Relationship Between Departments

How are Various Departments Interrelated in an Organization?

Larger organizations usually have separate departments. The departmental interrelationships within the organization are important for the success of the business. Interrelationships are when each department has a relationship with the other departments inside the organization.

The various departments in an organization work together and communicate with each other to achieve common organizational objectives. The functions performed by each department are interrelated and interconnected with other departments to ensure smooth operations within the entire organizational system.

Here are a few ways in which an organization’s departments can be interrelated:

Production v Purchase & Supply

The production and purchase departments are interrelated in this way: production department provides its specifications in terms of the raw materials needed to develop the product. The purchase department then procures those raw materials on time and with the right price.

Production v Research and Development

The production department also works closely with the research and development department. The latter identifies new trends and innovation through market research, and the former makes sure that those innovations are incorporated into the production process. The key here is to meet the customer’s needs and go ahead of competitors.

Production v Finance and Accounting

The finance and accounting department is also related to the production and purchase departments because the production department proposes the raw materials and labor required in production; and the finance department uses their proposal to develop a budget for the procurement of raw materials and production of goods.

Marketing v Research and Development

There is also a close relationship between the marketing department, research and development, and the production departments. The marketing department communicates with customers to identify their needs. The information is used by the R&D department to develop innovative ideas to meet those needs; and the production department implements those ideas through product development and improvement.

Human Resources v Finance

Human resources department is also interrelated with finance department in various ways. For example, the human resource department establishes the employment needs in the organization, including the right amount of wages that is appropriate for each position based on the prevailing market wage rate and the company’s policies. The finance department then creates a payroll to release funds to each employee according to their wage rate.

Production v Other Departments

Close collaboration will usually be necessary between Production and various other functions within the organisation, for example:

  • Research and Development, concerning the implications of product design for production methods and cost
  • Marketing, concerning desired product functionality, appearance, quality, durability and so on
  • Finance, concerning the availability of funds for purchase of new equipment and the acceptability of inventory levels.
  • Human Resource Management, concerning staff motivation implications of job design and production methods.

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