WELINGKAR INSTITUTE OF MANAGEMENT DEVELOPMENT &RESEARCH

PGDM-HB: E Learning Toolkit: Summary chapter 9

Subject: Principles of Management
Developed by P.M.Bendre

Chapter 9: Departmentation

• Departmentation is a part of organizing process. The meaning of organizing

is putting the resources together in order to achieve organizational goals.
Organizing has to be done for all the four M’s viz. Man, machine, material
and money. When the organization grows, it becomes complex.
Departmentation is needed when we want to handle complexity.
• Departmentation involves grouping of common activities and resources
under a single person’s control required for pre-determined activity. The
activities are grouped based on functions of the organization. The Chief
Executive of the Organization does this work.
o For example, in a company, it is prudent to have a photocopying
department with may be two machines only with one person who
will cater to all the organization for their photocopying requirements.
This is departmentation, which turns complexity into simplicity.
o However, it is necessary to utilize the resources optimally. If the
departmentation is done, it must facilitate resource optimization. If
this is not possible, then departmentation will not serve its purpose.
o Another example is of a big finance company. It expands and creates
many branches in the same city. However, it is found that half of the
branches do not have any footfall. The resources viz. men, materials
and machines are idling. Then the business will be in a loss.
• Process of departmentation:
o Identification of work
o Analysis of details of each work
o Description of the function
o Grouping of similar activities
o Entrusting the grouped activities to a separate person specialised in
the respective field and providing him with suitable staff
o Fixing the scope of authority and responsibility of the department
heads.
• Need and importance of departmentation:

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WELINGKAR INSTITUTE OF MANAGEMENT DEVELOPMENT &RESEARCH
PGDM-HB: E Learning Toolkit: Summary chapter 9
Subject: Principles of Management
Developed by P.M.Bendre
o Departmentation increases the operating efficiency of the employees
because it facilitates the grouping of activities, which are of similar
nature.
o There is a fixation of responsibilities to various executives of the
organization. It makes the executive to be alert and efficient in his
duties.
o The departmental heads are given certain powers and are allowed to
take their own decisions. It increases the prestige and skill of the
departmental heads.
o The top management evaluates the work of various departments and
the department that is not managed properly is identified. This
makes all the departmental heads efficient and alert.
o There is a possibility of expansion of the organization because of
fixing of the responsibilities to the executives and there is function-
wise departmentation.
o Departmentation gives other advantages such as facilitating budget
preparation, effective control of expenditure, attaining specialization,
better cooperation among the managerial personnel.
• Patterns of departmentation:
➢ Departmentation by functions: The activities are grouped on the basis
of functions which are to be performed.
➢ Departmentation by product or service: each type of product or service
is allocated to a separate department.
➢ Departmentation by region or area: The business activities are grouped
area-wise and a single person is made in-charge of the respective area.
➢ Departmentation by customers: For example, the sales department
could be divided into industrial goods and consumer goods. The
consumer goods could again be sub-divided into perishable and non-
perishable goods.
➢ Departmentation by process: For example, a textile mill has many
departments such as ginning, spinning, weaving, dyeing and printing,
packing and sales. Each section will be looked after by a specialized
person.

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WELINGKAR INSTITUTE OF MANAGEMENT DEVELOPMENT &RESEARCH
PGDM-HB: E Learning Toolkit: Summary chapter 9
Subject: Principles of Management
Developed by P.M.Bendre
➢ Departmentation by time: The business activities are grouped together
on the basis of time of the performance. If the work is not completed
within the normal working hours, extra time is be given to complete it
after the normal working hours.
➢ Departmentation by numbers: The principles of span of management
span of control or span of supervision is used under this type of
departmentation.
➢ Departmentation by marketing channels: It is adopted on the basis of
channel of distribution chosen by the particular business unit on the
basis of nature of goods and marketability of the product.