Pros and Cons of Departmentalization

Departmentalization

There are five common forms of departmentalization: functional, product, customer, geographic, and process. Functional departmentalization organizes the workforce by job function, such as accounting or marketing. This approach groups together employees who perform similar tasks. For example, a human resources department might include all of the employees who work in recruiting, training, and benefits administration. The advantage of this approach is that it allows employees to develop expertise in a particular area. The disadvantage is that it can lead to duplication of effort and a lack of coordination between departments.

Product departmentalization organizes the workforce around a company’s products or product lines. For example, a furniture manufacturer might have separate departments for bedroom furniture and office furniture. The advantage of this approach is that it allows the company to tailor its products or services to specific markets. Another type of departmentalization is customer departmentalization, which organizes the workforce around different groups of customers, such as retail or wholesale.