Departmentation, Authority, Responsibility and Accountability

Departmentation

The process of making departments in the organization is known as departmentation. It is the process of grouping related activities into different units. Departmentation further is the process of arranging, dividing and analyzing the activities in such a way so that they will be managed properly. It is the way of dividing long and complex organization into smaller administrative units.

The departmentation is an important task in defining the organizational structure. The department in the organization may be known by different names such as unit, division, section, etc.

Departmentation basically increases the operating skill and efficiency of the organization. It provides the various benefits such as division of work, specialization, fixation of responsibility, evaluation of performance, development of manager, freedom, job satisfaction ,motivation, administrative and financial control and so on. Departmentation may be done on the basis of product, function, territory, consumer, etc. Departmentation is the logical process of grouping similar nature activities into manageable units. It is the process of combining jobs into groups.

Types / Methods of Departmentation

• Departmentation by function: It is the common and popular method of departmentation. Under this method, total organizational work can be divided into different functions such as production department, finance department, marketing department, human resource, etc. Such departmentation is essential for the survival and maintenance of the organization. The departmental managers are responsible for controlling the activity of their department and all these departmental heads are expert and specialize in their own area of work. They can formulate the process for the betterment of their own department. The following figure makes us clear about departmentation by function.

Advantages:

1) Efficiencies from putting together similar specialist and people with common skills, knowledge, and orientations

2) Coordination within functional area

3) In-depth specialization

Disadvantages:

1) Poor communication across functional areas

2) Limited view of organizational goals

• Departmentation by product or service: It is another suitable method of departmentation for an organization producing a variety of product. Under this method, the product or product line form the basis of departmentation. All the major functions such as production, marketing, finance, etc. are brought under a particular product for the proper management. This is essential for proper evaluation of the product. The departmentation by product is shown below:

Advantages:

1) Allows specialization in particular products and services

2) Managers can become experts in their industry

3) Closer to customers

Disadvantages:

1) Duplication of functions

2) Limited view of organizational goals

• Departmentation by territory: It is the other method of departmentation for an organization having business in different territories or location. It is appropriate for a large-scale organization which is geographically spread out in many locations like bank, insurance companies, transport companies, etc. Under this method, the location may be selected according to the requirements of the organization.It may be district wise, zone wise, country wise, development region wise, etc. Regions are the basis for departmentation under such method. This method is suitable for evaluation of business in terms of location, A chief looking after a particular location becomes responsible for the business in given area. Its example is shown below:

Advantages:

1) More effective and efficient handling of specific regional issues that arise

2) Serve needs of unique geographic markets better

3) Local customer priority

4) Environmental adoption

Disadvantages:

1) Duplication of functions

2) Can feel isolated from other organizational areas

• Departmentation by customers: Departmentation by customers is that method of departmentation in which enterprise is divided into a number of departments on the basis of customers that it serves. Usually, it is observed that the enterprise deals with a variety of customers, Especially, big and large organization provides special services in different types of customers. That’s why, under this method of departmentation, activities are grouped on the basis of types of customer it serves, handle contract or deals.

Advantage:

1) Customers' needs and problems can be met by specialist

Disadvantages:

1) Duplication of functions

2) Limited view of organizational goals

• Departmentation by process: Under this form, departmentation is done on the basis of several discrete processes or technologies involved in the manufacturing process of a product. Hence, the activities are grouped on the basis of such process. For example, a vegetable oil processing and manufacturing enterprise may have a separate section in its processing and manufacturing department such as crushing, refining, finishing and packing sections in which the process, as well as equipment used, are found different.

Advantage:

1) More efficient flow of work activities

Disadvantage:

2) Can only be used with certain types of products

• Departmentation by time: In this method of departmentation, activities are grouped on the basis of the timing of their performance. This is the oldest form of departmentation generally used at lower levels of the organization. If it is the case of production department of any manufacturing department, the production function can be divided into different shifts like morning shift, day shift, and night shift. Even an educational institution may have a separate department for the day, evening and correspondence courses to import education to full-time students, locally employed students, and outstation students respectively.

Authority

It is a formal right of the superior to command and compel his subordinates to perform the works assigned to them. Authority is a kind of right and power – though the authority is different from power – to guide and direct the actions of others so that the organizational goals could be achieved. Authority is vested in a particular position not to the person, because, authority is given by an institution and is, therefore, legitimate or legal. Thus, authority denotes those legal, conventional and systematized rights and power through which any person, authorized or empowered, can perform his duty and responsibility, can compel other to perform the duty, order or direct the subordinates, motivate the people belonging to the organization and makes the organization legally responsible towards the third party for his action. Thus, we can understand the term ‘authority’ as the power to direct, issue orders, compel obedience, guide and utilize the organizational resources.

Henry Foyal – "Authority is the right to give orders and the power to exact obedience."

Responsibility

Just as authority is the right/ power of a superior to issue a command or compel the subordinates to do or not to do, responsibility is the obligation of the subordinates to obey those commands. It means, when superior assigns any works to subordinates, it become a responsibility to perform the same. The responsibility is an obligation to perform the certain function assigned to achieve certain results in the organization.

Responsibility has two dimensions. One may be expressed as, ‘Responsibility for’ and another as ‘Responsibility to’. ‘Responsibility for’ relates to an obligation to perform certain duties written or given in his job description. Particularly, in an organization, two types of responsibilities are found, they are: operating responsibility and ultimate responsibility. The subordinates assigned to them, where the superior retains ultimate responsibility for getting the job done. If the subordinates fail to perform the job (operating responsibility), the superior is held responsible for the failure.

Theo Heimann- "Responsibility is the obligation of a subordinate to perform the duty or required by his superior."

Accountability

Accountability is related with both authority and responsibility. It is neither authority nor responsibility. The obligation of an individual or organization to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner. Accountability is something more than responsibility. It refers that a subordinate is answerable under his obligation. An accountant is accountable for the integrity and accuracy of the financial statements even if errors were not made by them. Managers of a company may try to manipulate their company's financial statements without the accountant knowing. There are clear incentives for the managers to do this, as their pay is usually tied to company performance. This is why independent outside accountants must review the financial statement, and accountability forces them to be careful and knowledgeable in their review.

Stephen P.Robbins- "Accountability is the obligation to one's superior to carry out the assignment in a satisfactory manner."

References:

Pokhrel, Dhurb Raj et.al., Business Studies-XII, Asmita Book Publication, Kathmandu

Poudyal, Santosh Raj et.al., Business Studies-XII, Asmita Book Publication, Kathmandu

Bhandari, Kedar Prasad, Business Studies-XII, Bundipuran Prakashan, Kathmandu