Departmentalization is the process by which jobs are grouped based upon common bases. Bases could be task types, functionality, and other guidelines based upon the organizations desires. The four basic departmentalization bases are functional, product, customer and location.
Functional departmentalization is the basic separation of groups based upon their job types. These job types are also referred to as activities. Examples of departmentalization could be front end, register, human resources, inbound / outbound and even the toy isle depending on the see along the way. There are several benefits including the ability to tailor departments with department specific managers. As managers are specific to each department, they no longer need to be cross trained to understand multiple functions.
Image illustrating functional departmentalization retrieved from http://www.swotanalysistemplate.info/2011/06/departmentalization.html
Product departmentalization is the separation of departments based upon what type of output each team creates. For instance, an auto maker might have a paint and finish department, an interior and electronics department, and so on and so forth. Each manufacturing process gets its own department in similar fashion to functional departmentalization breaks departments down by department function. Once again a department can specialize in key areas without needing to worry about understanding the proceeding or following production steps.
Customer departmentalization is the breakdown of work by customer base. This helps companies tailor work and personal based upon customer needs. This is often critical in many retail / professional organizations where an industrial customer and a general consumer might need service simultaneously. Often an industrial customer is on a time sensitive job and needs immediate service. Where as a general consumer will probably have time on their hands and will ask many questions trying to be an educated buyer. By having different departments an organization can have tailored personal to address each customer needs and tailor the purchasing process to their specific needs.
Location departmentalization is probably the simplest and easiest department segregation to understand. Locations are the basis for breaking down the organization professionally. Instead of having one manager torn between multiple locations and geographic responsibilities, there are specific managers for each location. As examples go, we are surrounded by them on a daily shopping basis. Every fast food chain, grocery store, auto parts store, Target, Kmart, Wal-Mart and more are based upon the location departmentalization technique. Each store and location can be tailored to its specific location and customer base. Thus allowing for the greatest flexibility for customer service in comparison to a one size fits all practice.
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