Departmentation in Organisations

Departmentation in Organisations

This post is about how organisations go about departmentation. Departmentation is the process of grouping the activities into one unit. It implies the division of total work of an enterprise into individual functions and sub functions. It provides the growth and specialization in an organization for the efficient achievement of goals.

Patterns in Departmentation

There are several patterns that are developed for departmentation in the business world. But the most common are

• Departmentation by Functions
• Departmentation by Products
• Departmentation by Locations or Territories
• Departmentation by Time
• Departmentation by Process
• Departmentation by Customers

Departmentation by Functions

It refers to grouping of all the activities on the basis of functions. Basic aim of function departmentation is to simplify the work as all the work is grouped in major functional department. The basic functions are production, finance, marketing etc.

Departmentation by functions may be classified as

Minor Functional Department: It includes those departments that are important for the organization but do not give major contribution.

Major Functional Department: Department that carry basic activities of the enterprise is known as major functional department.

Derivative Functional Department: It is created when manager wants to reduce its span of management. Expansion of activities needs to divide the work in other department and that department is known as derivative functional departmentation.

Principles of Departmentation

Following are some of the basic principles for departmentation in organisations.

Principle of specialization:
Principle of specialization must be followed while adopting the method of departmentation. Duties should be assigned according to the abilities of managers so that they can perform efficiently.

Principle of control:
To maintain the proper control on the workers, it is necessary to that duties must be clearly defined and has proper lines of communication. Evaluation of the workers should be done at regular intervals.

Principle of coordination:
Before adopting any method of departmentation, it is necessary to check that proper coordination must be maintained between different departments. This can be achieved by grouping same activities under one department.

Principle of economy:

Activities of the organization must be grouped in such a manner that it will contribute majorly with the least cost. This will help in bringing economy in the organization and optimum utilization of resources.

Principle of social aspect:
Human and social aspect must be fully considered while taking the decisions to create the department. Local circumstances must also keep in mind while making departmentation.

Organization Functions Affecting Organisation Structure

In the designing of organization structure, managers must focus on various activities related to the organization like, technology, size, philosophy and strategy, departmentalization of functional as product, customers, geographic etc. Each of these factors affect the organization structure. Organization objectives and goals also based on organization functions. Functions like marketing, finance, human resources and production influence organization structure. In large organization, each function is subdivided to achieve right span of control (Liker & Meier, 2005).

Toyota structured is affected by various functions. In functions structures, each person serves a specialized role and handles large volumes of transactions. Functional structures are more effective when an organization does not have a large number of products and services. This is more effective in stable environment that are slower to change. Each functions influences the organization structure, these are:

Marketing functions: Characteristics of the market like income class, buyer behavior, competition and geographic dispersion must be considered in organizing the marketing unit. Toyota distributes product across the globe so they need to develop the effective organization structure. They are focus on trade channels like wholesalers, dealers and middlemen to reach its consumers (Young & Pagoso, 2008).

Human Resource functions: Organization choice of structure according to the characteristics of its human resources and nature of the employment relationship. Toyota prefer highly skilled workforce so they perform their tasks together in groups and teams. Toyota developed organization structure according to the latest technology and create the better and longer relationship with its employees and given them freedom to make important decisions.

Production or Operations functions: Organization structure and size is based on scope of the products and services. Toyota structure is influenced by the customer, customer demand and customer segment of their products and product trends and innovation, technological advantages, manufacturing process. Toyota analyze of company product, history, strength and weakness in prefer of competitor products. All of these factors influence the organization structure so Toyota analyzes them in time to time (Hiebing, Hiebing & Cooper, 2004).

Finance functions: Toyota produces global level products so they need to put huge investments in their structure. Toyota structure is influenced by various financial factors like income of the customers, buying behavior of customers; understand the various stakeholders, economy of the various countries.

So each function influences the Toyota structure and they are developing our structure according to the change of market.

References:
Abramowicz, W. (2009). Business Information Systems: 12th International Conference. Germany: Springer.
Bollingtoft, A., Håkonsson, D.D. & Nielsen, J.F. (2009). New Approaches to Organization Design: Theory and Practice of Adaptive Enterprises. USA: Springer.
Graubner, M. (2006). Task, firm size, and organizational structure in management consulting. Germany: DUV.
Hiebing, R.G., Hiebing, R. & Cooper, S.W. (2004). The one-day marketing plan: organizing and completing a plan that works (3rd ed.). USA: McGraw-Hill Professional.
Liker, J.K. & Hoseus, M. (2008). Toyota culture: the heart and soul of the Toyota way. USA: McGraw Hill Professional.
Liker, J.K. & Meier, D. (2005). The Toyota way fieldbook: a practical guide for implementing Toyota's 4Ps. USA: McGraw-Hill Professional.
Morgan, J.M. & Liker, J.K. (2006). The Toyota product development system: integrating people, process, and technology. USA: Productivity Press.
Toyota (2011). Toyota Manufacturing UK - Organisational Structure. Retrieved July 29, 2011 from http://recruitment.toyotauk.com/home/org-structure.jsp
Young, F.C. & Pagoso, C.M. (2008). Principles of Marketing. Philippine: Rex Bookstore, Inc.

Organisation Function of Management

Organization can be defined as a system that makes the formal relations among the members of the company and retains the interest of the society as well. It is one of the most important management functions that makes the employees organized and accountable. Organization needs an effective coordination among the members that builds a mutual understanding among them. In the organization, managers required to delegate the authorities and responsibilities to the members for carrying out the assigned task.

Organization as a structure means, it is a hierarchical framework in which the organization assigns the task and responsibility. It is further helpful in identifying the lines of communication and path for the flow of information. Organization structure includes the activity-authority relationship that means organization can be able to know what task should be assigned to whom and how much authority should be given to them. Structure of the organization depends on the type of strategies and objectives that have been adopted by the company. Organization structure is way to an end.

Peter F. Drucker suggests four ways for the formulation of organization structure to attain the objectives. First is activity analysis in which organization needs to identify the key activities and all those areas that needs excellence for the better performance of the company’s objectives. Second is contribution analysis in this step all the activities are divided into four groups i.e. result producing activities, support activities, house keeping activities, and top management activities. Direct revenues are generated from result producing activities while support activities provide contribution towards the overall results. Housekeeping activities contribute indirectly to the overall results and their avoidance can affect the business. Segregation of activities helps in identifying that which activity needs more attention and which is not. Then we come to the third mean that is decision analysis in which authority and responsibility are given to various kinds of decisions based on their character i.e. impact of one decision on other functions, its occurrence are regular or rare. Decisions should be made at the lowest level. Fourth and the last way is relation analysis in which the relation of activity to the another is made and it should be noticed that the critical activity should be placed at the center and should be easily accessible.

Organizing helps in achieving the objectives at least cost in terms of money, pain, time etc. Through the organizing managers can able to do the work with sound management structure and making coordination among different departments.It is further helps in overcoming the limitations of span of management that means organization can able to identify how many subordinates can be handled by one manager depending on their job and ability. And it is also help in formulating the supportive policies apart from the main objectives.

As organization operates in highly dynamic environment whereby technology, political conditions etc. changes day by day in such a conditions it need not to be static. To sustain in the competitive market organization should be adaptive to the moving environmental conditions. Organizations have to redesign the structure according to the changing needs of the external market environment. As the taste and preference of the customers changes after a certain interval then organization have to make further provisions for better services to the customers. And the capacities of the workers grow, changes or sometimes decline with the change in the technology.