What is an Organization?
The organization is the collection of people who work together, to achieve a common objective or a goal. In other words, Organisation is a place where people gather together, working on a different set of duties and responsibilities to fulfill the goals of the organization.
Functional Organization
A functional organization structure differentiates the employees by their skill, specialty, etc. It completely depends on a ranking system that consists of several departments under the guidance of expert leadership. Most businesses operate under the functional structure because it combines workers who have similar knowledge and skills, when used in a team environment, it will be helpful for the company to achieve their desired goals.
Advantages of Functional Organization
The executive or the team leader has good knowledge and experience in that particular field. For example, the person heading the marketing department will have the knowledge and skill necessary to carry the process with full responsibility and successfully run his team.
As the employees are experts in that particular field, the work becomes more efficient and precise. Reduces the rate of mistakes as this could motivate the employees of the company.
Since every member comes from a similar background it allows them to share their thoughts and come up with better solutions. As sharing of knowledge is always beneficial.
The employees also can have a clear idea of the hierarchy and need not have to report or answer to several managers.
Also, the employees can feel the work security as their work and efforts are not going unnoticed. This can help them to perform better.
Disadvantages of Functional Organization
The work can become one-dimensional. After some time, the employees may start to feel repetitive or bored. The lack of new challenges will make them unenthusiastic.
In this type of structure, the manager must keep an eye on the appraisal system. If the right approach is not made then there can be high chances of conflicts between the employees regarding their promotions or appraisals.
Also, this type of organization needs a high specialization degree which can be difficult to establish
If there is a change of personnel in the team, it can literally affect the whole system and its balance. Also, it is a rigid structure, where there are not a lot of scopes for adaptation.
In a Functional Organizational Structure, the employees can never gain any knowledge or skills out of their own department. This can be a big cause for inter-departmental communication.
FAQs on Functional Organization: Features and Benefits
1. What is a functional organization structure as per the CBSE syllabus?
A functional organization structure is a framework where a business groups its employees based on their specific skills and knowledge. In this setup, the entire organization is divided into distinct departments, such as marketing, finance, human resources, and operations. Each department is managed by a functional specialist who has expertise in that particular area, following the principle of functional foremanship.
2. What are the main features of a functional organization?
The defining features of a functional organization structure include:
- Occupational Specialisation: It promotes a high degree of specialisation as employees with similar skills work together in the same department, leading to enhanced efficiency.
- Departmentalisation by Function: The primary basis for creating departments is the function they perform (e.g., all marketing activities are under one department).
- Functional Authority: Each functional manager is an expert in their field and has the authority to make decisions related to their function across the entire organization.
- Violation of Unity of Command: An employee may receive instructions from multiple specialists, which is a direct violation of the principle of unity of command.
3. What are the primary benefits of implementing a functional structure in a business?
The main benefits, or advantages, of a functional organization structure are:
- Enhanced Efficiency: Grouping employees by skill leads to occupational specialisation, which improves performance and productivity.
- Expert Guidance: Each function is supervised by a specialist, ensuring better control and guidance for all related activities.
- Easier Training: It is simpler to train employees as they only need to focus on a limited set of skills relevant to their department.
- Effective Control: Management control is facilitated as managers are experts only in their specific functional area.
4. What are the key disadvantages or limitations of a functional organization?
Despite its benefits, a functional organization has several limitations:
- Conflict of Interest: Departmental heads may prioritise their own department's objectives over the overall organisational goals, leading to inter-departmental conflicts.
- Difficulty in Fixing Responsibility: When a project fails, it can be difficult to assign blame to a single department, as responsibility is shared and split.
- Delayed Decision-Making: Decisions that require input from multiple departments can be slow, as they involve consulting several specialists.
- Limited Employee Development: Employees gain deep knowledge in one functional area but lack a broader understanding of the overall business, restricting their career growth to top management positions.
5. How does a functional organization structure differ from a divisional structure?
A functional structure and a divisional structure differ primarily in how they group activities. A functional structure groups jobs based on similar functions (like marketing or finance). In contrast, a divisional structure groups jobs based on products, services, or geographical regions. While a functional structure is cost-effective and promotes specialisation, a divisional structure is more flexible and makes it easier to assess the performance of each individual division as a separate profit centre.
6. For which types of businesses is a functional organization structure most suitable?
A functional organization structure is most suitable for large organizations that produce a single product or a narrow range of related products. It thrives in stable environments where efficiency and deep functional expertise are critical for success. Companies that require a high degree of operational specialisation and have activities that can be clearly separated into functions (like manufacturing firms) benefit the most from this structure.
7. Why can achieving coordination be a major challenge in a functional organization?
Coordination can be a major challenge because each department in a functional structure operates as a semi-independent unit, often focused on its own goals. Information may not flow effectively between different departments, creating what are known as 'functional silos'. Since an employee reports to multiple specialists (violating the unity of command), it can lead to conflicting orders and a lack of clear, unified direction, making cross-functional coordination difficult and time-consuming.
