Departmentation or Departmentalization

Introduction:
Organisation involves the identification of individual activities to be undertaken for the attainment of the
objectives of the enterprise and the grouping of individual activities into administrative units on some
logical basis for the purpose of efficient administration. This has led to the necessity for departmentation.
It is the departmentation that helps the grouping of activities into administrative units, such as divisions,
departments, units, branches, sections, etc., for the purpose of efficient administration.
Meaning / Definition:
In the words of L.A. Allen defines departmentation as a means of dividing a large and monolithic
functional organisation into smaller flexible administrative units.
Importance and Advantages of Departmentation:
The main advantages of departmentation are:
1. It contributes to systematic distribution of work among individuals.
2. It contributes to the attainment of specialisation
3. It simplifies managerial tasks.
4. By defining the duties and responsibilities of the executives clearly, departmentation fixes
accountability for the results. This makes the executive alert and efficient.
5. Departmentation increases the operating efficiency of the organisation.
6. By bringing about division of functions and responsibilities, departmentation provides sufficient
scope for growth and expansion.
7. By giving sufficient powers to the managers in charge of different departments and allowing them
to take their own decisions within the powers given to them, departmentation increases the
prestige of the managers.
8. Departmentation is helpful to the management to evaluate the performance of the various
departments and find out the departments which are not managed properly.
9. Departmentation facilities proper supervision, as the authority for making decisions is diffused to
the managers of the departments.
10. As the authority for making decisions is diffused to the managers of the departments under
departmentation, departmentation frees the top management from routine matters and helps them
concentrate on important matters.
11. Departmentation makes budget preparation easy.
12. Departmentation contributes to performance appraisal. It helps not only in fixing responsibility but
also in evaluation of work carried out by the individuals.
13. Departmentation facilities effective control by grouping activities and personnel within well-defined
areas, setting standards of performance and by preparing budget.
14. Departmentation contributes to the development of managerial personnel.
Limitations of departmentation:
It is true that departmentation is helpful to the enterprise in many ways. But it is not free from limitations.
Its main limitations are:
1. There is the problem of co-ordination. The greater the number of departments, the more difficult
will be the task of co-ordination.
In this connection, it may be noted that the lack of proper co-ordination would impair the
managerial efficiency and the overall results of the enterprise.
2. There is also the problem of communication. The work of communication becomes more difficult.
3. Under departmentation, there is also the problem of supervision and control.
4. Departmentation is expensive in terms of money and efforts. In other words, it increases the cost
of managing the concern.
5. Under departmentation, because of the layering of executives, the operative personnel are far
removed from the top management.