Span of Management: Meaning, Factors

and Theory
Meaning of Span of Management:
Depending upon the complexity of organisational activities and relationships
amongst superiors and subordinates, it becomes important the superiors manage an
optimum number of subordinates that result in optimum organisational output. All
the subordinates cannot be managed by one superior. There has to be a limit on the
number of subordinates who can be effectively managed by one superior.

The number of subordinates that a superior can effectively supervise is known as

span of management or span of control. In the 19th and middle of 20th century,
management writers determined 5 or 6 as the optimum number that a manager
could effectively manage at the upper level.

Beyond this number, managers faced problems like:

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1. Overburdened with work.

2. Difficulty in coordinating the activities of large number of people.

3. Difficulty in controlling.

Thus, optimum number of subordinates that a manager could supervise was

determinable but today, it is not so. Exact number of employees that managers can
effectively supervise cannot be defined. Span of management is situational in nature.

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Depending on the number of employees that can be supervised or

controlled by managers, there can be two kinds of structures in the
organisation:
I. Tall structures, and

II. Flat structures.

I. Tall structures:
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These structures are found in classical bureaucratic organisations. In this structure,

a manager can supervise less number of subordinates. He can, therefore, exercise
tight control over their activities. This creates large number of levels in the
organisation. This is also known as narrow span of control. A tall structure or a
narrow span of control appears like this.
Merits of a Tall Structure:
1. Managers can closely supervise activities of the subordinates.

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2. There can be better communication amongst superiors and subordinates.

3. It promotes personal relationships amongst superiors and subordinates.

4. Control on subordinates can be tightened in a narrow span.

Limitations of a Tall Structure:

1. It creates many levels in the organisation structure which complicates co-
ordination amongst levels.

2. More managers are needed to supervise the subordinates. This increases the
overhead expenditure (salary etc.). It is, thus, a costly form of structure.

3. Increasing gap between top managers and workers slows the communication
process.

4. Decision-making becomes difficult because of too many levels.

5. Superiors perform routine jobs of supervising the subordinates and have less time
for strategic matters.

6. Employees work under strict control of superiors. Decision-making is primarily

centralised. This restricts employees’ creative and innovative abilities.

7. Strict control leads to low morale and job satisfaction. This can affect productivity
in the long-run.

To overcome the limitations of a tall structure, many organisations reduce the

number of levels in the hierarchy by downsizing the organisation. Downsizing is “the
process of significantly reducing the layers of middle management, expanding spans
of control and shrinking the size of the work force.”

Many companies downsize their work force through the process of restructuring.
Restructuring is “the process of making a major change in organisation structure
that often involves reducing management levels and also possibly changing some
major components of the organisations through divestiture and/or acquisition.”
“The most common and most serious symptom of mal-organisation is multiplication
of the number of management levels. A basic rule of organisation is to build the least
possible number of management levels and forge the shortest possible chains of
command.” — Peter F. Drucker

II. Flat Structures:

These structures have a wide span of control. When superior supervises a larger
number of subordinates, flat structure is created with lesser number of hierarchical
levels. A departure was made from tall structures to flat structures by James C.
Worthy who was a consultant in the L. Sears, Roebuck and company.

A structure where span of control for each managerial position is 4

appears as follows:

To illustrate, if organisations A and B, both have 256 workers and the span of control
for each managerial position is 2 for company A and 4 for company B, there will be 9
levels in company A (requiring 128 supervisors at the lowest level, 64 at the next
higher level and so on) and 5 levels in company B. A narrow span of control creates
more levels in the organisational hierarchy than the wide span of control.

The levels in case of organisation B(5) where span of control is 4 appears

as follows:

(The span of 4 prevails for each functional area at each level). For the sake of
simplicity, the figure represents the span for only one functional area and one level.

Merits of a Flat Structure:

1. There is low cost as less number of managers can supervise organisational
activities.

2. The decision-making process is effective as superiors delegate authority to

subordinates. They are relieved of routine matters and concentrate on strategic
matters. The decision-making is decentralised.

3. Subordinates perform the work efficiently since they are considered worthy of
doing so by the superiors.
4. There is effective communication as the number of levels is less.

