Departmentalization (or departmentalisation) refers to the process of grouping activities into departments. Division of labour creates specialists who need coordination. This coordination is facilitated by grouping specialists together in departments. Show
Popular types of departmentalization[edit]
Owing to the complexity of tasks and the competitive environment in which organisations operate, they often use a combination of the above-mentioned methods in departmentalization. Some philosophical considerations[edit]As March and Simon (1958) noted when tracing a first approach to departmentalization back to Aristotle (Politics, Book IV, Chap. 15), the problem of distributing work, authority and responsibility throughout an organization is hardly new. In modern times, Gulick and Urwick (1937) were the first to introduce a theory of different departmentalization strategies, which were referred to as departmentalization by purpose and departmentalization by process.
Studying the above characterizations of the two forms of departmentalization we note that purpose decentralization is concerned with building work around specific products, customers, or geographic locations, while process departmentalization encompasses the efficiency of ”production”. March and Simon (1958) described the basic difference between the two ways of departmentalization as following:
Author's note: Please keep in mind that the content of the term "process" as it is used today in concepts such as Business Process Management or business process reengineering differs significantly from its use by Gulick and Urwick. While G. and U. refer to functional decomposition when using the term "departmentalization by process", process orientation in today's meaning is more comparable to what G. and U. refer to as "purpose departmentalization". When taking a closer look at the three ways of departmentalization by purpose–product, customer, and location–we note that there are some specific advantages related to it. First, self-containment tends to improve the ability for internal coordination within the unit. At the same time, the need for developing and maintaining extensive external coordination mechanisms is reduced. Second, a clearer focus on the purpose itself–serving a specific customer or market–is enabled. On the other hand, the sense of independence may result in a drift-off from the achievement of the overall objectives of the organization. Therefore, several authors have emphasized the need for establishing control systems that serve the purpose of allowing decentralized decisions, while still aligning all sub-units to the overall goals of the organization (Drucker 1954, Koontz & O’Donnell, 1964). Departmentalization by process, on the other hand, seeks to benefit from the advantages that are found in high specialization, and tends to be very efficient in some instances. A high degree of specialization leads to the development of proficiency and professional competence, as well as it enables, and implies, the development of centralized control functions. On the other hand, the problem of aligning individual and organizational goals remains. In addition, in this case, we would also need to consider departmental goals. Also, the high level of specialization is a barrier for the flexible reallocation of resources within the organization, i.e. people can not perform other tasks than those they are working with in their functional occupation. The most common way of process departmentalization is the division of the firm into business functions, such as purchasing, manufacturing, sales, accounting, etc. Looking at the circumstances encompassing the use of either of the departmentalization strategies, we find that departmentalization by process generally is advantageous in cases of stable environments, while departmentalization by purpose, featuring self-containment and certain amounts of independence, appears to be the appropriate strategy for handling changing or unpredictable circumstances. Alfred Chandler (in: March and Simon, 1958) identified a correlation between the application of purpose departmentalization and the use of a diversification strategy:
Recent trends in departmentalization[edit]
References[edit]
When departments are grouped together on the basis of products or geography the organization is using a?Matrix Organizations
Employees may be organized according to product and geography, for example, and have two bosses. The idea behind this type of matrix structure is to combine the localization benefits of the geography structure with those of the functional structure (responsiveness and decentralized focus).
Which of the following is the basis for grouping positions into departments and departments into the total organization?Chapter 7 management. What is the organizational structure used by a business that has multiple products functions or geographic locations?Divisional types of organizational charts have their own division which corresponds to either products or geographies. Each division contains the necessary resources and functions needed to support the product line and geography. Another form of divisional org chart structure is the multi-divisional structure.
What is the term for an organization that is divided by geographic location?Geographic organisation is an organisation structure where company hierarchy is divided on the basis of geographic location in which company operates which is headed by a centralised head office. This kind of organisational structure serves distinct needs of various different groups within and outside the country.
|