what are the three basic approaches to departmentalization?

Departmentalization

Types of Departmentalization

Departmentalization is the clustering of individuals into units and of units into departments in order to facilitate the achievement of organizational goals.

Departmentalization is a logical mode of creating groups minor enough that someone tin can manage them. More significantly, it is a basic way of bringing together employees whose work is related.

There are, of form, many ways in which employees' work can be seen every bit related — they serve the aforementioned customers, provide one another with inputs, sell the same product, and so on — and so departmentalization provides managers with an of import means of strengthening the coordination amidst employees where the bear on on competitive advantage volition be greatest.

Four of the most normally used patterns of departmentalization are:

1. Functional
2. Divisional
3. Hybrid, and
4. Matrix.

Functional Departmentalization

When departmentalization involves group employees according to the arrangement'south functions, it is called functional departmentalization. The figure beneath shows a firm organized by functional departmentalization.

Effigy I. Functional Departmentalization

The functional structureOpens in new window groups position into units on the basis of similarity of expertise, skills and work activities. The major advantages and disadvantages of a functional structure are given below:

Advantages & Disadvantages of Functional Departmentalization
Advantages	Disadvantages
In-depth development of expertise. Clear career path within part. Efficient utilize of resources. Possible economies of scale. Ease of coordination within part. Potential technical advantage over competitors.	Tedious response time on multifunctional problems. Excess of decisions at top of bureaucracy. Bottlenecks due to sequential tasks. Restricted view of organization employees. Inexact measurement of performance. Narrow preparation for potential managers.
Sources: Kathryn M Bartol and David C Martin, " Management", McGraw Hill Inc, New York (1991), Folio 372.

Divisional Structure

The arrangement's other wide choice is to use divisional departmentalization, which groups employees according to some characteristic of markets or operations.

Divisional construction is a type of departmentalization in which positions are grouped according to the similarity of products, services or markets.

The effigy below shows the divisional structure.

Within a division structure, each division contains the major functional resources information technology needs to pursue its own goals with lilliputian or no reliance on other divisions.

Bounded structures are sometimes referred to as self-contained structures because the major functions are generally independent within each division. With departmentalization, the organisation may group employees in i of the three ways: product line, customer grouping, or geographic location.

1. Departmentalization co-ordinate to product line: Departmentalization co-ordinate to product line is attractive to large organizations considering functional managers tin can readily supervise functional work groups inside each division and the division structure promotes coordination amid the functions.

   In a divisional structure, each product department has its ain functional specialists, in areas such as marketing, manufacturing and personnel who perform work associated with the production or products of their specific sectionalisation simply.

Figure II. Segmentation past Product Line

2. Departmentalization co-ordinate to location of operations: Departmentalization according to location of operations is appropriate when operations or marketing activities are widely dispersed on customer needs and tastes vary according to geographic locations.

   Figure Iii. Division by Geographic Location

   Geographic divisions are divisions designed to serve different geographic areas. Geographic departmentalization often is adopted when it is of import to provide products and services that are tailored to the needs of dissimilar geographic areas.

3. Departmentalization according to customer groups: Departmentalization according to customer groups makes sense when the organization'southward customers fall into several categories with distinct needs.

Client divisions are divisions fix up to serve particular types of clients or customers.

Figure Four. Division past Customer

This type of arrangement blueprint is used mainly when there are major differences among types of customers that preclude adequate coordination of the customers' diverse needs within a standard functional structure. Every bit a result, each section contains individuals who perform the necessary functions for a specific type of customer.

Choice of Departmentalization

Each type of departmentalization provides a dissimilar strength. Because functional departmentalization groups together specialists working on a similar type of activity, it is efficient, and the departments are relatively easy to manage.

Divisional departmentalization, in contrast, provides a degree of flexibility by encouraging employees from various functional areas to adapt their work to the needs of their product, client group or geographic surface area.

Hybrid Structure

Hybrid structure is a form of departmentalization that adopts parts of both functional and divisional structures at the same level of management. Information technology attempts to incorporate many of the major advantages of functional also every bit bounded departmentalization. The figure below shows the hybrid structure.

Figure V.   A Hybrid Structure of a Chinese Firm

The major advantages and disadvantages of a hybrid structure are given below:

Advantages & Disadvantages of Hybrid Structure
Advantages	Disadvantages
Allows system to attain adaptability and coordination in production divisions and efficiency in centralized functional departments. Results in better alignment between corporate and division-level goals. Achieves coordination both within and between production lines.	Leads to disharmonize between corporate departments and divisions. Excessive administrative overheads Boring response to infrequent situations.

Uses of Hybrid Construction

A hybrid structure tends to be used in organizations that non only face considerable environmental uncertainty that tin all-time exist met through a divisional structure only too require functional expertise and/or efficiency.

Matrix Structure

Some organizations take tried to overcome limitations of product and divisional departmentalization by combining them in a matrix construction. The effigy below shows a matrix structure.

As the figure shows, the organisation has traditional functional departments (columns of the matrix), and each employee belongs to one of those departments.

The organisation besides assigns product managers to atomic number 82 projects involving each of the functional areas (the rows of the matrix). Thus, members of the functional departments are assigned to work on the projects under the direction of product managers. In most cases, the matrix pattern is used for but a role of an organization.

Matrix Stages

Stanley M Davis and Paul R Lawrence suggest that organizations adopting a matrix structure usually go through several identifiable structural stages:

1. Phase I is a traditional structure (usually a functional structure) which follows the unity-of-command principle.
2. Stage II is a temporary overlay, in which managerial integrator positions are created to take accuse of particular projects (e.thou., project managers), oversee product launches (e.g., product managers), or handle some other issue of finite elapsing that involves coordinating beyond functional departments.
3. Stage III is a permanent overlay, in which the managerial integrator positions operate on a permanent ground (e.yard., a make managing director coordinates issues related to a brand on an ongoing basis).
4. Stage Four is a mature matrix in which matrix bosses accept equal powers.

Advantages and Disadvantages of Matrix Construction
Advantages	Disadvantages
Gives room for coordination necessary to meet dual demands from surroundings Flexible sharing of human resource across products. Suited to complex decisions and frequent changes in unstable environment. Provides opportunity for functional and product skill evolution. Best in medium-sized organizations with multiple product.	Causes participants to experience dual authority which tin can be frustrating and disruptive. Frequently subjects participants to good interpersonal skills and extensive training. It is time-consuming; it involves frequent meetings and conflict resolution sessions. Will not work unless participants understand information technology and adopt collegial rather than vertical-type relationships. It requires dual force per unit area from surround to maintain power balance.

Uses of Matrix Structure

Matrix designs are not necessary for many organizations; they are usually appropriate when the following conditions exist:

1. In that location is considerable pressure from the surroundings that necessitates a simultaneous and strong focus on both functional and divisional dimensions.
2. The demands placed on the system are irresolute and unpredictable, making it important to have a large capacity for processing information and analogous activities quickly.
3. There is pressure for shared resource.

Regardless of the organization blueprint, managers typically need to take farther steps to accomplish the vertical and horizontal coordination that makes a structure constructive.

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