5. It promotes innovative abilities of the top management.

Limitations of a Flat Structure:

1. Superiors cannot closely supervise the activities of employees.

2. Managers may find it difficult to co-ordinate the activities of subordinates.

3. Subordinates have to be trained so that dilution of control does not affect

organisational productivity.

Both tall and flat structures have positive and negative features and it is difficult to
find the exact number of subordinates that a manager can effectively manage. Some
management theorists like David D. Van Fleet and Arthur G. Bedeian assert that
span of control and organisational efficiency are not related and many empirical
studies have proved that span of control is situational and depends on a variety of
factors.

Some studies proved that flat structures produce better results as decentralised
decision making has less control from the top, promotes initiative and satisfaction at
work. Large number of members in a group can better solve the complex problems
as group decision making is based on greater skill variety.

Other studies proved that people working in tall structures produce better results as
less number of members in a group can come to consensus of opinion and evaluate
their decisions more thoroughly. Group cohesiveness is high and, thus, commitment
to decisions is also high. Members feel satisfied with their decisions and conflicts are
reduced.

Factors Affecting Span of Management:

The following factors help in determining the suitable span of
management:
1. Competence of managers:
If managers are competent in their jobs, they can have a wide span of management.
Competence of managers is judged by their ability to make decisions related to
motivational plans, leadership styles, communication channels and chains,
techniques of control etc. Managers who rank high on these parameters can
effectively supervise larger number of subordinates.

2. Nature of work:
If employees perform similar and repetitive work, managers can supervise large
number of subordinates and, thus, have a wide span of control. Non-repetitive and
challenging work requires narrow span of control. Changes in the nature of work
also affects the span of management.

Frequent changes as a result of dynamic environment support a narrow span as

superiors frequently have to direct the activities of subordinates. Stability in the
nature of work supports a wide span of management as superiors’ directions are not
frequently required to carry out the work processes.
3. Assistance to managers:
If managers have access to technical or secretarial assistance, a larger group of
subordinates can be managed. Span of control can, therefore, be wide. Staff
assistance can be useful for collecting and processing information related to various
decisions and issuing orders to the subordinates. Managers save time in
communicating with subordinates, direct the activities of larger number of
subordinates and focus on other strategic organisational matters.

4. Competence of subordinates:
If subordinates are competent to manage their jobs without much assistance from
the superiors, span of control can be wide. Competent subordinates do not require
frequent directions from the superiors with respect to various organisational
activities. Superiors can thus, manage a larger group of subordinates.

5. Plans and policies:

If plans clearly define the organisational/individual goals and policies, superiors can
supervise a larger group of subordinates and have a wide span of control. Clearly
defined plans include well-formulated policies procedures, methods etc. Particularly,
if standing plans are well defined, subordinates know the broad guidelines within
which they have to make decisions in similar and repetitive situations.

They do not approach the superiors every time they face a similar problem-solving
situations. Superiors can, thus, manage a larger group of subordinates. However, if
most of the decisions are made by resorting to single use plans (programmes,
budgets, projects etc.), managers have to be frequently approached and the span can,
thus, be narrow.

6. Organisational level:
The top executives look after important and specialised activities and, therefore, the
span is narrow at the top level but at lower levels the span can be wide, since
supervisors are mainly concerned with routine jobs. According to J.C. Worthy, a
manager can supervise as many as 20 subordinates at the lower levels.

7. Authority-responsibility structure:
If authority-responsibility structure is well-defined and understood, superiors can
supervise larger number of subordinates. People work within the confines of their
responsibility and take directions from superiors only when required. Lack of clarity
in authority-responsibility structure will create confusion in the organisation. Jobs
and who will perform which job, who is accountable to whom will not be clear. In
such a situation, managers cannot supervise a large group of subordinates. The span
of management will, thus, be narrow.
8. System of control:
Effective techniques of control can enable the manager to supervise larger number of
subordinates. Effective system of control promotes decentralisation. Superiors do
not actively involve in the decision-making processes as decisions are taken at the
levels where they are required. There is extensive delegation, clarity of jobs,
authority-responsibility relationships and freedom to take decisions. The span of
control can, thus, be wide.
9. Financial factors:
Both narrow and wide structures have financial constraints. A narrow span requires
more managers and is, thus, a costly form of structure. Wide span, on the other
hand, may result into organisational inefficiencies. Proper balance has to be
maintained between the costs and benefits of the span that a manager can effectively
supervise.

