1.0 INTRODUCTION
We studied the management function of organizing in our last note.
We noted the meaning of organizing and the advantages associated with proper
organizing. Since organizing demands
designing the internal structure of an
enterprise or any organization it needs the conceptual skill of the manager.
This means that organizing demands creativity. We went further to list the
conditions that should be put in place before proper organizing can take place.
We then examined the two forms of organization, noting too their
characteristics.
In this note, we are going
to take another phase of organizing, and that is Departmentation . We saw in our last note that one of the
advantages of organizing is that it clarifies the organization's internal
environment. One way to achieve this is proper Departmentation . We shall therefore be looking at what is Departmentation . We have to note that there several forms of
Departmentation . At this stage of our
course, we shall not be able to treat all of them. There are other fundamental
principles of management which you have not yet learnt, though they are
important at 154 this stage. We will be
discussing, as a result only the major forms of Departmentation
.
We will be emphasizing the advantages and disadvantages associated
with each form of Departmentation . One
further remark we have to make concerning Departmentation is
that there is no single pattern of Departmentation to
use. The manager has to use his creativity to select the pattern or the form
that will assist him to accomplish the objective in the light of the prevailing
situation.
2.0 OBJECTIVES
By the end of this note, you should be able to:
· Describe the major form of Departmentation
· List the advantages
and disadvantages of each form of Departmentation
3.0 MAIN CONTENT
3.1 Departmentation by Enterprise Function
This form of Departmentation
is to group the activities being
performed along the line of functions of the organization. Since every
enterprises aims at creating or producing something that is desirable by others
the basic enterprise functions are:
3.1.1 Production
Production is to add utility to goods or services. This means
getting raw materials and transforming them into finished products or taking an
idea and using it as a basis for providing service to others.
3.1.2 Selling
This necessitates finding customers/clients who will agree to
accept the product or service at a price.
3.1.3 Financing
This involves raising funds, safeguarding the funds against waste
and expending the funds in a manner that will maximize the objectives of the organization.
All these activities can logically be grouped into: engineering, production,
marketing and finance departments. Note that there can be variation of names
concerning these departments. For example there may be no engineering or
production in a ministry or church. But
appropriate names reflecting the major functions can still be used. See example
of Departmentation by enterprise function below:
Fig. 7.1 Showing Departmentation
by enterprise function
The above Departmentation is according to enterprise functions. This means
that the activities are grouped according to the major functions being
performed by this medium-size manufacturing company. There are obvious
advantages associated with this form of Departmentation .
3.1.4 Advantages
(a) It shows in a logical manner the basic functions that are
being performed in the organization. By merely glancing at the chart, one would
quickly see these functions
(b) Its main the power and prestige of the major functions. We
have earlier discussed that positions should only be created if such positions
have positive roles to play in the attainment of the organizations objectives.
By looking at the diagrams one can see the departments and positions that are
playing such roles.
(c) The form of Departmentation
again follows the principles of occupational
specialization. These are in engineering, production, marketing and finance. As a result, any one
that has a flair for any of these areas can move in to such area and contribute
his quota toward the realization of the organization's objective.
(d) The form of Departmentation
simplifies training. This means
that whenever there is a new employee on the job, training can be organized for
such employee. The older person in the department can put him through in the
fine rope of the department's job without moving outside the department.
3.1.5 Disadvantages
There are recognized disadvantages in this form of Departmentation which
are stated below.
(a) It tends to create over specialization. And when employees in
a department over specialize, it tends to narrow their view points and
orientations to the extent that problems of the other departments are not
appreciated.
(b) This form of Departmentation
makes the development of the specialist
managers to be difficult. This is because as specialists, their view points are
narrowed and can not readily be made a general manager because a general
manager as the name implies is a generalist; as such, his mind is sufficiently
broadened to take balanced decision for the overall interest of the
organization.
(c) Because managers see themselves along specialist lines, it
makes coordination which is the essence of management to be difficult. Coordination
demands that an activity should be linked logically to another activity and
thereby making the entire organization to operate as a note. But with over
specialization which has strait jacketed managers. View points tend to reduce
the note of the whole enterprise.
