Departments divide the organization into manageable areas, defining the organization structure from a human resources management point of view.
Departments are usually a combination of functional areas of the organization such as sales, marketing and accounting; cost centers such as stores, warehouses, theaters, branches and offices; and production lines or product related processes such as forming, molding, finishing, and quality assurance. They are the lowest levels of standard report totals. A supervisor or manager is typically assigned at this level. Positions and employees report to a department.
Department codes do not require a hierarchical coding structure for reporting; the organization levels are used for this purpose. Department codes must be unique within an entity. This entity is the organization to which they are accountable for operational management purposes. Departments may be associated with a second entity for legal reasons. The second connection enables a department to be the responsibility of a different entity for external government reporting purposes while still being part of the organization structure of the original entity.
Department details are date sensitive. This means that changes to information such as the department manager or the physical locations of the department may be tracked over time and a complete history of the department can be retained. Codes or names may be changed at any time and the effects of the change will be seen immediately wherever that department is used. A department code may be frozen to ensure the department is no longer used, while it still remains in the historical records of the organization for inquiry purposes.
When defining departments, it is recommends you do not build any hierarchical meaning into the department codes. They should simply reflect the function of that area of the organization and not the division or reporting structure above them. This makes departments easier to manage and reduces the maintenance required should an organization restructuring take place.
