Departmentalization is the process of dividing up activities into various departments. These divisions were established so that tasks could be carried out by specialization within the company. You will find it in both private and public organizations.
The term “departmentalize” also refers to a formal organizational structure that outlines various departments, roles, and how they relate to one another.
Teams from various departments within an organization are combined to work toward a common goal. These organizations employ a number of people to carry out similar tasks for the benefit of their business.
It classifies people according to the duties and responsibilities they will have in a single department. If you look at a corporate ladder, you will notice that every level below the top and every one after it has been departmentalized.
Senior executives, some of whom are also known as managers of their department, are in charge of the departments. They are in charge of assigning responsibilities and tasks to the team members in their department.
What is Departmentalization? Advantages, Factors, and Types (Management video 9)
The primary distinction between formalization and specialization is how jobs are organized and standardized within an organization. In contrast, specialization refers to how much activity is divided into subsets that can then be further subdivided into individual jobs.
Formalization, Specialization, Organizational Structure
Most manufacturers adopted the idea of work specialization by the 1940s. With this approach, unskilled workers can complete simple tasks while workers with specialized skills complete tasks that call for specialized skills. As a result, skilled workers won’t have to waste their time on mundane tasks that don’t require special abilities. Specialization is the best strategy from a productivity standpoint to boost output and total input. Additionally, specialization can lower production costs, resulting in a lower overall product price.
Every successful company has an excellent organizational structure behind it. An organizational structure describes how job tasks are formally divided, grouped, and coordinated to meet a company’s objectives. Chain of command, span of control, specialization, departmentalization, centralization/decentralization, and formalization are the six elements of organizational structures.
Employees with highly formalized jobs do not have a lot of input into how, when, or even what to do in their jobs. For instance, because they lack much autonomy, assembly line workers have highly formalized jobs. On the other hand, there is little formalization in the jobs of sales representatives who make phone calls to customers.
Module 14: Organizational Structure Search for:
A worker reports to a manager. A manager reports to a director, a director reports to a vice president, and a vice president reports to a C-level senior leader, like a chief executive officer or a chief administrative officer. If you’ve ever worked in a corporate setting, you’re likely to recognize this as the basic set of layers of an organization’s structure.
The formal division, grouping, and coordination of job tasks is determined by organizational structure. The structure of an organization usually features six different elements:
After defining organizational structure, let’s examine each of its components to gain a better understanding of how businesses choose to set up their structures in order to maximize productivity.
Frederick Winslow Taylor, who investigated time and motion and identified the most effective ways for workers to complete their tasks, was previously covered. Taylor’s “one right way” was the birth of work specialization. Henry Ford rejected the idea of “one best way” when he created the assembly line and viewed work specialization as a means of achieving continuous improvement. The degree to which activities within an organization are split into separate jobs is referred to as work specialization.
One employee may still be working on building an automobile a month or two after being assigned the task. However, if you assign one worker to install the right front tires and another to install the left front fenders, those tasks will become standardized. Employees learn to do them quickly with practice.
The majority of manufacturers were engaging in work specialization, or “division of labor,” by the 1940s. From a task perspective, work specialization was ideal because it allowed employees with the necessary skills to separate out the easier tasks from those that required more skill. These skilled workers weren’t squandering their time on unnecessary tasks.
Additionally, from the perspective of productivity, work specialization was ideal. When workers were assigned to one of those tasks instead of both, tools didn’t need to be taken out and put away because installing brake pads requires different tools than installing tires. Employees could be cheaply trained to perform a single task, and many employees could assemble extremely complex machinery more quickly and easily than a single highly trained employee who had all the necessary skills.
Up until the 1960s, manufacturers tweaked and refined worker specialization to boost productivity, but it soon became apparent that a good thing could be taken too far. Higher productivity is offset by lower output, stress, increased absenteeism, and higher turnover. In response, manufacturers increased worker specialization and added more tasks to a position to boost engagement.
Jobs must be combined once they have been divided up by work specialization in order to coordinate related tasks. Departmentalization is the basis by which jobs are grouped together. Jobs can be grouped in the following ways.
