Important enterprise functions

Bases of Departmentation 1. Functions. Important enterprise functions provide the usual basis for classifying activities into departments. Manufacturing, marketing, finance, personnel, accounting and engineering are the typical functions of an industrial enterprise, and departments ma be established on the basis of such functions. But all these functions are not alike in importance from the business point of view. Marketing and manufacturing are the basic functions of an industrial concern, and others are regarded as service functions because they exist for supporting the main functions of the business.

Accordingly, basic and main functions must be given a higher organizational status than the status enjoyed by service functions. Further more, the size, nature and volume of business have an important say in creating departments. A small business may not require so many departments, and it may be put under the manufacturing departments, viz. Marketing, manufacturing and finance. Purchasing, engineering and accounting may be put under the manufacturing department, and accounting under finance. Conversely, large-sized enterprises may be required to create more units than this classification of functions warrants.

For example, marketing department may be split into three separate ones like sales, advertising, and market research & product design. This type of departmentation is known by fictionalization. 2. Products. Products manufactured may be adopted for division as well as for sub division purposes. When there are several product lines an each product line consists of a variety of items, functional classification fails to give balanced emphasis on each product. Slow-moving and outdated products may be given greater attention at the cost of growing ones.

For the sake of expansion and development of their products, many large enterprises have created more or less autonomous, self-sufficient products divisions based on either one single product or a group of related products. A gigantic structure with separate product lines is usually laid on this pattern of departmentation which is technically called divisionalization. With favourable product and market characteristics, divisionalization become the only choice available to large-sized enterprises. Apart form this use, product or services may be made the basis of major divisions by a epartmental store, a banking concern and an insurance company. Again, manufacturing an marketing departments may subdivide their activities on the basis of products. 3. Territories. Like the products basis, geographical regions are adopted for main division as well as for subdivision purposes. Units that are located at physically dispersed areas are made so many self-contained divisions of the organization. Apart form this divisionalization, marketing activities are very often subdivided on the basis of geographical areas.

It has almost the same advantages and disadvantages as are to be found in the case of departmentation by products. There are two special advantages of this pattern of grouping activities. Being nearer to the market and becoming familiar with local conditions, this classification help to cater to the needs of local people more satisfactorily. In addition, the economy in transport cost, the local supply of raw materials or services and the convenience of supervision make a significant contribution towards the lower cost of operation. 4. Customers.

This basis of classification is widely followed in subdividing activities of the marketing department. To give individual attention to diverse groups of buyers in the market, sales activities are often split into several parts. When the products are offered to an extensive market through numerous channels and outlets, it has the special merit of supplying goods in accordance with the peculiar needs of customers. Sales being the exclusive field of its application, co-ordination may appear difficult between sales function and other enterprise functions.

Specialized sales staff may become idle with the downward movement of sales to any specified group of customers. 5. Processes. The manufacturing activities may be subdivided on the basis of their processes of production. Similar machines are grouped into separate sections that are utilized for a distinct operation of the job. For example, lathe machine, drill machine, grinding machine and milling machine are placed in each distinct unit. In office work also, this basis of grouping activities has become common, e. g. , filing department, mail handling department and duplicating department.

Cost and economy considerations urge the use of electronic office equipments and other costly machine on the basis of this subdivision. It is, however, not a suitable basis to be utilized in any mass production arrangement. Characteristics 1. Delegation is the authorization to a manager to act in a certain way independently. The degree of delegation puts a manager to act within the limits prescribed by his superior. Moreover, withing the limits he is not free to act arbitrarily but subject to provisions of organisational policy, rules and regulation. . Delegation has a dual characteristic. A superior delegates authority to subordinates, however a superior at the same time still retains authority. As Terry has observed, ‘it is something like imparting knowledge. You share with others who then possess the knowledge, but you still retain the knowledge too. 3. Authority once delegated can be enhanced, reduced or withdrawn depending upon the requirement. The changes in organization structure, organisation climate, policy, procedure, and method require modifications in delegation of authority.

