What is Departmentation and How Is It Done?

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As one gets from the name, the word departmentation refers to the division of the labor, instead of the individuals, of the group of the various types of the activities that are involved. The departments are formed from the related activities that have the ability to form various semi independent units.

The process of the departmentation generally follows no stiff rules but the main purpose of carrying on with the process of the departmentation is to provide the level of the convenience to each of the organization.
The whole or the total business activity is divided in to the work units as per the convenience of all the organizations.

But the basis on which the departmentation may be or can be done, can be summarized as the follows –
1. Departmentation by the time –

a. The main point here, on which the departmentation is based, is the ‘time’.
b. People can be easily supervised.
c. Working as the exemplified by the shift working in the factories, acts as a great example for explaining the departmentation by the time.

2. Departmentation by the location or the place –

a. A really good example of this type of the departmentation depending on the location can be the regional offices spread over the number of the places, branch offices etc.
b. One of the possibilities includes the presence of the manufacturing activity at one place and the marketing activity at a different place.

3. Departmentation by the functions –

a. A separate department can be formed depending on the nature of the activity that is to be performed.
b. The various activities that are closely related can be brought together in this type of the departmentation.

4. Departmentation by the processes –
a. Different processes are converted to the different departments in this type of the departmentation.
b. For example, various processes like the spinning, the weaving, the dyeing etc are involved in a textile mill and depending on these processes only, new departments have come up.

5. Departmentation by the divisions –

a. Before going any further, it is very important to understand the meaning of the word ‘divisions’.
b. The divisions can be defined as the extensions of the concept of the departments.
c. In this type of the departmentation, the departments act as the cost centers.
d. The divisions act as the profit centers.
e. The divisions are accountable to the income as well as the expenditure.

6. Strategic Business Units (SBU) –

a. During the engagement of the organization in the multiple businesses, there is a dire need for treating each of the business unit as a strategic unit and for fulfilling this purpose, an independent competitive business approach is very essential and here these units are referred to as the strategic business units.

Advantages of the process of the Departmentation
1. The departmentation is greatly based on the logics.
2. With the help of the departmentation, proper attention can be given to the various activities and hence, resulting in the growth of the organization.
3. Synergy can be brought in to the various results.
4. The departmentation results in establishing the team spirit and the co–operative culture.

This article has been written by KJ Singh a MBA Graduate from a prestigious Business School In India
Article Published:June 14, 2011
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  • Subrata Kumar Paul December 17, 2012 at 11:41 pm

    very good job….tnx 4 such help

  • martin birungi September 25, 2014 at 12:59 am

    i have liked the way u have elaborated the concept departmentation

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