Departmentalization gives employees the ability to understand their roles and stick to work – eliminating confusion and building an environment of worker-welfare.

Depending on what kind of departmentalization you’re looking for, there’s functional departmentalization (that aligns departments according to their function), geographical departmentalization (that separates an organization by geography), customer departmentalization (that provides a customized strategy for various segments of customers).

Increased Productivity

Departmentalization brings increased productivity through communication and clear hierarchy so that departments can easily connect with one another. It makes it much easier for supervisors to maintain track of everyone as they can have a clear view of everything happening in each division and allocate power more effectively and monitor subordinates.

Placement of same skillsets and tasks employees into the same department generates collaboration which creates innovative solutions and new products. In addition, departmentalization allows managers to align employee skills with work assignments and increase morale and motivation of all staff.

A business can use different models of departmentalization as per its needs and framework. For instance, product departmentalization means the siloing of all functions for each major product portfolio under one single manager: this creates specialisation within your verticals but also limits cross-functional expertise and leads to inefficiencies. Customer departmentalization, on the other hand, helps customers in improving customer services by personalizing processes based on customers’ specific needs.

Better Supervision

Having more people to supervise while the company grows helps keep managers in better control over what’s going on and allows them more options for delegation of authority.

It makes it easier to work with the same talent and skills in one department, and that means more products and processes are developed faster.

It is much easier to identify who is responsible in case something goes wrong with departmentalization — especially useful in large and geographically distributed companies. Departmentalization also helps businesses to specify job roles and streamline internal communication and coordination. A second type of departmentalization is a product level: this helps companies understand more about the demographics of their customers which in turn generates more sales revenue; such departments are most common in manufacturing/production businesses as well as service-based companies such as life insurance, banks or utilities.

Improved Job Satisfaction

Departmentalised hierarchy makes it simpler for bosses to manage their employees and be held accountable for their actions; it also facilitates communication and coordination because of the grouping together of employees with the same competencies.

Coordination and communication is a part of any successful company, no matter the size. They enable supervisors to delegate work, give direction, get feedback and make suggestions; and for employees to collaborate on projects and share information in order to be able to exchange information and settle conflicts.

Managers can also departmentalize staff into specialised specialties for better satisfaction and retention. Because by having an employee work in the same department you’ll be able to easily schedule training in the field – which is a good way to get started – and with this kind of structure, employees have more flexibility in their pursuit of careers and aspirations, which results in more efficiency and productivity overall.

Increased Flexibility

More efficient use of resources is possible with the proper delegation of work between units. All departments can take advantage of their own staff, materials and technologies as per their specific needs; further minimising any uncertainty about tasks and roles which makes evaluation of performance more easily achieved by managers.

Organization of the same skill and expertise groups into departments enables the managers to easily teach on the job and support employee growth. Also, this system also builds a community within a department that can raise morale and output of an organization.

Businesses have different departments of departmentalization viz., functional, product, customer, and geographic. Each has its pros and cons, so be selective in your decision for the specific business needs of your company; geographic departmentalization may provide specialised solutions unique to local circumstances, but it can result in incoherent practices and policies; functional departmentalisation develops specialized knowhow while silencing departments’ communication.