Page 109 - DMGT520_ORGANIZATION_CHANGE_AND_DEVELOPMENT

Organization Change and Development

Notes Functional Departmentalisation

This is the basic form of Departmentalisation. It refers to the grouping of activities or jobs
involving common functions. In a research organisation the groupings could be research,
production, agricultural engineering extension, rural marketing and administration.
Product Departmentalisation

It refers to the grouping of jobs and activities that are associated with a specific product.
As organisations increase in size and diversify, functional departmentalisation may not be very
effective. The organisational as to be further divided into separate units to limit the span of
control of a manager to a manageable level (Luthans, 1986). In an agricultural research institution
functional departments can be further differentiated by products and purpose or type of research.
In contrast, to functional Departmentalisation, product-based Departmentalisation has the
advantage of:

 less conflict between major sub-units;
 easier communication between sub-units;
 less complex coordination mechanisms;
 providing a training ground for top management;

 more customer orientation; and
 greater concern for long-term issues.
In contrast, functional Departmentalisation has the strength of:

 easier communication with sub-units;
 application of higher technical knowledge for solving problems;
 greater group and professional identification;
 less duplication of staff activities;
 higher product quality; and

 Increased organisational efficiency (Filley, 1978).

Departmentalisation by Users

It is grouping of both activities and positions to make them compatible with the special needs of
some specific groups of users.

Departmentalisation by Territory or Geography

It involves grouping of activities and positions at a given location to take advantage of local
participation in decision-making. The territorial units are under the control of a manager who
is responsible for operations of the organisation at that location. In agricultural research
institutions, regional research stations are set up to take advantage of specific agro-ecological
environments. Such Departmentalisation usually offers economic advantage.

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