Choosing A Basis Of Departmentation

The following factors should be kept in mind while selecting a suitable basis of departmentation.


1)     Specialisation:Specialisation brings about internal economies in the business. Therefore, it is an important consideration while choosing a particular basis of departmentation. The management should group various activities into units in such a way which leads to specialisation of work. Overspecialisation should be avoided because it may result in loss of motivation among the personnel.


2)     Economy: This factor is of great relevance to the number of departments to be created. Creation of a new department increases various costs. This is because the new department requires additional personnel, space and equipment. Therefore, management should see that the departments created make the best possible use of these factors and maximum economy is achieved by creating the departments.


3)     Appreciation of key areas: All the important areas of the business on which the success of the business depends must be given proper weightage. That is why, in practice, function is taken at the top of the organisation structure. Separate departments are created for important functions like production, financing, marketing etc. Sometimes, local conditions are very important. Therefore, the management should give necessary attention to the local conditions at the time of determining the basis of departmentation.


4)     Minimum conflicts: The jurisdiction of the departments should be clearly laid down in order to avoid conflict among them. The authority of the managers of different departments should be clearly specified.


5)     Coordination: The basic purpose of departmentation is the achievement of organisational goals. Coordination in the operations of different departments is essential to achieve the organisational goals. Therefore, departmentation should always facilitate coordination in the organisation.


6)     Control: Control is an important function of management by which it guides and checks the activities of different departments and personnel. The selected basis of departmentation should ensure effective control to achieve the organisational goals more economically and efficiently. Departmentation should make easier for top management to ensure performance and to hold people accountable for results.


7)     Human consideration:Departmentation should not only consider the technical aspects of the organisation but it should also give due attention to the human factor. The existence of informal groups, cultural pattern, value system, etc., should be given due weightage at the time of grouping the personnel.

In short, whatever may be the basis, the departmentation should be directed to promote the attainment of organisational objective economically and efficiently. Naturally, managers concerned with taking such a decision will consider the relative advantages and disadvantages of various types of departmentation. In practice, in many cases, it is not possible to follow a single basis in grouping the activities throughout the organisation. Most of the big organisations follow schemes of departmentation that are a composite of several basis. Thus, there is no ideal pattern to suit all occasions and situations. Therefore, the management has to be very careful and use high degree of imagination at the time of choosing a pattern of departmentation. Once the pattern is chosen, it is very difficult and costly to switch over to another pattern.

In India, the most commonly followed basis of departmentation at the top level of the organisation is functional departmentation. At the intermediate and lower levels, other bases are used wherever further functionalisation is not feasible.

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