These factors are situational in nature and the span of management is also, thus,
situational. Sometimes it can be narrow and sometimes wide. For the same
organisation, it can be different for different functional areas and different levels.
The span is usually narrow in the finance department and wide in the marketing
department for the same level. It may be different in different organisations for the
same functional areas and levels.

Graicunas Theory on Span of Management:

A French management consultant, V.A. Graicunas, introduced a theory on span of
management which explains three kinds of relationships that a superior can have
with subordinates. He formulated a theory and suggested the number of
subordinates under one superior based on mathematical calculations. Superior-
subordinate relationships are based on mathematical formulae.

The kind of relationships and the formulae for arriving at the number of
relationships is as follows:

Graicunas identified three types of relationships:

1. Direct single relationships,

2. Direct group relationships, and

3. Cross relationships.

1. Direct single relationship:

This is the relationship between the superior and his immediate subordinates. It
represents direct contact of the superior with his subordinates. If there are 3
subordinates (A, B and C) under one superior (X), there will be three direct single
relationships, represented by the formula n. These are relationships between X and
A, X and B, and X and C.

2. Direct group relationships:

This is the relationship of superior with subordinates in the presence of other
subordinates. All possible combinations of superior and subordinate relationship-
exist in group relationships. It represents contact of the superior with one or more
subordinates while others (one or more) assist the relationships.

For one superior (X) and three subordinates (A, B, C), there will be 9
direct group relationships as follows:
1. X and A with B providing assistance

2. X and A with C providing assistance

3. X and B with C providing assistance

4. X and A with BC providing assistance

5. X and B with AC providing assistance

6. X and C with AB providing assistance

7. X and AB with C providing assistance

8. X and AC with B providing assistance

9. X and BC with A providing assistance

The number of relationship (9) is represented by the formula:

3. Cross relationships:
While the subordinates work under the same superior, they also interact amongst
themselves. These are the relationships amongst subordinates. As interaction with B
and B’s interaction with A will be different as viewed by the managers and, therefore,
this relationship will also be different. Based on the formula n (n -1), with 3
subordinates, 6 such relationships will be formed.

These are between:

A and B

Band A

A and C

C and A

B and C

C and B

With every increase in the number of subordinates by one, increase in the number of
relationships is by more than one. While, with 2 subordinates, the total number of
relationships is 6, with 3 subordinates, it is 18.
The theory does not seem to have any practical application as it emphasises on the
number of relationships and not on the importance of relationships. Based on
Gaicunas’ theory, many other management thinkers also suggested numerical limits
on the span of management, ranging from 3 to 9 for top managerial positions and 8
to 30 for supervisory management. More than the number of subordinates that can
affect the ability to manage the subordinates, managerial effectiveness is judged by
the situational factors that can affect the span of management.

Difference Between Centralization and

Decentralization

Centralization
and Decentralization are the two types of structures, that can be found in the organization,
government, management and even in purchasing. Centralization of authority means the
power of planning and decision making are exclusively in the hands of top management. It
alludes to the concentration of all the powers at the apex level.

On the other hand, Decentralization refers to the dissemination of powers by the top
management to the middle or low-level management. It is the delegation of authority, at all the
levels of management.

To determine whether an organization is centralized or decentralized greatly depends on the

location of decision-making authority and the degree of decision-making power at lower levels.
There is a never ending debate between these two terms to prove which one is better. In this
article, significant differences between Centralization and Decentralization, in an organization is
explained.

Content: Centralization Vs Decentralization

1. Comparison Chart
2. Definition
3. Key Differences
4. Conclusion

Comparison Chart
BASIS FOR
CENTRALIZATION DECENTRALIZATION
COMPARISON

Meaning The retention of powers The dissemination of

and authority with respect authority, responsibility and
to planning and decisions, accountability to the various
with the top management, management levels, is known
is known as Centralization. as Decentralization.
 BASIS FOR
CENTRALIZATION DECENTRALIZATION
COMPARISON

Involves Systematic and consistent Systematic dispersal of

reservation of authority. authority.