Any or all of these methods of departmentalization can be used by large corporations to set up their internal structure. They may have a manufacturing area that is organized around processes, but they may also have a sales department that is geographically organized and a corporate support center that is functionally organized.
The chain of command is the unbroken line of authority that extends from the top of the organization (e.g., the CEO or the President) to the lowest echelon and clarifies who reports to whom. At the beginning we talked about managers reporting to directors, who reported to vice presidents who reported to C-level leaders. Such is the chain of command.
Along with the concept of chain of command, there are two other ideas. The first, authority, describes the rights a manager has to issue commands and demand that those commands be followed. The second, known as unity of command, refers to the idea that each subordinate should only have one direct superior. If there is no unity of command, it is likely that a subordinate will be responding to orders from various people and will be faced with a conflict of competing priorities, which is unproductive.
Henri Fayol’s management theories, particularly those relating to chain of command and unity of command, were discussed in class. The chain of command element of organizational structure is not going away any time soon, but technological advancements and the trend toward employee empowerment have made these principles less relevant today.
The number of subordinates a manager can effectively manage is known as the Span of Control. The more expansive an organization’s managers’ spheres of influence can be, the more effective it will be. Wider spans of control save money.
Take a look at the company’s span of control, which is depicted in the drawing above in blue. With the exception of the bottom layer’s 4,096 managers, the blue company has 5,461 employees in total. Let’s say those managers make $50,000 apiece. For 1,365 managers earning $50,000 each, the total payroll is $68,250,000.
If we look at the green company, there are still 4,096 people in the bottom layer, but there are fewer managers overall overseeing them. The total payroll for the green company’s 585 managers, if they are paid $50,000 each, is $29,250,000. That’s a huge savings.
Small spans of control are not only expensive but also frequently make communication within the organization more difficult. The more layers there are, the more managers must pass the message. Additionally, more stringent control and less employee creativity and empowerment are promoted by shorter control spans. Wider spheres of control have become more popular recently.
The degree to which decision-making is concentrated at a single location within an organization is referred to as centralization.
Employee input is taken into consideration because employees in decentralized organizations have the authority to make decisions, which allows for quick problem-solving. An organization is more decentralized when lower-level employees have more decision-making authority.
Lower management is responsible for carrying out decisions made by upper management in centralized organizations.
The level of formalization describes how standardized the organization’s jobs are. An employee with a highly formalized job has little say in how the job is carried out, when it is carried out, or how it ought to be carried out.
An assembly line worker likely has a highly formalized job where he has little control over how he performs his duties. Although her position is probably a little less formalized than the assembly line worker’s, an accounts payable associate also doesn’t have much of a say in how those numerous invoices are handled. A salesperson who is out meeting customers might not have much formal training.
Now that we are aware of the six components that make up organizational structure, let’s examine some typical organizational structure configurations and the situations in which they are applied.
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Examples of departmentalization
A multinational corporation, ABC Company has offices in both the United States and India. Due to the various geographic locations and the need to perform organized and precise work functions, it has established numerous departments.
These are examples of Geographical Departmentalization and Functional Departmentalization, respectively.
FAQ
What is the difference between specialization and departmentalization?
The degree to which the organization’s overall task is divided into more manageable component parts is known as job specialization. On the other hand, departmentalization is the arrangement of jobs into groups that make sense.
What is the difference between specialization and formalization?
In a nutshell, the two main elements of an organizational structure are formalization and specialization. The primary distinction between formalization and specialization is that the former focuses on the division of labor, while the latter is more concerned with policies, rules, and procedures pertaining to jobs and tasks.
What is the difference between departmentalization and division of labor?
The process of organizing activities into departments is known as departmentalization (or departmentalisation). Division of labour creates specialists who need coordination. This coordination is facilitated by grouping specialists together in departments.
How would you differentiate the types of departmentalization?
- Function. Organizations that divide their workforce into functional departments do so based on the nature or focus of the work that is performed.
- Process. People are grouped according to where in the production process their work typically takes place in a process department.
- Product. …
- Market. …
- Customer. …
- Location. …
- Divisional. …
- Multiple.