(d) The Departmentation creates another limitation of preventing the to
grow economically as a system. Each department tend to operate along its own
area of specialization. But an organization is supposed to operate as a note,
to the extent that what affects a part will automatically have effect on other
parts. Each part should support and cooperate with one another. Over specialization
reduces this support and cooperation.
3.2 Departmentation by Geographic area
This form of Departmentation
ensures that all activities in a
geographic area or territory are grouped and assigned to a manager who has
other staff working under him. This form of Departmentation is
attractive to large scale organizations whose organizations spread over large geographic
areas. There are advantages as well as disadvantages of this form of Departmentation .
3.2.1 Advantages of Geographic Departmentation
(a) Profit making is placed at a lower level that is, the
respective managers in the field are charged with the responsibility of making
profit for the organization. This leaves the headquarters and the top level
manager to have the time to plan for overall greater growth of the
organization.
(b) Emphasis is placed on the local market. This is important
because there is no point producing goods and services that are not readily sold
to the customers. This is a problem which arises either because the goods do
not meet the needs of the customers and/or the goods are not sold with the
correct marketing strategies. But by operating close to the customers, their
peculiar needs and problems are taking into consideration in producing and marketing
the goods.
(c) Since the field managers and the staff are more or less
experts in the local area, they can gather good results in terms of greater sales
revenue compared to somebody who does not know the local environment. The field
managers know the captains and other channel members through whom they can
distribute the company's products. They also know the customs, norms and traditions
and will not adopt strategies that will be offensive to the culture of the
local people. All these and more a stranger can never appreciate let alone
observe. The field officers also know their competitors and are better prepared
to compete with them.
(d) The form of Departmentation
provides a fertile ground to
train managers who can become general managers in future. This is because while
in the field, he has got experiences in dealing with specialists in accounting,
marketing/sales, personnel, production/engineering and was successful. The same
experience can be brought to bear in his future role as a general manager without
being unduly biased to any specialist.
3.2.2 Disadvantages of Departmentation by
geographic area
(a) There is high cost of coordination and control from the headquarters.
In an attempt to ensure that the entire organization work as a team there is
the need to link together the activities of one geographic area to the
activities operating in another geographic area. This is not an easy task
because it may necessitate staff transfers with the attendant costs. Visits
also from the headquarters and other forms of communication may also demand
enormous resources of the organization.
b) The form of Departmentation
demands creating more levels of management.
At each level, there are supporting staff. Beyond the payment of salaries and wages,
workers must be provided with offices. And these offices must be furnished.
Cars and other status symbols associated with each position must be made available.
All these and more put demands on organizational resources. See the diagram
below
Fig. 6.2: Showing Geographic Departmentation .
(c) Again, this form of Departmentation requires personnel with general managerial
abilities who can not only be in the headquarters but more importantly in the
field because as we have pointed out earlier the responsibility for profit is
in the field. But to find managers with general managerial ability that can take
balanced and matured decisions is not easy. What one readily finds are
specialists who cannot for reasons earlier given can be made general managers.
If for any reason, specialist is made a general manager; such action can spell
disaster to the organization.
4.0 CONCLUSION
Two forms of Departmentation
have been discussed in this note.
These are the Departmentation by enterprise functions and geographic/territorial
form of Departmentation . This means
that an organization adopting any form of these Departmentation have
to group its activities along such lines. But in doing so, it has to consider
or weigh the cost/benefits.
That is, it has to examine carefully the advantages as well as the
disadvantages that are associated with the forms of Departmentation . The outcome of such analysis will provide
the basis for the choice of the form of Departmentation to
adopt.
5.0 SUMMARY
We have discussed two major forms of Departmentation . These are Departmentation by
enterprise function and geographic or territorial form of Departmentation . We have also looked at the sets of
advantages and disadvantages that are associated with these forms of Departmentation . We shall be talking more of forms of Departmentation in our
next note.
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