Communication Vertical Open and Free

Flow

Decision Making Slow Comparatively faster

Advantage Proper coordination and Sharing of burden and

Leadership responsibility

Power of decision Lies with the top Multiple persons have the
making management. power of decision making.

Reasons Inadequate control over Considerable control over the

the organization organization

Best suited for Small sized organization Large sized organization

Definition of Centralization

A pivot location or group of managerial personnel for the planning and decision-making or
taking activities of the organization is known as Centralization. In this type of organization, all
the important rights and powers are in the hands of the top level management.

In earlier times, centralization policy was the most commonly practiced in every organization to
retain all the powers in the central location. They have full control over the activities of the
middle or low-level management. Apart from that personal leadership and coordination can also
be seen as well as work can also be distributed easily among workers.

However, due to the concentration of authority and responsibility, the subordinate employee’s
role in the organization is diminished because of all the right vests with the head office.
Therefore, the junior staff is only to follow the commands of the top managers and function
accordingly; they are not allowed to take an active part in the decision-making purposes.
Sometimes hotchpotch is created due to excess workload, which results in hasty decisions.
Bureaucracy and Red-tapism are also one of the disadvantages of centralization.

Definition of Decentralization

The assignment of authorities and responsibilities by the top level management to the middle or
low-level management is known as Decentralization. It is the perfect opposite of centralization,
in which the decision-making powers are delegated to the departmental, divisional, unit or
center level managers, organization-wide. Decentralization can also be said as an addition to
Delegation of authority.

At present, due to the increase in competition, managers take the decision regarding for the
delegation of authority to the subordinates. Due to which the functional level managers get a
chance to perform better, as well as freedom of work, is also there. Moreover, they share the
responsibility of the high-level managers which results in quick decision making and saving of
time. It is a very effective process for the expansion of the business organization, like for
mergers and acquisitions.
Although, decentralization lacks leadership and coordination, which leads to inefficient control
over the organization. For an effective decentralization process, open and free communication in
the organization must be there.

Key Differences Between Centralization and Decentralization

The points given below are noteworthy, so far as the difference between centralization and
decentralization is concerned:

1. The unification of powers and authorities, in the hands of high-level management, is

known as Centralization. Decentralization means dispersal of powers and authorities by
the top level to the functional level management.
2. Centralization is the systematic and consistent concentration of authority at central
points. Unlike, decentralization is the systematic delegation of authority in an
organization.
3. Centralization is best for a small sized organization, but the large sized organization
should practice decentralization.
4. Formal communication exists in the centralized organization. Conversely, in
decentralization, communication stretches in all directions.
5. In centralization due to the concentration of powers in the hands of a single person, the
decision takes time. On the contrary, decentralization proves better regarding decision
making as the decisions are taken much closer to the actions.
6. There are full leadership and coordination in Centralization. Decentralization shares the
burden of the top level managers.
7. When the organization has inadequate control over the management, then centralization
is implemented, whereas when the organization has full control over its management,
decentralization is implemented.

Conclusion

The difference between centralization and decentralization is one of the hot topics these days.
Some people think that centralization is better while others are in favor of decentralization. In
ancient times, people used to run their organization in a centralized manner, but now the
scenario has been changed completely due to rise in the competition where quick decision
making is required and therefore many organizations opted for decentralization.

At present, most of the organisation are equipped wth both the features, as absolute
centralization or decentralization is not possible. Complete centralization in an organisation not
practicable because it represents that each and every single decision of the organisation is taken
by the top echelon. On the other hand, full fledge decentralization is an indicator of no control
over the activities of subordinates. So, a balance between these two should be maintained.

Departmentalisation : Meaning, Need

and Types
Meaning of Departmentalisation:
‘Departmentation’ or ‘Departmentalisation’ is the process of grouping the activities
of an enterprise into several units for the purpose of administration at all levels.

The administrative units so created may be designated as departments, divisions,

units, branches, sections, etc.

