What is the difference between a business unit and a department?

Modified on Tue, 06 Feb 2024 at 03:16 PM

In organizations like Keka, where employees are categorized into business units and departments, it's important to understand the distinction between the two:

Business Unit:

A business unit is a distinct unit within the organization that can be segregated based on various parameters, including but not limited to location, vertical (industry or market segment), operation, product lines, etc.

Key Characteristics:

1. Business units are often larger and more encompassing than departments.
2. They are typically organized around broader strategic goals or market segments.
3.Business units may have their own leadership, budgets, and resources.
4.They are more focused on the overall business strategy and performance.

Department:

A department is a specific functional unit within a business unit or the organization as a whole. It is segregated based on the specific function or set of tasks that the team within that department is responsible for. Common department names include Finance, Operations, Sales, Human Resources, Marketing, etc.

Key Characteristics:

1.Departments are typically smaller and more specialized in their functions.
2.They are organized around specific operational or administrative tasks.
3.Each department may have its own manager or head responsible for overseeing its operations.
4.Departments collaborate to support the overall goals of the business unit or organization.