Grouping jobs (departmentalization)

After jobs have been designed the next step in organizing process is to group them into logical sets. The step is important because properly grouped jobs make coordination and integration of activities much easier. This process of grouping jobs is known as departmentalization. Departmentation usually groups jobs according to one of these three bases: function, product and location.

Departmentation by function—in this form of departmentation employees who are involved in the same or very similar functions are grouped together. Most organizations using this form of departmentalization end up with the four basic functional departments: marketing, production, finance and human resource.

Departmentalisation by function has certain advantages:

•    It is logical because it groups like or similar activities together. This facilitates specialization which could lead to increased productivity.
•    Coordination is improved since work is not duplicated.
•    It also contributes to organizational simplicity.
•    Each department is staffed by experts in that particular function and therefore managers in charge of each function can keep close control of the activities.
   
Departmentalisation of functional areas also has certain limitations. It is ideal for small organizations but as the organization grows some weaknesses become apparent and complex.

•    The chain of command becomes excessively long as new levels are added. This may slow down communication.
•    It does not allow departmental managers to develop much understanding of the activities in other departments—so it becomes difficult to develop well rounded executives.
•    It tends to slow decision making. Employees might concentrate so much on their functional specialities that they lose sight of the total organization.