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The process of organising consists of dividing and grouping of the works to be done
in an enterprise and assigning different duties and responsibilities to different
people.
Dividing the work naturally means the identification of individual activities which
have to be undertaken for the attainment of the organisational objectives. But once
the various activities have been identified, it is necessary to group them together on
some logical basis so that a team can be organised.

Departmentation can provide a necessary degree of specialisation of executive

activity for efficient performance. It can simplify the tasks of management within a
workable span. It also provides a basis on which the top managers can co-ordinate
and control the activities of the departmental units.

Need for and Importance of Departmentation:

The basic need for departmentation is to make the size of each departmental unit
manageable and secure the advantages of specialisation. Grouping of activities and,
consequently, of personnel, into departments makes it possible to expand an
enterprise to any extent.

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Departmentation is necessary on account of the following reasons:

1. Advantages of Specialisation:
Departmentation enables an enterprise to avail of the benefits of specialisation.
When every department looks after one major function, the enterprise is developed
and efficiency of operations is increased.

2. Feeling of Autonomy:
Normally departments are created in the enterprise with certain degree of autonomy
and freedom. The manager in charge of a department can take independent
decisions within the overall framework of the organisation. The feeling of autonomy
provides job satisfaction and motivation which lead to higher efficiency of
operations.

3. Expansion:
One manager can supervise and direct only a few subordinates. Grouping of
activities and personnel into departmentation makes it possible for the enterprise to
expand and grow.

4. Fixation of Responsibility:
Departmentation enables each person to know the specific role he is to play in the
total organisation. The responsibility for results can be defined more clearly,
precisely and accurately and an individual can be held accountable for the per-
formance of his responsibility.

5. Upliftment of Managerial Skill:

Departmentation helps in the development of managerial skill. Development is
possible due to two factors. Firstly, the managers focus their attention on some
specific problems which provide them effective on-the-job training. Secondly,
managerial need for further training can be identified easily because the managers’
role is prescribed and training can provide them opportunity to work better in their
area of specialisation.

6. Facility in Appraisal:
Appraisal of managerial performance becomes easier when specific tasks are
assigned to departmental personnel. Managerial performance can be measured
when the areas of activities are specified and the standards of performance are fixed.
Departmentation provides help in both these areas.

When a broader function is divided into small segments and a particular segment is
assigned to each manager, the area to be appraised is clearly known; and the factors
affecting the performance can be pointed out more easily. Similarly, the standards
for performance can be fixed easily because the factors influencing the work
performance can be known clearly. Thus, performance appraisal becomes more
effective.

7. Administrative Control:
Departmentation is a means of dividing the large and complex organisation into
small administrative units. Grouping of activities and personnel into manageable
units facilitates administrative control. Standards of performance for each and every
department can be precisely determined.

Types of Departmentation:
There are several bases of Departmentation. The more commonly used bases are—
function, product, territory, process, customer, time etc.

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These are explained below:

(A) Departmentation by Functions:
The enterprise may be divided into departments on the basis of functions like
production, purchasing, sales, financing, personnel etc. This is the most popular
basis of departmentation. If necessary, a major function may be divided into sub-
functions. For example, the activities in the production department may be classified
into quality control, processing of materials, and repairs and maintenance.

The organisation chart based on functional departmentation is shown in

Fig. 4.10:
Advantages:
The advantages of functional departmentation include the following:
(a) It is the most logical and natural form of departmentation.

(b) It ensures the performance of all activities necessary for achieving the
organisational objectives.

(c) It provides occupational specialisation which makes optimum utilization of man-

power.

(d) It facilitates delegation of authority.

(e) It enables the top managers to exercise effective control over a limited number of
functions.

(f) It eliminates duplication of activities.

(g) It simplifies training because the managers are to be experts only in a narrow
range of skills.

Disadvantages:
There are some problems associated with functional departmentation.
These are mentioned below:
(a) There may be conflicts between departments.

(b) The scope for management development is limited. Functional managers do not
get training for top management positions. The responsibility for results cannot be
fixed on any one functional head.

(c) There is too much emphasis on specialisation.

(d) There may be difficulties in coordinating the activities of different departments.

(e) There may be inflexibility and complexity of operations.

