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Breaking down an organization into smaller business units/departments allows the organization to more efficiently and effectively manage the organization. For starters, people will know where to look for employees with specific skill sets. For example, if someone has a question about salaries, then they know to look for someone in the HR department.

Since employees of a specific department are often located in a specific physical location in an organization, finding a specific employee is simpler. Employees that serve similar purposes within an organization (e.g. HR, PR, IT) often have to work with one another. So by having them in the same physical location, they can communicate and work with one another more effectively. Having departments localized in specific areas of an office can also help streamline the office layout.

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