Types of Departmentation

(a) (b) (c) Functions, e.g., sales, production, personnel, planning, transport, etc. Products, e.g., air-conditioners, accounting machines, electronic calculators, etc. Territory, region, or geographical area, e.g., Northern Railway, Western Railway, N.E. Railway, etc. Customer, e.g., wholesaler, retailer, government. Process. Appropriate combination of any of these types.

(d) (e) (f)

Function wise Departmentation

Under each of these five managers, there will be subordinate managers and under them, the subordinate staff. The advantages of this type of structure are as follows: (i) (ii) (iii) (iv) (v) (vi) It is a logical reflection of functions. It follows the principle of specialisation. Maintains power and prestige of major functions. Inter-departmental co-ordination is facilitated. The structure is simple, logical and easy to understand. Provides a good means of control at the top.

There are also some disadvantages: (i) (ii) Responsibility for profits tends to be at the top. There may be chances of heavy centralisation in decision-making.

(iii) Where geographical centralisation is desirable or required, this form becomes unsuitable. (iv) (v) This is not very suitable where product lines have to be emphasized. There is a lower potential for manager development.

Product wise Departmentation

The advantages of this type of structure are: (i) (ii) (iii) Places greater effort on individual product line. Better customer service arising from greater product knowledge. Simplifies departmentation of profitability of each product line. Responsibility for profits is at the Division level. Improves co-ordination of functional activities. New department may be added without difficulty. Permits growth and diversity of products and services. Detailed information on markets for specific products will be generated.

(iv) (v)

(vi)

(vii) Extremely suitable where product lines are complex or vary greatly. (viii) Furnishes measurable training ground for Managers.

Some of the disadvantages inherent in such departmentation are: (i) A customer has to deal with different salesmen or managers for different products of the same company. Extra costs of maintaining separate sales force for each product. Duplication of costs on travel, etc. Tends to make maintenance of economical central services difficult. Results in increased problems of the top management control.

(ii) (iii) (iv) (v)

Territorial or Geographical Departmentation

The advantages of such departmentation are: (i) Regional expertise is generated and managers can tackle customers or competition better. Places responsibility at lower levels. Proximity will reduce costs of operation and administration. Places emphasis on local markets and problems. Local conditions might warrant different types of selling. This is possible only in territorial departmentation.

(ii) (iii)

(iv) (v) (vi)

Improves co-ordination at the regional level. Better face-to-face communication with local interests in mind. Better manager development.

Some disadvantages are listed as follows: (i) (ii) (iii) Involves higher costs of co-ordination and control from headquarters. Results in more managerial levels which increases overhead costs. Unsuitable for departments like Finance, where no gains are possible by specialisation on local factors. Increases problems of the top management control.

(iv)

Departmentation by Customers
Some advantages of this type of structure are: (i) Greater specialized customer service.

(ii) Where marketing channels are considerably different for various types of customers, this type of structure is very useful. Some disadvantages of this type are: (i) May not be enough work for certain types of customers. Hence, under employment of facilities and manpower specialized in terms of customer groups. Problems of co-ordination might pose difficulties. Unequal development of customer groups.

(ii) (iii)

1. Determination and enumeration of activities. The required activities are spelled out from the objectives of the enterprise. The total work, operating an managerial, is broken down into component activities that are to be performed by all personnel. The breakdown of activities is carried as far down as to determine the job of each individual. 2. Grouping and assignment of activities. Correlated and similar activities are grouped into divisions or departments first. And these divisional or departmental act5ivities are further divided into sections and jobs. Different bases are adopted for dividing and subdividing activities into different groups or blocks of work. Enterprise functions like sales. Production or finance, the

products manufactured and territorial regions are usually made the basis of primary grouping. Secondary grouping is made on the basis of geographical areas, types of customers, equipments used, process or constituent parts of the major enterprise function. 3. Allocation of fixed duties to definite persons. Definite job assignments are made to different subordinates for ensuring certainty of work performance. These job assignments are first made to different management members who, in turn, allocate the jobs among their subordinates. Along with the allocation of duties to different positions, each job is to be staffed by the placement of qualified personnel. To make any systematic recruitment and selection, job requirements are first ascertained by the allocation of duties to different positions, and on the basis of job descriptions, man specifications are prepared. In accordance with man specifications which indicate qualification and experience expected form candidates for different posts, positions are filled by selection, training and placement of individuals. 4. Delegation of authority. Corresponding to the nature of duties, commensurate authority must be granted to the subordinates for enabling them to make adequate work performance. As authority without responsibility is a dangerous thing, so responsibility without authority is an empty vessel. Authority and responsibility are correlated terms and they are terms to be constants companions. Delegation is a three tier concept that calls for assigning duties and delegating authority to subordinates and demanding accountability from subordinates. Wherever duties are assigned to subordinates, whether managers or operators, the other two aspects of delegation come into the picture. Division and subdivision of activities create a number of managerial and operating jobs which are bound together in a consistent pattern by the delegation process. Absence of delegation in any enterprise implies that one person is performing the whole work of operation and management with nobody else to assist him. In such a situation, no formal structure can be designed as there is no proliferation of activities into levels. Fore establishing any organization structure, it is obvious therefore that delegation is to be effected in some way or other.
Characteristics of Delegation 1. Delegation is the authorization to a manager to act in a certain way independently. The degree of delegation puts a manager to act within the limits prescribed by his superior. Moreover, withing the limits he is not free to act arbitrarily but subject to provisions of organisational policy, rules and regulation. 2. Delegation has a dual characteristic. A superior delegates authority to subordinates, however a superior at the same time still retains authority. As Terry has observed, 'it is something like imparting knowledge. You share with others who then possess the knowledge, but you still retain the knowledge too. 3. Authority once delegated can be enhanced, reduced or withdrawn depending upon the requirement. The changes in organization structure, organisation climate, policy, procedure, and method require

modifications in delegation of authority. Since, authority is delegated to an individual, the authority can be recovered back fully in the case of his exit from the organisation. 4. A manager cannot delegate authority which he himself does not process. Moreover, he does not delegate the entire authority to his subordinates because if he delegates all his authority he cannot work. 5. Delegation may be specific or general. Similarly, it can be written or unwritten. Delegation is specific when course of action for specific objectives are specified; it is general when these are not specified, though objectives are specified.