Luther Gulick propose the theory of departmentalization to address the problem of creating departments in the organization

According to Luther Gulick, there are 4 bases on which different departments are created, namely: purpose, process, person, and place.


Departments can be developed based on the organization's goals and functions.

Purpose-based departments are formed with a specific goal in mind.

A sanitation department, for example, could be established to ensure the organization's cleanliness and hygiene.

Similarly, the welfare department may be established to take care of socio-welfare issues in the organization.

Advantages of purpose-based department

1. Purpose-based departments are self-contained.

2. It is more likely to succeed because it is created for a specific purpose

3. Low coordination costs.

Disadvantages of purpose-based department

1. Lack of opportunities for specialists, as there may be insufficient work for specialists in such departments.

2. Problems may be faced during work division.



The process involved in its functioning can serve as the basis for creating departments.

A process-based department is created when all work involving similar skills, knowledge or processes is grouped.

That is, all works involving the same processes, and skills are grouped to form a department.

For example, the department of engineering may be considered a process-based department.

Advantages of process-based department

1. It allows an organization to make the most of its labour and equipment in order and achieve mass production.

2. As it is based on skills, a process-based department encourages the division of work and specialization.

Disadvantages of process-based department

1. It could result in the purposeless division of work.


Departments can also be developed based on the clients or individuals they serve.

A person-based department is a department established to serve a particular clientele.

For example, an old age welfare department only serves the interest of elderly people.

There may also be a handicapped person department to look for the needs of people who are disabled in some way. 

Advantages of person-based department

1. Because they only serve a specific clientele, employees in the person-based department may develop skills to deal with such clientele over time.

A worker working in an old age welfare department, for example, would have specialized abilities in dealing with the elderly.

Disadvantages of person-based department

1. Coordination may become difficult due to overlapping and duplication of functions.


This is an important basis of departmentalization in the organization, particularly if a district or tribal areas are involved.

When all functions are done in a specific area and are put together to form a department, it is known as a place-based department.

Advantages of place-based department

1. It assists in the rapid development of a specific area.

2. It encourages specialization and coordination in specific areas.

Disadvantages of place-based department

1. Organizations that use place-based departmentalization may suffer from functional growth and specialization.

Criticism of the theory of departmentalization

The theory of departmentalization has been criticized for being prescriptive rather than descriptive in that it specifies how work should be divided rather than how work is divided in practice.

Furthermore, there is also some overlapping on the bases of departmentalization.

For example, the department of medicine may is considered a process based department because it involves a process.

The department of medicine can also be described as a purpose-based department because there is a purpose behind its formation.

Indeed, almost every department, whether place-based, person-based, or process-based, is purpose-based because they are always a purpose for forming them.

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