. By bringing all these different viewpoints together, the task force can create a well-rounded plan with a greater chance of success. If your organization considers using a planning task force, it’s essential to select the members carefully. Choose people with the knowledge and experience necessary to provide valuable input into the planning process. Additionally, you’ll want to make sure that the task force members are committed to working collaboratively. A planning task force can be a powerful tool for developing an effective plan with the right people. Task forces can be helpful in other ways as well. For example, a task force can be assembled to help manage the transition if your organization faces a significant change. Such a group can help to develop communication plans, identify potential risks, and create processes for dealing with the change. In addition, by bringing together a group of people with different perspectives, a task force can provide valuable insights and assistance during times of change. Related: Group Communication Advantages of departmentalizationThere are several advantages of compartmentalization, which include the following:
Disadvantages of departmentalizationWhile departmentalization can have some advantages, there are also several disadvantages to consider before implementing this organizational structure. These disadvantages include:
Related: Benefits of Cross-functional Teams ConclusionThere are many different ways to departmentalize an organization, and each has its benefits and drawbacks. By understanding the different types of departmentalization, you can make a more informed decision about which is best for your business. Have you tried using one of these methods? Let us know in the comments how it went! FAQOrganizational structure is how a company is structured, including organized and managed. Many factors impact organizational structure, such as the company’s size, geographical location, industry, and more. When it comes to a company’s management and organizational structure is a set of rules and guidelines used to establish clear lines of authority. These structures must be clearly defined and communicated to have an effective organization. • Functional• Product• Matrix• Customer• Divisional • Geographic The four common types of organizational structures are functional, divisional, matrix, and flatarchy structures. A functional organizational structure is a type of organizational structure that groups activities together by function. This structure is common in companies with a wide range of products or services. Functional departmentalization is a type of organizational structure in which business activities are grouped together by function. Example departments might include accounting, marketing, and human resources. This type of departmentalization is advantageous because it allows for specialization and efficient use of resources. |