Functional Structure

What Is Functional Organizational Structure?

In the functional organizational structure, also known as the traditional or classical structure, people are organized by discipline and their level of authority in a top-down hierarchy. The functional structure is the hallmark of specialization and efficiency; and is the most prevalent structure used by organizations.

Simply put, functional organizational structure involves organizing organizational members according to the particular function that they perform within the organization and the set of resources that they draw on to perform their tasks. Therefore, the departments have names such as Marketing, Production, Finance, Human Resources, and Information Technology (see Figure below).

functional structure of organization
Functional Organizational Structure

This organizational structure is characterized by:

  • decentralization of functional power (full departmental autonomy)
  • a narrow span of control
  • direct and indirect supervision
  • formal communication
  • integrated decision making
  • interdependency of the workflow, processes, sales and socializing
  • having a planned strategy
  • being a slow reactor to a dynamic environment.

Because functional structures are based on specialization, they can help focus on a particular job or task in order to perform effectively and efficiently. Because of this, the functional structure is the most commonly used organizational form.

  • Total control of executive managers
  • Clear roles and responsibilities of departments
  • Specialist divisions
  • Difficult to coordinate between departments
  • Difficult to adapt
  • Difficult to diversify

Shown on the table above are the major potential advantages and disadvantages associated with the functional structure. The main advantage of functional structure is that it allows for high production control at a senior level and a clear definition of roles and authority.

The disadvantage is that decision making can be slow and will require the team to communicate and collaborate with multiple departments to initiate change. A less traditional organizational structure is known as the matrix structureOpens in new window.

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