Main Advantages of Functional Organization Structure Show
Functional organization structure is optimal for small businesses or companies producing standardized goods or services. Functional Organization Structure Main Advantages:
Create Your Own Org Charts! Functional Organization Structure Examples & TemplatesICS Org ChartIBM Org Chart Example
In today’s aggressive business environment, company’s must be more efficient, flexible, and innovative than before in order to obtain a competitive advantage in the market. It is obvious that a number of factors affect a company’s success. For example, having a well-defined organizational structure is one of them. Typically, organizational structures define how the tasks are directed and coordinated towards the achievement of organizational objectives. For that purpose, there are many different types of organizational structures that can be used to demonstrate reporting lines and roles of the workgroups. In this article, we will discuss the functional organizational structure and its advantages and disadvantages compared with other structures. What is a Functional Organizational Structure?An organization can be established in many different ways, depending on its goals. The structure of an organization demonstrates the system in which it operates. Basically, an organization structure shows the allocation of responsibilities of individuals and departments in a hierarchical way. A functional organization structure is one of the most common structures which break down the company into departments such as the marketing department, engineering department, sales department, IT department, etc. Employees are supervised by a department manager who has skilled and experted in the same field. This expertise supports the department managers to analyze the powers of their team and lead them through the achievement of organizational goals. Department managers are responsible for the performance of their department. The direction of communication is from the department manager to the top management. In that structure, employees are classified according to the function that they perform within the organization. If you consider other types of organizational structures, you will see some differences in the reporting system. For example, in a projectized organizational structure, you report to the project manager. In a matrix organizational structure, your reporting hierarchy depends on the type of the matrix. Project Managers RoleIn functional organizational structures, all the authority stays with the functional managers. Therefore the role of the project manager is very limited if he exists. A functional organizational structure has a vertical and disconnected structure in which communication flows through the functional managers to the top management. Advantages of the Functional Organizational StructureThe following are some advantages of the functional organization structure:
Disadvantages of the Functional Organizational StructureThe following are some disadvantages of the functional organization structure:
Which Company is Suitable for a Functional Structure?The functional organizational structure best suits the smaller organizations rather than the ones which produce many different types of products. Also, the functional organizational structure suits best the operations which require deep knowledge. For example, the expertise of the department is very important for a research and development project. Employees are grouped based on their skills and expertise in the functional organizational structures. The reporting hierarchy is clear in this structure. The below figure illustrates the organizational structure of FedEx which is a great example of a functional organizational structure. This chart demonstrates various departments such as marketing, human resources, and communications. Each department is divided into sub-functions. Example of Functional Organization StructureFor example, XYZ Ltd. manufactures wooden tables and chairs and has around two hundred employees. It has adopted a functional organizational structure and formed departments for manufacturing, accounting, operations, sales, and human resources. All the department heads report to the top management. This is an example of a functional organizational structure. SummaryOrganizational structures define the working styles of individuals and departments. The type of organization is determinant on your role, career growth path, responsibilities, reporting system, and working culture. A functional organization structure is a strong and rigid structure that ensures running the organization’s business effectively. This type of organization is applicable for relatively small companies or the ones that provide a standard product or a service. When the company gets larger, a matrix organization structure will be suitable. The project manager’s role is very limited and the department manager’s role is significant. Unlike other organizational structures, a functional organizational structure gives a static role to the staff. You report to the functional manager in this structure while in other types of structures you may report to multiple managers. However, vertical communication lines and limited cooperation with other departments decrease flexibility and innovation. Note that this is one of the most important topics for the PMP Certification Exam. You may encounter a few questions related to the topic. What is your opinion regarding the advantages and disadvantages of the functional organizational structure? Please share with us your comments. Further Readingpmi.org Brantlee Bhide is a project manager at HB Consultancy. She has 16 years of experience working as a project professional across varying industries, countries, and cultures. She operates in both business and technical domains using an approach that she developed. Tags: functional organizational structure functional organizational structure advantages and disadvantages |