DEPARTMENATION

To survive and grow two or more people working together must organise themselves to
achieve common objectives. In the previous article we have described in detail about the
elements of organization structure.

The main challenge in creating an organisation structure is to take into consideration the
five dimensions.
(a) Functions;
(b) Products;
c) Geographic markets;
(d) Customer segments; and
(e) Projects (both external and internal).
Structure is a means to an end and therefore, must aid and facilitate the organistic members
to carry out the organisation work.

Departmentation refers to grouping of jobs, identified earlier, into

work units on some logical basis. Every level in the hierarchy
below the apex (the Board of Directors and the (EO) is
departmentalised and each succeeding lower level involves
departmental differentiate Different systems use different words
to denote departmentation.
Bases for Departmentation:
 1. Functional Departmentation:
• Similar tasks requiring similar skills grouped into work unit are referred to
as functional structure or functional departmentation also known as U-
form organisation.
• With the U representing “unitary”, in Figure 10.1 functional
departmentation has been shown for a business firm engaged in
manufacturing of goods and also of Engineers India Ltd. (a consultancy
firm).
• In the first case production is the responsibility of chief production officer;
marketing problems come in the arena of chief marketing officer. Main
point to be noted is that each member of a function works within his area
of expertise.
• Functional departmentation can be used for any type of organisation. The
functions may change according to the objectives of that particular
organisation. The main merit behind this kind of structure is to achieve
size advantage by putting people with common stills and organisations
into similar units.
This structure is suitable when the environment is stable, i.e.,
problems can be predicted and the need for change and
innovation are limited. The merits and limitations of this kind of
departmentation are given
• Merits– Maintain power and prestige of major-
Economy of scale with efficient use of resources- Task
assignment in consistency with expertise and training
• – Better quality technical problem – solving
• – Facilitates tighter control by chief executive
• Demerits-
• – Focus on department rather than goals and issues.-
Difficulties in pinpointing responsibilities for things like
cost containment, service quality and innovation-
Expertise only in narrow field.
• – Functional chimneys problem due to people’s
mindset and breakdown of cooperation.
• 2. Divisional Structure:
• When people who work on same product process, customer group
or geographic reason are grouped, it is known as divisional
structure (also known as M-form organisation, with the M
representing “multidivisional”). Divisional structures are self –
contained divisions. Thus, divisional structure includes different set
of structures.

• Merits– Better flexibility to respond to environmental challenges

• .- Better coordination across functional departments
• .- Greater responsibility for product or service delivery

• LIMITATIONS — Reduction in size of economy.

