Figure 8-1 to Support Learning Objective 8-5: Approaches to Departmentation (continued from page 252 of the text)

Whereas major departments of an organization are established by top-level managers, supervisors primarily are concerned with activities within their own areas. Nevertheless, from time to time supervisors will be confronted with the need to departmentalize within their areas, and they should be familiar with the alternatives available for grouping activities. These are the same options available to top-level managers when they define the major departments. Departmentation is usually done according to function, products or services, territory, customer, process and equipment, time, or matrix design.

Functional Departmentation. The most widely used form of departmentation is to group activities by function—the jobs to be done. Consistent with the idea of specialization and division of work, activities that are alike or similar are placed together in one department and under a single chain of command. For example, word processing, data-entry, and duplicating services may be grouped together into a clerical department or information processing center; sales and promotional activities into a marketing department; manufacturing assembly work into a production department; inspection and monitoring activities into a quality control department; and so on. As an enterprise undertakes additional activities, these new activities—for the most part—are simply added to the already existing departments.

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.

In recent years, many companies have utilized extensive cross-training and multi-skilling of employees in order to develop more flexibility in operations. A flexible workforce is one that has employees trained to handle a variety of skills needed to perform multiple tasks in production, customer-service departments, or processes. This is in contrast to the more traditional functional arrangement where each worker is responsible for only one job, or where each worker performs narrowly defined tasks in the operation. Although developing a flexible workforce can be costly and time consuming, the advantages can be well worth the effort. Supervisors can more easily delegate work to employees who better understand the total departmental functions, and the employees also can assume additional responsibilities and tasks in a more collaborative fashion aimed at getting the departmental work done.

Product or Service Departmentation. Many companies utilize product or service departmentation. To departmentalize on a product basis means to establish each major product (or group of closely related products) in a product line as a relatively independent unit within the overall framework of the enterprise. For example, a food products company may choose to divide its operations into a frozen food department, a dairy products department, a produce department, and the like. Product departmentation can also be a useful guide for grouping activities in service businesses. For example, most banks have separate departments for commercial loans, installment loans, savings accounts, and checking accounts. Many home maintenance firms have separate departments for carpentry, heating, and air-conditioning services.

Geographic (Territorial, Locational) Departmentation. Another way to departmentalize is by geographical considerations. This approach to departmentation is important for organizations with physically dispersed activities. Large-scale enterprises often have divisions by territories, states, and cities. Increasingly, many companies also have international divisions. Where units of an organization are physically dispersed or where functions are to be performed in different locations—even different buildings—geographic departmentation may be desirable. Locational considerations may be significant even if all activities are performed in one building but on different floors. An advantage of territorial departmentation is that decision-making authority can be placed close to where the work is being done.

Customer Departmentation. Many organizations find it advisable to group activities based on customer considerations. The paramount concern here is to service the differing needs and characteristics of different customers. For example, a university that offers evening programs in addition to day programs attempts to comply with the requests and special needs of part-time and full-time students. Companies may have special departments to handle the particular requirements of wholesale and retail customers. Major department stores may attempt to reach different segments of the buying public, such as customers for a “bargain basement” or lower-priced division at the one extreme and an exclusive high-priced fashion division at the other extreme. Most hospitals have separate units for outpatient services.

The importance of maintaining close customer relationships in today’s competitive climate is well recognized by most organizations. Supervisors often are the key representatives in the effort to build strong interpersonal relationships with customers. Coordinated efforts to communicate and build trust with customers has been referred to as customer relationship management (CRM). This type of effort may be spearheaded by the marketing/sales department, but supervisors from other departments with customer linkages are usually expected to be part of whatever processes are appropriate and helpful to build customer goodwill and loyalty.

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.

Time Departmentation. Another way to departmentalize is to group activities according to the period of time during which work is performed. Many organizations are engaged in round-the-clock operations and departmentalize on the basis of time by having work shifts. Activities are departmentalized by time (day, afternoon, night shift), although the work operations of all the shifts for the most part may be the same. Here, too, there may be an overlap in the departmentation process. Where time is a partial basis for departmentation, it is likely that other factors will be involved. For example, a maintenance division—based on function and services—may be further departmentalized by shifts, such as the maintenance night shift. Shift departmentation can create organizational questions of how self-contained each shift should be and what relationships should exist between regular day-shift supervisors and the off-shift supervisors.

Shift work also can contribute to numerous other employee problems and concerns, including personal safety, sleep deprivation, child care, and work/family conflicts. Night-shift workers often perceive that they are viewed as “second-class citizens” who have limited access to the training and development opportunities afforded to day-shift personnel. Supervisors of all shifts need to be cognizant of and sensitive to these types of shift workers’ concerns. It may be possible for supervisors to coordinate certain types of scheduling rotation, training opportunities, and other efforts (perhaps with the assistance of the human resources department) designed to raise and maintain shift worker morale and job performance to acceptable levels.

Mixed Departmentation. In order to achieve an effective structure, a supervisor may have to apply several types of departmentation at the same time. This is referred to as “mixed” departmentation. For example, there may be an inventory control clerk (functional) on the third floor (geographic) during the night shift (time). In practice, many organizations have a composite departmental structure involving functional departmentation, geographic departmentation, and other forms. All of these alternatives may be available to supervisors to facilitate the grouping of activities in their departments (see accompanying Figure). There are some departments in which additional subgroupings are not needed. However, supervisors of departments of considerable size may find it necessary to divide various jobs and skills into different groups under a lead person or foreman, who in turn will report to the supervisor. Whatever structure is chosen, the purpose of departmentation is not to have a beautiful, well-drawn organization chart. The purpose is to have a sound structure that will best achieve the objectives of the department and the entire organization.