Departmental Organization: Meaning, Features, Advantages and Disadvantages


Meaning of Departmental Organization

Departmental Organization is one of the traditional and most common form of public enterprises prevalent in distinct countries. These organizations are fully organized, managed and funded by government. Under this form of organization, a public enterprise operates as a full-fledged ministry or a main sub-division of government department. All activities and working of undertaking are under the control of minister who report directly to the parliament. 

The responsible minister then delegates his authority downward at various level of management for effective functioning and achievement of defined goals. The controlling ministry decides each and every policy matter and other key decisions of departmental organizations. However, the general policies for these types of undertaking are framed by the parliament. Various individuals working in these types of undertakings are government employees as they are directly influenced by government. These undertaking are further classified into state government and central government. Indian railways being managed by railway ministry and Post and Telegraph services run by ministry of communication are some of the best examples of departmental organization. 

Features of Departmental Organization

Various features of departmental organization are as discussed in points below: –

  1. Ease of formation: It is a quite easier task of establishing organizations under departmental undertakings in comparison to private organizations. Departmental organizations do not face any strict registration formalities as they are established and organized by the ruling government of country.
  2. Under government control: Management of departmental enterprises is directly managed and control by government by appointing minister to this enterprise. The minister is directly responsible for the operations of departmental undertaking and report to parliament. 
  3. Not a separate entity: Departmental undertaking are not established as an independent legal entity distinct from Government.  They do not enjoy any separate legal powers but operates as a part of Government.
  4. Audit and Accounting: These undertakings are subject to audit and accounting formalities in the same way as applicable to other departments of government. All accounts are properly maintained and timely audited for avoiding any error, fraud and discrepancies.  
  5. Not liable to public borrow: Departmental organization do not have any option of raising funds from public or any private body. The budget allocation sanctioned by Indian parliament is the only source of finance available to these undertakings for acquiring any additional funds. Government partially or wholly own all such type of enterprises. 
  6. Government financing: It is financed by the treasury of government. Each and every activity of departmental organization are financed through government funds. Also, all revenues of these undertakings are paid into the treasury. 
  7. Ultimate responsibility with Minister: The ultimate responsibility of managing the activities of departmental organization lies with the responsible minister. This minister is appointed by government as a head of organization and is responsible to state legislature or Indian parliament for all the affairs of departmental undertaking. Minister in turn delegates its authority downwards to distinct levels of management for effective functioning.

Advantages of Departmental Organization 

Different advantages provided by departmental organization can be well-understood from points given below: –

  1. Tool for social change: Departmental undertakings are key tool available to government for promoting economic and economic justice within the country. These enterprises are used by government as an instrument for bringing social change. For example, a government by establishing a post office, broadcasting and telecasting programmers in far off rural areas can do social, economic and intellectual development of people residing in that areas. 
  2. Direct control of government: Such enterprises operates under the direct control of government and are linked to one of the departments of government. A minister is appointed at the top who is responsible to parliament or state legislature for all functioning of these type of undertakings. All polices and decision are taken by government and they can’t take any decision on their own which may harm any group of public.
  3. Secrecy maintained: Another important benefit of departmental undertaking is that they can maintain secrecy of important policy matters. Government have full control over such organizations and can easily withhold any sensitive information like defence for public interest. 
  4. Avoid misuse of government treasury: Departmental undertakings are subject to strict budgeting, accounting and auditing like any other government organizations. They are under strict control and all employees working in these undertaking are accountable which avoids any misuse of public funds.
  5. Tax on public is lesser: These type of undertaking results in less burden of tax on general public as all revenues from these department directly go into the treasury of government. Each and every activity is funded by government and also all earnings are paid to government.  
  6. Contributes to government income: Departmental undertaking makes efficient contribution to treasury of government thereby raising their overall revenue. Any surplus in these departments is transferred to government which increase their income. In the similar way, any deficiency is also met by government. 
  7. Monitored by rule and regulations of Ministry: These organizations work under the control of minister appointed as a head by government. Every administrative officer working within the departmental undertaking works as per the direction of appointed minister. The minister reports directly to parliament and state legislature with regard to state of affairs of departmental undertakings. 

Disadvantages of Departmental organization

Departmental organization in addition to benefits also has some disadvantages which are summarized below: –

  1. Influence of Bureaucracy: Departmental organization lacks autonomy and initiative as are subject to excessive red tape and bureaucracy. Approval of government is required for taking every decision which delays the whole working process. In this way, the departmental undertaking lacks flexibility in running business as in case of other type of enterprises. 
  2. Excessive parliamentary control: It operates under the excessive control of parliament which creates difficulties in its day-to-day functioning. All key policies and rules are framed by parliament and implemented via minister working as a head of these organization. 
  3. Financial dependence: Departmental undertaking are financially dependent upon the budget allocations of government. They cannot independently any long-range investment decisions that may generate revenue for these organizations. All the revenues generated cannot be utilized for funding business but need to be deposited into the national treasury.
  4. Casual approach to work: The officers working in the departmental undertakings develop a casual approach to work as they are subject to frequent transfers. These organizations face a lot of operational inefficiency due to the casual work attitude of employees. 
  5. Lack of professionalism: Departmental undertakings faces a lot of non-professionalism as civil servants employed here do not possess relevant professional management skill set. These managers due to the fear of criticism from parliament or minister cannot afford to be innovative one. 
  6. Political influence: A departmental organization faces an excess political influence in its functioning. The power balance in between the ruling party and opposition influence its fate of performing efficiently. As a result of this, it becomes more an political organization rather than a business or economic organization.