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One reason organizations exist is to do things that would be hard for one person to
do by themselves. For example, it's hard to conceive of one person building an office
building. Instead, we have organizations of thousands of people with diverse skills
that work together to build buildings. However, coordinating, controlling and just
keeping track of a lot of individuals introduces its own problems.
One way to solve these problems is to create a hierarchical system of supervision, so
that small groups of workers (up to say, 50 people) are supervised by coordinators
(managers). Depending on how many people there are in the organization, the
coordinators themselves need to be organized into groups supervised by higher level
managers, and so on. Part and parcel of this hierarchical supervisory system is the
cutting up of the organization into groups (departments).
The question arises: On what basis should we carve up the members of the
organization into subunits? What would happen if we did it randomly, without regard
for tasks? One problem would be that each manager would have to be aware of what
needed to be done in every area of the organization, in order to direct his/her
workers. This would be impossible in most cases.
1. Knowledge and Skill. People are grouped by what they know. For example,
hospitals have departments like Neurology, Allergy, Cardiology, Internal
Medicine, Gastro-Enterology, etc.
2. Work Process. Workers are grouped based on the process or activity used by the
worker. For example, a manufacturing company may create separate casting,
welding and machining groups. Often, it is the underlying technology that
determines the departmentation. For example, a print shop may have separate
letterpress and offset departments -- two different processes for getting the same
outputs.
3. Business Function. Grouping by the basic function in the organization: purchase
supplies, raise capital, generate research, etc. This leads to the familiar
departments of manufacturing, marketing, engineering, finance, and so on.
4. Time. When work is done. For example, shifts in a factory or hospital or hotel.
5. Output. Grouping based on the products or services that the employee works on.
For example, a manufacturer may have different divisions for each of its product
lines.
6. Client. Grouping based on the type of clients their work is ultimately sold to. For
example, computer companies often have different sales departments for home,
small business, educational, government and large business customers.
7. Place. Groups are based on the geographical areas that they serve. For example,
during WW2, the US War Dept. was organized into 7 "theatres" corresponding to
regions of the world where the US was fighting. Similarly, Post Offices are often
divided by regions and zipcodes.
http://www.analytictech.com/mb021/departme.htm
Functional departmentation is a method that has been and still is successful in most
organizations. It makes sense since it is a natural and logical way of arranging activities.
Grouping departments along functional lines takes advantage of occupational specialization by
placing together jobs and tasks that are performed by people with the same kinds of training,
experience, equipment, and facilities. Each supervisor is responsible primarily for an area of
operation upon which his or her energy and expertise can be concentrated. Functional
departmentation also facilitates coordination since a supervisor is in charge of one major area of
activity. It is easier to achieve coordination this way than to have the same functions performed in
different departments under different supervisors.
Process and Equipment Departmentation. Activities also can be grouped according to the
process involved or equipment used. Since a certain amount of training and expertise are required
to handle complicated processes and operate complex equipment, activities that involve the use of
specialized equipment may be grouped into a separate department. This form of departmentation
often is similar to functional departmentation. For example, in a machine shop department,
specialized equipment is used but only certain functions are performed; function and equipment
become closely allied. A data processing department utilizing a mainframe computer may serve
the processing requirements of a number of operations and departmental needs throughout an
organization.
http://www.swlearning.com/management/leonard/leonard_9e/ch08_various_structure
s.doc
Advantages:
• Advantage of specialization
Disadvantages:
Horizontal specialization.
– A division of labor that establishes specific
work units or groups within an organization.
– Often referred to as departmentation.
– Pure forms of departmentation.
• By function.
• By division.
• By matrix.
Functional departmentation.
– Grouping individuals by skill, knowledge, or
action.
– The functional pattern dominates in many
small firms.
– Large firms use the functional pattern in
technically demanding areas.
Divisional departmentation.
– Groups individuals and resources by products,
territories, services, clients, or legal entities.
– Often used to meet diverse external threats and
opportunities.
Matrix departmentation.
– Uses functional and divisional forms
simultaneously.
– Workers and supervisors in the middle of a
matrix organization have two bosses — one
functional and one divisional.
– Many firms use elements of a matrix structure
without officially designating the organization
as a matrix.