CHOOSING THE PATTERN OF DEPARTMENTATION
There is no one best way of department forming applicable to all organizations and all situations. Managers must determine what is best by looking at the situation they face — the jobs to be done and the way they should be done, the people involved and their personalities, the technology employed in the department, the users being served, and other internal and external environmental factors in the situation. However, if they know the various department patterns, and the advantages, disadvantages, and dangers of each, practicing managers should be able to design the organization structure most suitable for their particular operations.
The Aim: Achieving Objectives
Department formation is not an end in itself but is simply a method of arranging activities to facilitate the accomplishment of objectives. Each method has its advantages and disadvantages. Consequently, the process of selection involves a consideration of the relative advantages of each pattern at each pattern at each level in the organization structure. In all cases, the central question concerns the type of organizational environment that the manager wishes to design and the situation being faced. There are various ways of department formation and each method yields certain gains and involves certain costs.
Mixing Types of Departments
Another point to be highlighted concerns the mixing of types of departments within a functional area. For example, a wholesale drug firm has grouped the buying and selling activities relating to beverages in one product department, but it has grouped, on the same level, all other selling activities on a territorial basis. A manufacturer of plastic goods has territorialized both the production and the sale of all its products except dinnerware, which is itself a product department. A functional department manager may, in other words, employ two or more bases for grouping activities on the same organizational levels. Such practices may be justified on logical grounds: The objective of department formation is not to build a rigid structure, balanced in terms of levels and characterized by consistency and identical bases, but to group activities in the manner which will best contribute to achieving enterprise objectives. If a variety of bases does this, there is no reason why managers should not take advantage of the alternatives before them.
The logic of this view is frequently ignored by those who design organization structure. For some reason, possibly to make an organization chart look pretty or to maintain control, specialists often insist that all department activities below the primary level of organization be grouped in exactly the same manner.
Creating an identical organization structure in similar enterprise groupings merely to make an organizational chart look nice is really not good practice.
The organization planner may think it â€œlooks better,â€? but this is a poor reason for organizing in a particular way. The matter of control, however, is quite different. There may be very important reasons for comparing the operation of similarly organized plants, stores, and agencies. They all may be comparable profit centers; consequently, their managers can be more readily compared within this organization structure. Even though these, and others, are important arguments for similarity of organization structure, it must be remembered that no one organizes to control; people organize to produce efficiency and effectively. If the latter purpose is sacrificed for the former, the cost of control is too great.