Since, authority is delegated to an individual, the authority can be recovered back fully in the case of his exit from the organisation. 4. A manager cannot delegate authority which he himself does not process. Moreover, he does not delegate the entire authority to his subordinates because if he delegates all his authority he cannot work. 5. Delegation may be specific or general. Similarly, it can be written or unwritten. Delegation is specific when course of action for specific objectives are specified; it is general when these are not specified, though objectives are specified.

Delegation of Authority Organisation units require the delegation of authority to their respective managers so that they can manger their respective units. Every manger in the organisation has some activities assigned by the superior. In order to perform these activities, he needs authority to take decisions about these and to enforce them. In fact, authority vests in the owners of the organisation, an from there, it is delegated to the chief executive. The chief executive cannot perform all the activities, hence, he assigns some activities to his subordinates and delegates them authority.

This process of delegation and redelegation from superiors to subordinates goes on till all the activities are assigned to persons by whom these are performed. Departmentation The process of dividing activities into units and subunits is referred to as departmentation. The term departmentation is used in a generic sense n is not only confined to the creation of such units as are called departments, but it includes divisions, sections and jobs also. Dividing up work calls or identification of total activities and classification of such activities into units and subunits.

There are three bases for primary grouping of activities at the second level of the organization just below the top level. Units at the second level are commonly called departments when business functions are adopted as the pattern of grouping activities. Such units go by the name of divisions when either products manufactured or territories are adopted as the means of classifying activities. There are, however, two approaches to departmentation- top down and bottom-up approaches.

In the top-down approach, activities are divided step by step downward form the chief executive’s job to the operating jobs. In the bottom-up approach, the division of activities is carried on in a reverse order. Starting form operating jobs, there arise sections form combining some correlated jobs, departments from combining some sections and finally the chief executive position form putting departments together. While the top-down approach gives emphasis on co-ordination and managerial action, the bottom-up approach gives emphasis on co-ordination and managerial action, the ottom-up approach focuses attention on employee performance. Although the top-down approach is easy for understanding the departmentation process, both the approaches are utilized in actual practice. Steps in Organisation The steps in organization may be stated as follows : 1. Determination and enumeration of activities. The required activities are spelled out from the objectives of the enterprise. The total work, operating an managerial, is broken down into component activities that are to be performed by all personnel.

The breakdown of activities is carried as far down as to determine the job of each individual. 2. Grouping and assignment of activities. Correlated and similar activities are grouped into divisions or departments first. And these divisional or departmental act5ivities are further divided into sections and jobs. Different bases are adopted for dividing and subdividing activities into different groups or blocks of work. Enterprise functions like sales. Production or finance, the products manufactured and territorial regions are usually made the basis of primary grouping.

Secondary grouping is made on the basis of geographical areas, types of customers, equipments used, process or constituent parts of the major enterprise function. 3. Allocation of fixed duties to definite persons. Definite job assignments are made to different subordinates for ensuring certainty of work performance. These job assignments are first made to different management members who, in turn, allocate the jobs among their subordinates. Along with the allocation of duties to different positions, each job is to be staffed by the placement of qualified personnel.

To make any systematic recruitment and selection, job requirements are first ascertained by the allocation of duties to different positions, and on the basis of job descriptions, man specifications are prepared. In accordance with man specifications which indicate qualification and experience expected form candidates for different posts, positions are filled by selection, training and placement of individuals. 4. Delegation of authority. Corresponding to the nature of duties, commensurate authority must be granted to the subordinates for enabling them to make adequate work performance.

As authority without responsibility is a dangerous thing, so responsibility without authority is an empty vessel. Authority and responsibility are correlated terms and they are terms to be constants companions. Delegation is a three tier concept that calls for assigning duties and delegating authority to subordinates and demanding accountability from subordinates. Wherever duties are assigned to subordinates, whether managers or operators, the other two aspects of delegation come into the picture.

Division and subdivision of activities create a number of managerial and operating jobs which are bound together in a consistent pattern by the delegation process. Absence of delegation in any enterprise implies that one person is performing the whole work of operation and management with nobody else to assist him. In such a situation, no formal structure can be designed as there is no proliferation of activities into levels. Fore establishing any organization structure, it is obvious therefore that delegation is to be effected in some way or other.