• — Increase in cost due to duplication of resources and efforts in
every division.
• — Competition or lack of cooperation among deferent divisions for
resources and top management attention.
• Matrix Structure:
• The focuses in functional structure remain on specialisation, and in
divisional structure it is on the results. But divisional structures
suffer from duplication of resources and efforts. Matrix structure
provides the benefits of both functional and divisional and it is
known as Matrix structure and minimises the limitations of the two.
• The foundation of matrix is a set of functional departments. A
matrix organisation is a complex structure because it depends upon
both vertical and horizontal flows of authority and communication.
Whereas functional and divisional structures depend primarily on
vertical flows of authority and communication.
• The special feature of the matrix is that employees have two bosses
– the functional boss (parent department) and the project pass
(host department). Project boss has authority in relation to project
goals. But promotions, salary hikes and annual reviews come under
the functional boss.
• In this structure the different functional departments depute their
specialists to work on the project under the project boss, thus cross
– functional teams share their expertise and information in a timely
manner to solve problems.
• Benefits and Limitations of Matrix Structure:
• (a) More cooperation across functions.
• (b) Improved Decision making.
• (c) Greater flexibility in adding / deleting or changing activities or changing
demands.
• (d) Better customer service due to presence of project manager.
• (e) Better performance accountability.
• (f) Improved strategic management, better motivation and commitment
to organisation or people (as teams can be created, redefined and
dissolved as needed).
• (g) Opportunities of learning new skills.
• (h) A useful vehicle for decentralisation.
• (i) Two boss means power struggles, buck passing, and dual reporting
channels.
• (j) Team meeting time consuming.
• (k) Two bosses mean creating confusion.
• (l) More time required for coordinating task related activities.
• (m) Propensity to foster power struggles because of confusion and
ambiguity.
• (n) Higher over heads because more management positions are created.
• (o) Dual source of reward and punishment.
• The matrix structure is most suitable when, first
there is strong pressure from the environment ;
second, when large amounts of information is
required to be processed ; and third, when there
is pressure for shared resources.
• Matrix structure is used by pharmaceuticals,
electronics, aerospace, service industries,
professional areas (accounting and the non-profit
sectors (like hospitals and research). The use of
matrix structure should be justified in terms of
cost, efficiency, and organisational development.
• Project Structure:
• A project structure is an advanced type of matrix structure.
A project structure has no formal departments where
employees can go back at the completion of a project.
Rather, employee takes their skills, abilities and experiences
to other projects, one after the other. In project structures
all work is performed by teams.
• The advantages of a project structure are that since there is
no departmentation or employee job titles, decision
making is not slowed. Secondly, herein managers work as
facilitators, coaches and mentors. However project
structure remains to be ‘fluid and flexible” organisational
designs.
• Although there are theoretical differences between matrix
and projects structure, most of the people discuss the two
together.
• Network Structure:
• In the traditional organisation structure, every activity was to be done in-
house or to own everything. The new model or network structure also
called as cluster structure says concentrate only on “Core” activities and
go for strategic alliance cooperative strategy and or “outsourcing” the
peripheral activities.
• Outsourcing means contracting business functions to outside contractors
or suppliers. An airline may outsource food, engineering services and
airport handling.
• An all-India examination body outsources receipt of examination forms,
preparation of list of cheques, filling deposit slips of the bank, despatch of
admission tickets, checking of marks etc.
• The firm itself is very small, comprises a few full-time core employees
working from head quarters. The insurance company has outsourced
preparation of insurance policies, call centre, claim settlement and the
accounting function; and has entered into an alliance with a bank, who
would be selling the insurance policies through its all-India network.
• The availability of information technology has made the job of outsourcing
very easy. Network structure enables firms to remain Cost-Competitive,
very learn and streamlined. The job of the core people is merely to
coordinate with the outside related firms.
• Advantages-Allows firms to what they do best and
contract out the balance to those who do them the
best- To remain cost-competitive. Small number of
employees.
• DISADVNTAGES- The more complex the business or
mission more complicated the network of contracts &
alliances.If one part of the network fails to deliver, the
whole system has to suffer. Loss of control over
activities performed outside. Hidden costs of
outsourcing-vendor search & contracting, transitioning
to vendor, managing the effort, and transitioning after
outsourcing.
• Span of Management:
• Once the firm decide of the base for departmentation, the next thing to be decided is how
many employers be put under one manager to whom he can efficiently and effectively direct
?
• Concept of Span of Management:
• Span of management, also known as span of control refers to number of subordinates
directly reporting to a manager, whom the manager can efficiently and effectively supervise
and control.
• What is the ideal span of Management?
• There is no agreement about the number of subordinates to be managed by one manager,
whether it should be narrow (tall structure) or wide (flat structure) and what constitutes
narrow and wide span.
• The classical theorists were in favour of narrow span. VA Graicunas in 1933 came out with a
formula to define relationships in terms of direct single relationships, direct group
relationships and cross-relationships.
• Total relationships = n (2n/2+n-1)
• In case of 8 subordinates less than one manager means 1080 relationships. On the basis of
this work and his person experience Urwick suggested 5 to 6 subordinates as the ideal span
or number of people to be managed by one manager.
• It has also been found that as we go down the hierarchy the span gets wider. As a manager
goes up in the hierarchy, he has to deal with a larger number of non-structured problems.
That is why top manages needing a smaller span compared with first-line managers.
• Determinants of span of Management:
• How much of span shall be ideal depends upon the following.
• 1. Nature of work (similarity or dissimilarity of jobs, degree of needed
interaction, and the extent of standardised procedures in use).
• 2. Qualities of the supervisor (Managers believing in theory Y work with
wider span).
• 3. Qualities of subordinates (educated technically competent, trained and
experienced do not need much guidance).
• 4. Levels of Management (inverse relationship between the span of
control and number of levels in hierarchy in an organisation).
• 5. Use of technology for interaction (internet, emails, mobile phones, etc.
enable wide span).
• 6. Clarity of plans and Definiteness of Responsibilities (supervision
becomes easy and span may become wider).
• 7. Use of staff specialists (work being shared, wider span is possible).
• 8. Geographic proximity of subordinates (Nearer the subordinates to
supervisor, greater the span).
 Delegation of Authority
• Definition: The Delegation of Authority is an organizational process wherein, the
manager divides his work among the subordinates and give them the
responsibility to accomplish the respective tasks. Along with the responsibility, he
also shares the authority, i.e. the power to take decisions with the subordinates,
such that responsibilities can be completed efficiently.

• Features of Delegation of Authority

• Delegation means giving power to the subordinate to act independently but within
the limits prescribed by the superior. Also, he must comply with the provisions of
the organizational policy, rules, and regulations.
• Delegation does not mean that manager give up his authority, but certainly he
shares some authority with the subordinate essential to complete the
responsibility entrusted to him.
• Authority once delegated can be further expanded, or withdrawn by the superior
depending on the situation.
• The manager cannot delegate the authority which he himself does not possess.
Also, he can not delegate his full authority to a subordinate.
• The delegation of authority may be oral or written, and may be specific or general.
• The delegation is an art and must comply with all the fundamental rules of an
organization.