13.6 DEPARTMENTATION DEFINITIONS, SCOPE, AND IMPORTANCE Departmentation involves grouping of people or activities with similar characteristics into a single
department or unit. This facilitates communication, coordination and control, thus contributing to
organisational success. It creates semi-autonomous units with independent responsibilities, providing
satisfaction to the managers which is turn improves efficiency and effectiveness.
Definitions: According to
Knootz and
O’Donnell define a department as designating - “a distinct area, division,
or branch of an enterprise over which a manager has authority for the performance of specified
activities”.
Scope and Importance: Most enterprises are involved in producing a product or a service for the benefit of others. The latter
aspect requires marketing or distribution so that the persons for whom the product or service is
intended accept it. These activities require money or sufficient capital or finance. Thus for every
organisation or enterprise there are three fundamental activities or functions to be performed, namely
1. Production, 2. Marketing and 3. Finance. Thus functional departmentation consists of grouping of
common activities to form an organisational unit. In short, units are formed around common functions.
The term functional departmentation is often used at the higher organisational levels. In addition to
the functional departmentation on the basis of production, marketing an finance, it is possible to
attempt departmentation in different ways such as by product, by territory, by customer, by process
and by task-force. Top management is at liberty to use any means of departmentation while forming
an organisation structure. Usually for the top and bottom organisation levels, functional
departmentationollowed and for the intervening organisation orgnaisational levels other means of
departmentation are used. The selection of the media of departmentation will be determined on the
basis of the extent to which it is likely to achieve the objective.
