Departmentation is not an end in itself but a means for achieving organizational objectives. Each basis of departmentation has its own merits and demerits. Therefore, the relative advantages and limitations of various types of departmentation should be analyzed in the light of the needs and circumstances of the particular enterprise. That basis of departmentation is the best, which facilitates the achievement of organizational objectives most economically and efficiently.
In practice, no single pattern is ideal to suit all situations. Therefore, no single basis is followed for grouping activities. Rather, most of the big enterprises follow a composite or combination of several bases. For example, an organization manufacturing agricultural machinery may follow product as the base (tractor department, appliance department, generator department) at the primary level (i.e., the level immediately below the chief executive), territory as the base at the intermediate level and function as the base at the ultimate level. This is shown as follows.
Matrix organization
Matrix organization is another form of combined base organization, which is becoming very popular nowadays. Matrix organization is otherwise called Lattice pattern or Grid organization. In this form of organization, two types of departmentalization such as functional and product departmentalization exists simultaneously. Functional departments are a permanent fixture of the matrix organization; they retain authority for the overall operations of their respective units. Product departments or project teams, on the other hand, are created as the need for them arises that is, when a specific programme requires a high degree of technical skill in a concentrated period of time. Members of a project team are assembled from the functional departments and are placed under the direction of a project manager. The manager for each project is responsible and accountable for its success; thus he has authority over the other team members for the duration of the project. On the completion of the project, the team members of the team, including the project manager revert back to their respective departments until the next assignment to a project.
This form is now used in a variety of organizations, such as engineering companies executing turn - key projects, hospitals, universities, etc. hospitals now have both functionally organized departments (such as X – Ray, medicine, orthopedics, etc…) and latterly organized patient care teams.
Functional Departmentation Territory Departmentation Product Departmentation President Generator Department Appliance Department Tractor Department Western plant Southern plant Eastern plant Finance Marketing Production
Universities have both functionally organized academic departments and specialized inter disciplinary programmes (such as MBA).
Functional Departmentation Functional Authority Product Authority P ro du ct D ep ar tm en ta tio n General Manager
R & D AdministrationContract Engineering Manufacturing
R & D Group
Contract Administration
Group
Engineering
Group Manufacturing Group
Project Manager A R & D Group Contract Administration Group Engineering
Group Manufacturing Group
Project Manager B R & D Group Contract Administration Group Engineering
Group Manufacturing Group
Project Manager C
Merits
The problem of coordination, which plagues most functional designs, is minimized here because the project manager acts as an integrator to relate personnel from diverse discipline.
There is a reservoir of specialists, which ensures availability of expertise to all projects on the basis of their needs.
There is economy in cost – each project is assigned only the number of people it needs, thus avoiding unnecessary surplus.
There is an effective information decision system, which enables members to respond quickly to the change in project needs.
Demerits
It violates the traditional principle of unity of command
It fosters conflict because of the heterogeneity of team members.
Matrix structure may be expensive. The dual chain command may cause management costs to double.
3.9. DECISION - MAKING
3.9.1. Meaning of Decision
A decision is a choice between two or more alternatives. This implies three things:
When managers make decisions they are choosing right one from alternatives,
They are deciding what to do on the basis of some conscious, and
Deliberate logic or judgment.
A decision may be defined, in terms of commitment of resources – raw materials, machines, finance, time, efforts etc… in a particular channel of thinking and action.
For example, a decision to advertise the product, involves the time, effort, finance of the marketing department in preparation of advertisement programme, its implementation and reviewing its progress.
Whenever a manager takes a decision, his thinking and actions are involved in a particular direction. Whenever the decision is implemented, it implies commitment of precious organizational resources in that particular direction.
3.9.2. Types of Decisions
Decisions can be classified in a number of ways as shown below.
Programmed and Non – Programmed Decisions Major and Minor Decisions
Routine and Strategic Decisions Individual and Group Decisions Simple and Complex Decisions
Organizational and Personal Decisions 1). Programmed and Non-Programmed Decisions
According to Herbert Simon, Programmed decisions are concerned with relatively routine and repetitive problems. Information on these problems is already available and can be processed in a preplanned manner. Such decision have short – term impact and are relatively simple. These types of decisions are made at lower level executives of management. These decisions require little thought and judgement. The decision-maker identifies the problem and applies the predetermined solution. For examples, granting leave to employees, purchase of raw materials, disciplinary action against late comers, determining salary payments to employees who have been ill, and so on.
Non-programmed decisions are novel and non-repetitive. Such decisions deal with unusual problems. It cannot be tackled in a predetermined manner. A high degree of executive judgement and deliberation is required to solve the problem. These types of decisions are made at higher-level management. For example, to locate a new branch office, development of a new product, and so on.
2). Major and Minor Decisions
Some decisions are considerably more important than others. For example, decision relating to the purchase of a new plant worth of Rs.2 crores is a major decision. Top management may decide these decisions. On the other hand, purchase of spare parts for the machineries is a minor decision. The lower level management people may decide matter.