(B) Departmentation by Products:

In product departmentation, every major product is organised as a separate
department. Each department looks after the production, sales and financing of one
product. Product departmentation is useful when the expansion, diversification,
manufacturing and marketing characteristics of each product are primarily
significant.

It is generally used when the production line is complex and diverse requiring
specialised knowledge and huge capital is required for plant, equipment and other
facilities such as in automobile and electronic industries.

In fact, many large companies are diversifying in different fields and they prefer
product departmentation. For example, a big company with a diversified product
line may have three product divisions, one each for plastics, chemicals, and metals.
Each division may be sub-divided into production, sales, financing, and personnel
activities.

Advantages:
Product departmentation provides several advantages which may be
stated as follows:
(a) Product departmentation focuses individual attention to each product line which
facilitates the expansion and diversification of the products.

(b) It ensures full use of specialised production facilities. Personal skill and
specialised knowledge of the production managers can be fully utilised.

(c) The production managers can be held accountable for the profitability of each
product. Each product division is semi-autonomous and contains different
functions. So, product departmentation provides an excellent training facility for the
top managers.
(d) The performance of each product division and its contribution to total results can
be easily evaluated.

(e) It is more flexible and adaptable to change.

Disadvantages:
Product departmentation presents some problems as follows:
(a) It creates the problem of effective control over the product divisions by the top
managers.

(b) Each production manager asserts his autonomy disregarding the interests of the
organisation.

(c) The advantages of centralisation of certain activities like financing, and

accounting are not available.

(d) There is duplication of physical facilities and functions. Each product division
maintains its own specialised personnel due to which operating costs may be high.

(e) There may be under-utilisation of plant capacity when the demand for a
particular product is not adequate.

(C) Departmentation by Territory:

Territorial or geographical departmentation is specially useful to large-scale
enterprises whose activities are widely dispersed. Banks, insurance companies,
transport companies, distribution agencies etc. are some examples of such
enterprises, where all the activities of a given area of operations are grouped into
zones, branches, divisions etc.

It is obviously not possible for one functional manager to manage efficiently such
widely spread activities. This makes it necessary to appoint regional managers for
different regions.

The organisation chart of territorial departmentation may take the

following form:

Advantages:
Territorial departmentation offers certain facilities in operation. These
are pointed out below:
(a) Every regional manager can specialise himself in the peculiar problems of his
region.

(b) It facilitates the expansion of business to various regions.

(c) It helps in achieving the benefits of local operations. The local managers are more
familiar with the local customs, preferences, styles, fashion, etc. The enterprise can
gain intimate knowledge of the conditions in the local markets.

(d) It results in savings in freight, rents, and labour costs. It also saves time.

(e) There is better co-ordination of activities in a locality through setting up regional

divisions.

(f) It provides adequate autonomy to each regional manager and opportunity to train
him as he looks after the entire operation of a unit.

Disadvantages:
Territorial departmentation have the following problems:
(a) There is the problem of communication.

(b) It requires more managers with general managerial abilities. Such managers may
not be always available.

(c) There may be conflict between the regional managers.

(d) Co-ordination and control of different branches from the head office become less
effective.

(e) Owing to duplication of physical facilities, costs of operation are usually high.

(f) There is multiplication of personnel, accounting and other services at the regional
level.

(D) Departmentation by Customers:

In such method of departmentation, the activities are grouped according to the type
of customers. For example, a large cloth store may be divided into wholesale, retail,
and export divisions. This type of departmentation is useful for the enterprises
which sell a product or service to a number of clearly defined customer groups. For
instance, a large readymade garment store may have a separate department each for
men, women, and children. A bank may have separate loan departments for large-
scale and small- scale businessmen.
The organisation chart of customer-oriented departmentation may
appear as follows:

Advantages:
The important advantages of customer departmentation are the follow-
ing:
(a) Special attention can be given to the particular tastes and preferences of each
type of customer.

(b) Different types of customers can be satisfied, easily through specialised staff.
Customers’ satisfaction enhances the goodwill and sale of the enterprise.

(c) The benefits of specialisation can be gained.

(d) The enterprise may acquire intimate knowledge of the needs of each category of
customers.

