What are the important Merits of Departmentalization suggested by Louis Allen?

Important Merits of Departmentalization suggested by Louis Allen:

According to Louis Allen, the following are the chief advantages of adopting the functional basis of Departmentalisation.

Encouragement of Specialisation:

Organisations, which depend upon the utilisation of functional skills to a very great extent, will profit by retaining the functional basis of departmentalisation.

Specialisation adds to the competitive strength of the business. Stiff competition in production technology or in marketing or in other areas needs a specialised emphasis upon the individual areas. These advantages can however be retained only so long as the product lines may need primary departmentalisation on product basis followed by functional departmentalisation for each product.

Improves co-ordination within the function:

Since there is one production manager to head the production function, it leads automatically to close co-ordination and harmony in all the phases of production activity.

For all products, the policy for materials procurement, designing of items, mode of quality control etc can all be developed uniformly. Such uniformly of standards and procedures within each function is highly desirable form the standpoint of coordinated performance.

Economical Operation:

Functional departmentalisation avoids duplication of the same functions for every product or location. The same purchasing department would cater for the materials requirement for all products the same personnel department would supply the personnel requirements for the whole organisation and so on.

Besides, maximum possible utilisation of resources, plant capacity etc is possible under functional departmentalisation because one product or the other could always be made to use the idle capacity available within the plant or use the resources left over after one item has been manufactured.

Flexibility of the organisation structure:

The pyramidal structure, which results from functional departmentalisation, allows easy additions to subtractions from the existing framework without causing much dislocation.

Expansion is easily possible by widening the base of the pyramid by adding more layers to the structure or by recruiting more subordinate personnel. Similarly, the structure can be pruned in size by eliminating .layers from the bottom. In neither case is the basic structure affected adversely. The top managers with the best of skills and training are always retained within the business.

Bringing out of good Leader:

Functional departmentalization offers the widest possible scope for the exercise of various skills and funds of experience of a manager over a wide range of products. His faculties of adaptability, imagination, inventiveness, etc are fully challenged by his job and his leadership process gets a good impetus.