What Is Departmentalization? Definition, Types, Techniques, & Importance

What is Departmentalization? Definition, Types, Advantages, and Techniques

What is Departmentalization?

Departmentalization or departmentation is the process of a logical grouping of similar nature functions into manageable units called departments on the basis of their nature and area specialization for the purpose of overall coordination of organizational resources.

Departmentation creates some independent functional units in the organization. It helps to increase the smoothness and working efficiency of the organization.

In an organization, many people perform various activities in different situations. The task’s nature, process, and procedures may vary. It is not possible to perform all types of work at a time and also in a group. It is essential to classify activities into different units.

This is where departmentation comes to play, it divides large and complex functions into smaller and flexible units to accomplish all the jobs in an effective and efficient manner.

Departmentalization is the means of dividing a large and monolithic functional organization into smaller, flexible, and administrative units – Louis A. Allen.

Departmentalization facilitates maintenance coordination, communication, and control among all the mechanisms of the organization. It creates separate units with independent responsibilities to the department managers who in turn improve their working efficiency and effectiveness. Besides, it also facilitates supervising and maintaining control over all functional units and therefore expansion of the organization becomes easier.

Types of Departmentalization

How departmentation is implemented in the organization? The chief executive of the organization groups the jobs into different departments on the basis of their nature such as human resources, marketing, finance, production, research, and development department.

Each department is headed by a senior called the department head. Eg. in the production department he is called the head of a production department and so on. Similarly, the respective department head is given sufficient authority to control his respective department, and also he is responsible for the performance of his department.

Also Read: What is Job Design? Definition, Meaning, Benefits, and Techniques

Departmentation can be improved by making a provision of providing bonuses and other facilities to a departmental manager who will perform better work. The following six are the main types of departmentation found in organizations.

Departmentation By Function

Departmentation by Function is a method of organizing teams and departments based on the specific functions they perform within an organization. It involves grouping individuals with similar skills and expertise together to carry out specific tasks efficiently.

For example, an accounting department would consist of accountants and financial analysts who handle financial-related tasks.

Departmentation By Product

Product or Service departmentation involves organizing teams based on the products or services offered by a company. Each team focuses on a specific product or service and is responsible for its development, production, and marketing. This approach allows for specialization and a deep understanding of the particular product or service.

Departmentation By Customer

Customer departmentation involves dividing teams based on different customer groups. Each team is dedicated to serving the unique needs and preferences of a specific customer segment.

This helps tailor products, services, and marketing strategies to meet the distinct requirements of different customer groups.

Departmentation by Geography

By Territory or Geography, departmentation involves dividing teams based on different geographical regions or territories. Each team operates within a specific area and is responsible for sales, distribution, and customer support within that region. This approach allows for local market knowledge and customization to cater to regional preferences.


Departmentation by Process

Process departmentation involves organizing teams based on the different processes involved in a company’s operations. Each team specializes in a specific process or workflow, such as manufacturing, quality control, or research and development. This ensures that each process is handled efficiently and effectively.

Departmentation by Time

Time departmentation involves organizing teams based on time-specific tasks or projects. Each team is assigned a particular time frame to complete their assigned tasks. This approach allows for effective coordination of time-sensitive projects and ensures timely delivery.

Advantages of Departmentalization

The major advantages and importance of departmentalization include the following:

  • Specialization at work
  • Increased efficiency
  • Fix responsibility and authority
  • Facilitation in administration
  • Feeling of Autonomy
  • Balanced workload
  • Management growth

Specialization at Work

Departmentalization leads to the benefits of specialization. Here, workers are divided into different departments on the basis of their nature and responsibility and are entrusted to a skilled and efficient manager. When a manager is involved in one specific function, his expertise and efficiency increase in that particular field.

Increase Efficiency

Departmentation helps to increase efficiency in work through specialization. Every member of an organization has a specific task to do when they involve in particular tasks repetitively their efficiency is increased in the given job.

Fix Responsibility and Authority

In every organization, there must be a balance between the responsibility and authority of an employee. In compartmentalization, work is divided into different units, and the respective department head is provided with fixed authority and responsibility to control his/her department.

Facilitation in Administrative

Here, the standard of performance of each department and the objective to be achieved is planned. When actual performance deviates from planned performance, corrective measures are taken to remove barriers.

Feeling of Autonomy

Departmentation develops feelings of autonomy among departmental managers. In one sense they are responsible to complete the assigned task. But in another sense, they are given sufficient freedom to operate their departments.

Balanced Workload

Here top-level manager is not overburdened, he had divided work into different groups and delegated sufficient authority to functional managers.

Management Growth

In departmentation, there is provision for a good performer manager can get a chance to promote to a high level by doing initiative work.

Techniques of Effective Departmentalization

These approaches to departmentalization offer organizations alternative ways to structure their teams and departments, emphasizing collaboration, flexibility, and adaptability to enhance overall effectiveness and performance.

Related: Organizational Structure: Definition, Types, Process, and Importance

Cross-functional Teams

Instead of organizing departments strictly based on functions, creating cross-functional teams brings together individuals from different departments or functional areas to work collaboratively on specific projects or initiatives. This fosters communication, breaks down silos, and encourages a holistic approach to problem-solving.

Matrix Organization

A matrix organizational structure combines functional departments with project-based teams. It allows employees to report to both a functional manager and a project manager simultaneously. This approach facilitates efficient resource allocation, knowledge sharing, and flexibility in adapting to changing project demands.

Virtual Teams

With advancements in technology, organizations can leverage virtual teams, where members collaborate remotely from different locations. This approach enables access to a global talent pool, reduces costs associated with physical office spaces, and allows for around-the-clock productivity in different time zones.

Team-Based Structures

Rather than organizing departments around hierarchical levels, a team-based structure creates self-managing teams responsible for specific tasks or processes. Each team has autonomy in decision-making and is accountable for its own outcomes. This fosters employee empowerment, promotes innovation, and enhances teamwork.

Network Organizations

In a network organization, an organization forms partnerships or alliances with external entities such as suppliers, distributors, and other organizations. The structure is dynamic and flexible, relying on collaboration and coordination among interconnected entities. This approach allows for specialization, shared resources, and agility in responding to market changes.

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