After reading this article you will learn about:- 1. Characteristics of Departmental Organisation 2. Advantages of Departmental Organisation 3. Disadvantages.

Characteristics of Departmental Organisation:

A departmental organisation has the following characteristics:

1. The management of such enterprises is in the hands of the government. The enterprise is managed and controlled by the civil servants of the department.

2. Such an enterprise is financed by the treasury and its receipts are also paid into government treasury.


3. It enjoys the legal immunity and government sanction is necessary for suing the undertakings.

4. Its accounts are also audited in the same manner as any other government department.

5. Recruitments to these departments are made on the same principles and almost in the same manner as is the case with the government departments.

6. The same conditions of service which are applicable to other government departments are applied to the personnel working in this type of enterprise.

Advantages of Departmental Organisation:


Following are the main advantages of departmental enterprises:

1. These undertakings are completely under government control and are associated with one of the government departments. Government regulates their working in a systematic and proper way to achieve the objectives.

2. Departmental organisations can maintain secrecy in their working as it is necessary for undertakings like defence.

3. Departmental organisation ensures maximum degree of parliamentary control on the enterprise.


4. Departmental form of organisation is necessary for public utility services and strategic industries. Strategic industries like defence and atomic power are managed in a better way under government departments.

5. The risk of misuse of public money is minimised in departmental organisation because of strict budget, accounting and audit controls.

Disadvantages of Departmental Organisation:

A departmental enterprise suffers from the following drawbacks or limitations:

1. The public enterprises are supposed to have considerable autonomy and initiative. Under this system there is excessive ministerial control which kills harmony and the very purpose of creating such organisations is virtually defeated.


2. This type of organisation is practically run on government lines and as such inherits all the defects of a government organisation including those of delays and running into the rut of redtapism and officialdom.

3. Under this system, all policies are decided at the ministerial level and the powers are centralised at the higher level. It adversely affects the efficiency of the concerns.

4. Departmental organisation cannot take long-term financial decisions because it depends upon budgetary appropriations of the government.

5. Management of such enterprises is in the hands of civil servants. There is a shortage of competent persons who have commercial experience. Civil servants are not suitable for running commercial organisation.