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
- 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 specialised skills. The departmental heads ensure efficient functioning of their departments within the broad principles of organisation (scalar chain, unity of command, unity of direction etc.)
- Flexibility: In large organisations, one person cannot look after all the managerial functions (planning, organising etc.) for all the departments. He cannot adapt the organisation to its internal and external environment. Such an organisation would become an inflexible organisation. Creating departments and departmental heads makes an organisation flexible and adaptive to the environment. Environmental changes can be incorporated which strengthen the organisation’s competitiveness in the market.
- Sharing of resources: If there are no departments, organisational 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.
- Specialization: Division of work into departments leads to specialisation 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. Specialisation promotes efficiency, lowers the cost of production and makes the products competitive.
- 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 manager’s task is clear and specific. There are opportunities to improve performance in their area of specialisation.
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