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Every business or organization is structured differently, depending on its needs and goals.

A variety of different structures are utilized today. One of the oldest and most traditional structures is a functional structure. Under this system, individuals with similar jobs and skills are grouped together into productive units with a hierarchical reporting system. This provides a variety of benefits. Functional organizational structure is best for smaller companies or those that focus on a single product or service. Not designed to change quickly, functional structure works well in a stable environment where your business strategies are less inclined to need changes or updating. Functional structures are the most common type of structural design and have evolved from the concept of high specialization, high control framework of manufacturing organization turned towards high efficient, reports Practical Management website.

Structure
Functional organizations contain specialized units that report to a single authority, usually called top management. Refereed to as functional units or areas, these specialized units contain personnel with various but related skills grouped by similarities. Each functional unit handles one aspect of the product or service provided: information technology, marketing, development, research, etc. Top management is responsible for coordinating the efforts of each unit and meshing them together into a cohesive whole. (Ref. 2)

Specialists
The functional organization structure clusters those with similar knowledge in the same place. Since employees grow within their field, this leads to the development of specialists, especially in technical fields. Acc ording to Practical Management, If the organization has properly crafted performance management that promotes the visibility of individual skills, functional structure makes it easier to coach others and climb the hierarchical ladder. The in -depth training and focused career path gives employees clear career goals and the direction to reach them. (Ref. 1, ref. 2, ref. 3)

Performance
The goal of functional structure is to put all the human and informational resources necessary for a single activity in one place. This maximizes performance by facilitating sharing of valuable expertise by superiors with their subordinates, reports Practical Management. Sub-organization leaders are experts both in their field and in the resources available, which allows each unit to reach its greatest potential and prevents over-use of limited resources. Specialized training and involved management mean that standout employees are quickly recognized and placed where they will be most effective and managers are always on the lookout for helpful skills and ideas.

Disadvantages
The same qualities that lead to increased production and specialization lead to complicated communication and decisionmaking processes. Since the functional units are not accountable to each other and share decision-making power, the process is more bureaucratic and tends to take longer. While the flow of communication within a department is expedient, communication between departments and synchronization of work and project completion is more difficult to manage. Finally, too much focus leads employees to neglect the larger view of the company and its objectives. (Ref. 1)

Skill Development
One benefit of a functional organization structure is the positive atmosphere it provides for skill development.

Because a functional structure groups people performing similar tasks that require certain skills, more experienced or talented group members serve as examples and mentors to individuals with less experience. This leads to continuous growth and development within the organization from simple day to day interaction, instead of having to rely on specialized seminars .
A functional organization has a traditional organizational structure in which each functional department, such as engineering, marketing, and sales, is a separate entity .Depending on the size of the organization, there could be ahierarchy within these manager and other designations like director, managing director etc could be available who in turn report up to the CEO or the owner of the company.