Departmentalization

Departmentalization refers to the formal structure of the organization, composed of various departments and managerial positions and their relationships with each other. As an organization grows, its departments grow and more sub-units are created, which in turn add more levels of management.

Advantages/Importance of Departmentalization

1. Organization Structure

Division of work into units and sub-units creates departments. Supervisors and managers are appointed to manage these departments. People are placed in different departments according to their specialized skills. The departmental heads ensure efficient functioning of their departments within the broad principles of organization (scalar chain, unity of command, unity of direction, etc.)

2. Flexibility

In large organizations, one person cannot look after all the managerial functions (planning, organizing, etc.) for all the departments. He cannot adapt the organization to its internal and external environment. Such an organization would become an inflexible organization. Creating departments and departmental heads makes an organization flexible and adaptive to the environment. Environmental changes can be incorporated which strengthens the organization’s competitiveness in the market.

3. Sharing of resources

If there are no departments, organizational resources; physical, financial, and human, will be commonly shared by different work units. Departmentation helps in sharing resources according to departmental needs. Priorities are set and resources are allocated according to the need, importance, and urgency regarding their use by different departments.

4. Specialization

Division of work into departments leads to specialization as people of one department perform activities related to that department only. They focus on a narrow set of activities and repeatedly performing the same task increases their ability to perform more speedily and efficiently. Specialization promotes efficiency, lowers the cost of production, and makes the products competitive.

5. Development of managers

Departmentation enables departmental heads to be creative in making decisions with respect to their departmental activities. Training needs can also be identified because the manager’s task is clear and specific. There are opportunities to improve performance in their area of specialization.