How to Configure Departments for a Company in Odoo 18 (2025 Guide)

As businesses continue to digitize in 2025, having a scalable and structured ERP system is no longer optional—it’s essential. Odoo 18, the latest release of the popular open-source ERP platform, gives companies more control than ever over human resources with powerful features for department configuration. Whether you’re a growing startup or managing a complex enterprise structure, understanding how to set up departments in Odoo 18 can ensure your organization runs smoothly and efficiently.

This guide will walk you through everything you need to know about configuring departments in Odoo 18, from understanding why departmental organization matters to actual setup steps, recent updates in the 2025 release, and best practices. 

Let’s dive in.

Why Department Configuration Matters in Odoo 18

The department structure in an ERP system like Odoo influences HR management, workflows, reporting, and interdepartmental coordination. Proper configuration leads to:

• Improved HR oversight for leave requests, appraisals, and recruitment.
• Streamlined workflows where tasks are assigned to correct department heads.
• Detailed reporting so you can better allocate resources and budgets.
• Enhanced security by assigning permissions and responsibilities by department.

With the 2025 update of Odoo 18, configuring departments is even more intuitive, with upgraded UI elements, better integration with other Odoo modules (e.g., Projects, Recruitment, Timesheets), and improved performance for larger enterprise structures.

New in Odoo 18 (2025): Key Departmental Enhancements

Before jumping into setup, it’s important to highlight what’s new in Odoo 18:

• Hierarchical Department Views: Easily build nested department trees with drag-and-drop.
• Multi-Company Support: Run multiple companies with shared or unique department structures.
• AI-Powered Assignment Suggestions: Automatically suggest managers and roles based on organizational structure.
• Enhanced Payroll Integration: Departments now auto-link with payroll and analytic accounts.
• Mobile Optimization: Department views and management functions fully optimized for mobile.

These improvements make department configuration more powerful and flexible, particularly for HR and operations leaders.

Step-by-Step: How to Configure Departments in Odoo 18

1. Activate Employee Management Features

Start by making sure the necessary apps are installed.

• Navigate to Apps.
• Search for Employees, HR, and Payroll and ensure they are installed.
• This will enable department features across employee records, approvals, and other HR modules.

2. Access the Departments Menu

Once the modules are installed:

• Go to Employees > Configuration > Departments.

You will find a default department named “Human Resources” created by Odoo. You can edit this or start creating your own departmental structure.

3. Create a New Department

Click on “Create” to open the department creation window. Fill in the following fields:

• Department Name: E.g., “Marketing”
• Parent Department: Optional. Choose this to create a hierarchy (e.g., “Marketing” under “Sales & Marketing”).
• Manager: Assign a department manager from your list of employees.
• Company: Select the company (useful for multi-company setups).
• Analytic Account: Link if you want to track departmental expenses and revenues.

Departments can later be linked to job positions, employees, and used in reports and permissions.

4. Organize the Departmental Hierarchy

Use the Tree View to establish a clear organizational chart. Departments can be nested under broader ones to form a hierarchy, like:

Sales & Marketing

• Marketing
• Sales

Operations

• Supply Chain
• Logistics

This is useful for reporting and approving workflows up and down the structure.

5. Assign Employees to Departments

Navigate to Employees > Employees.

Select an employee and edit their record. Assign them to the appropriate department under the Work Information tab. You can also specify their manager, job title, and location here.

6. Integrate Departmental Data Across Modules

The real power of setting up departments comes when you begin to integrate them with other modules:

• Recruitment: Filter candidates and job requisitions by department.
• Projects: Assign project tasks to departments and track time.
• Time Off and Approvals: Department managers are automatically included in approval workflows.
• Payroll & Accounting: Link departments with analytic accounts and cost centers for financial tracking.

These cross-module connections provide better visibility and control over operations.

Best Practices for Department Setup in Odoo 18

1. Align Departments with Business Functions  

Don’t overcomplicate. Keep departments aligned with your actual business functions. Avoid creating departments for every minor role.

2. Use Hierarchies Strategically  

Create broader parent departments (e.g., “Operations”) and use nested departments (e.g., “Procurement”, “Inventory”) for clarity and control.

3. Integrate Early  

Even if you’re only starting with the Employees module, think ahead. Connecting departments with Payroll, Timesheets, and Projects will save you time and effort later.

4. Keep It Clean  

Regularly audit your department list. Deactivate or merge obsolete departments to avoid clutter and confusion.

5. Leverage Reports  

Use department filters in Odoo’s built-in reporting tools (especially HR and financial reports) for insights into performance, turnover, and costs.

Common Mistakes to Avoid

• Using Job Titles Instead of Departments: Roles like “Sales Executive” belong in Job Titles, not Department fields.
• Not Assigning Managers: Odoo workflows depend on department managers for approvals.
• Skipping Integration: Without connecting your department structure to other modules, you’ll miss out on analytics and automation benefits.

Real-World Use Case: Department Setup for a Multi-Country Business

Let’s say you’re a manufacturing company operating in the US and Germany, with localized HR laws and payroll.

With Odoo 18, you can:

• Set up each company under the Multi-Company feature.
• Create similar departmental structures (like Sales, Production, HR) unique to each company.
• Link country-specific analytic accounts and payroll rules.
• Enable context-based access where managers in Germany can’t view or approve data from US departments.

Odoo 18’s new performance and multi-company enhancements make it much easier to achieve this.

Wrapping Up: Why Smart Department Configuration in Odoo 18 Matters

Configuring departments in Odoo 18 is more than an HR procedure—it’s a foundational step toward streamlined workflows, smarter decision-making, and more efficient operations. The latest 2025 updates have made it easier than ever for business owners, HR professionals, and operations managers to build a scalable, integrated ERP foundation.

Whether you’re starting from scratch or migrating from previous Odoo versions, investing the time to configure your department structure properly will pay long-term dividends.

Need Help Setting Up Odoo 18 for Your Business?

Our Odoo-certified consultants specialize in full-suite implementation, customization, and training. Whether you need help with basic setup or enterprise-level ERP design, we’re here to guide you through every step.

Let’s optimize your business—together.