What is Departmentation? Types, Objectives

What is Departmentation?

The process of departmentation or departmentalisation involves grouping people according to their activities and tasks into different departments. An organisation consists of different departments grouped according to their job functions.

The various departments in which an organisation can be divided are the production department, marketing department, human resources department, finance department, research and development, etc. The responsibility of the departmental heads is to delegate jobs and responsibilities among the employees who report to them and are accountable for the performance of their departments.

The process of departmentalisation is a formal procedure of organisational structure.

Objectives of Departmentation

The main objectives of the departmentation or departmentalisation are as follows:

• Categorise and group the jobs according to the specialisation
• Simplify the procedures and operations within the organisation
• Effectively monitor and control the performance of every department
• Increase the productivity and growth of the organisation

Types of Departmentation

Departmentation is the act of distributing the tasks, activities and people of an organisation into different groups termed as departments. The people are put into groups according to the functions and tasks they would be working on in the department.

The following are some types of departmentation:

• Functional departmentation
• Product departmentation
• Location departmentation
• Customer departmentation
• Process departmentation

Functional departmentation

The activities, tasks and people of the organisation are categorised into departments based on the different functions and activities carried out within a specific department. The departments get categorised into manufacturing departments, human resources departments, purchase departments, sales, and marketing departments, etc.

This process is beneficial in increasing the specialisation and efficiency of respective departments. It also helps the top management to efficiently control different departments. Figure 1 depicts functional departmentation:

Figure 1 shows that on the basis of the functional departmentation, an organisation can be grouped in the production department, finance department, marketing department and human resource department.

Product departmentation

Departments are made and the people are divided into departments based on the products that are produced by the organisation. For example, an automobile manufacturing unit may manufacture various products such as bike, car, two-wheelers etc. This helps managers to exercise control on various product lines in a single organisation. Figure 2 depicts product departmentation:

Figure 2 shows that on the basis of the product departmentation, an automobile organisation can be grouped in a two-wheeler department, three-wheeler department, four-wheeler department and heavy motors department.

Location departmentation

The people in the organisation are grouped according to their area, location and time zone of the territory. With increasing globalisation, the customers of an organisation are geographically spread far and wide and they need to be serviced in their respective locations. Hence, the employees are grouped into departments according to their geographic locations to cater any local needs of these customers. Figure 3 depicts location departmentation:

Figure 3 shows that on the basis of location or geographic departmentation, an organisation can be grouped in north zone department, south zone department, east zone department and west zone department.

Customer departmentation

The tasks, activities and people of an organisation are grouped according to the need and preferences of customers. For instance, a bank may have separate loan departments for the education loan, home loan, car loans, etc.

Customer departmentation is useful for organisations selling varied products or services to clearly-defined customer groups. It helps in enhanced customer experience and provides a competitive edge in the market. Figure 4 depicts customer departmentation:

Figure 4 shows that on the basis of the customer departmentation, an organisation can be grouped in various departments to handle foreign customers, domestic customers, wholesale customers and retail customers.

Process departmentation

The process departmentation is used to group activities of an organisation on the basis of the production processes involved or equipment used. This form of departmentation is used for manufacturing organisations. For example, the activities of a textile mill can be grouped into processes such as ginning, spinning, weaving, dyeing and finishing. Figure 5 depicts process departmentation:

In Figure 5, a textile organisation is shown to have various departments based on the processes, such as the spinning department, weaving department, dyeing department and printing department.

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