DEPARTMENTATION

DEFINITIONS
Grouping of people or activities with similar characteristic of a complex organizational structure into smaller flexible units Division of labor into parts responsible for different tasks Creation of smaller semi-autonomous units with independent responsibilities Establishment of distinct units or subsystem within the organization

IMPORTANCE OF DEPARTMENTATION
Fixation of responsibilities Facilitation of autonomy Ease of communication, coordination and control Appraisal of performance Accountability Specialization

BASES OF DEPARTMENTATION
Departmentation by function Departmentation by product Departmentation by customers Departmentation by territory Departmentation by time Departmentation by matrix

DEPARTMENTATION BY FUNCTION
Grouping of activities by the work or function performed by them Advantages: 1. Interdepartmental coordination is facilitated 2. Simpler and more comprehensive structure 3. Logical reflection of the structure Disadvantages: 1. Chances of centralization in decision making 2. Tendency for functional independence

DEPARTMENTATION BY PRODUCT
Grouping of activities and people based on product line. Advantages: 1. Each division is interdependent 2. Greater effort on product line and better customers service 3. Permits growth and diversity of product and services Disadvantages: 1. Internal competition among the divisions 2. Extra cost for maintenance of individual product sale force 3. Chances of occurrence of lack of coordination among various units

DEPARTMENTATION BY CUSTOMERS
Grouping of activities based on common types of customers Advantages: 1. Customers are the priority 2. Greater specialized customer services Disadvantages: 1. Unequal development of customers groups leading to redundancy and under utilization of facilities and manpower

DEPARTMENTATION BY TERRITORY
Grouping based on serving different geographical areas Advantages: 1. Generation of regional expertises 2. Emphasis on local market and problems 3. Face-to-face interaction with local minds Disadvantages: 1. More managerial levels leading to higher cost of coordination and control overhead and increased problems of top level management

DEPARTMENTATION BY TIME
Division of staff possessing different set of skills and abilities based on time Advantages: 1. Easy and efficient adoption of change of plans 2. Releases the top level for more important and central decisions Disadvantages: 1. Duplication of work, resulting in redundancy

DEPARTMENTATION BY MATRIX
Collaboration of functional and product departmentation, attempting to capitalize simultaneously on both types of departmentation Advantages: 1. Balanced and flexible 2. Better facilitation of communication and coordination Disadvantages: 1. Problems could arise when project managers do not see eye-to-eye

HYBRID DEPARTMENTATION
Combination of functional, product, geographical and customer departmentation Capitalize on the strength of various structures, avoiding the weakness of each other.

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