Disadvantages:
This method of departmentation may have certain disadvantages,
specially when it is followed very rigidly. These are as follows:
(a) Co-ordination between sales and other functions becomes difficult because this
method can be followed only in marketing division.

(b) There may be under-utilisation of facilities and manpower in some departments,

particularly during the period of low demand.

(c) It may lead to duplication of activities and heavy overheads,

(d) The managers of customer departments may put pressures for special benefits
and facilities.

(E) Departmentation by Process or Equipment:

In such type or departmentation the activities are grouped on the basis of production
processes involved or equipment used. This is generally used in manufacturing and
distribution enterprises and at lower levels of organisation. For instance, a textile
mill may be organised into ginning, spinning, weaving, dyeing and finishing
departments. Similarly, a printing press may have composing, proof reading,
printing and binding departments. Such departmentation may also be employed in
engineering and oil industries.

The organisation chart of departmentation by process or equipment in

the manufacturing department of a textile industry has been shown in
Fig. 4.14:

Advantages:
The basic object of such departmentation is to achieve efficiency and economy of
operations. The processes are set in such a way that a series of operations is feasible
making operations economic. Efficiency can be achieved if departments are created
for each process as each one has its peculiarities.

It provides the advantages of specialisation required at each level of the total

processes. The maintenance of plant can be done in better way and manpower can
be utilised effectively.

Disadvantages:
In such departmentation, there may be difficulty in coordinating the different
process-departments, because the work of each process depends fully on the prece-
ding process. So, there are chances of conflicts among the managers looking after the
different processes. It cannot be used where manufacturing activity does not involve
distinct processes.

(F) Departmentation by Time and Numbers:

Under this method of departmentation the activities are grouped on the basis of the
time of their performance. For instance, a factory operating 24 hours may have three
departments for three shifts—one for the morning, the second for the day, and the
third for the night.

In the case of departmentation by numbers, the activities are grouped on the basis of
their performance by a certain number of persons. For instance, in the army, the
soldiers are grouped into squads, companies, battalions, regiments and brigades on
the basis of the number prescribed for each unit.
Such type of departmentation is useful where the work is repetitive, manpower is an
important factor, group efforts are more significant than individual efforts, and
group performance can be measured. It is used at the lowest level of organisation.

Factors to be Considered in Departmentation:

A suitable basis of departmentation is one which facilitates the performance of
organisational functions efficiently and effectively so that the objectives of the
organisation are achieved. Since each basis is suitable to a particular type of
organisation, often a combination of various basis is adopted.

So, the determination of suitability of departmentation basis should be considered in

the light of various principles or factors affecting the functioning of an organisation.

These factors or principles are described below:

1. Specialisation:
The activities of an organisation should be grouped in such a way that it leads to
specialisation of work. Specialisation helps to improve efficiency and ensure
economy of operations. It enables the personnel to become experts.

2. Co-ordination:
Quite different activities may be grouped together under one executive because they
need to be co-ordinated. So, the basis of departmentation should ensure that the
dissimilar activities are put together in one department.

3. Control:
Departmentation should be such that it facilitates the measurement of performance
and adoption of timely corrective action. It should enable the managers to hold the
employees accountable for results. Effective control helps to achieve organisational
objectives economically and efficiently.

4. Proper Attention:
All the activities which contribute to the achievement of subordinate results should
be given adequate attention. This will ensure that all necessary activities are
performed and there is no unnecessary duplication of activities. Key areas should be
given special attention.

5. Economy:
Creation of departments involves extra cost of additional space, equipment and
personnel. So, the pattern and number of departments should be so decided that
maximum possible economy is achieved in the utilisation of physical facilities and
personnel.

6. Local Condition:
While forming departments adequate attention to the local conditions should be
given. This is more important to the organisation which operates in different
geographical areas. Departmentation should be adjusted according to the available
resources. It should aim at full utilisation of resources.

7. Human Consideration:
Departmentation should also consider the human aspect in the organisation. So,
along with the technical factors discussed above, departments should be created on
the basis of availability of personnel, their attitude, aspiration and value systems,
informal work groups, cultural patterns, etc. Due attention to the human factors will
make departmentation more effective and more efficient.