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Functional Organization

A functional organization divides a company into departments based on special functions like IT, finance, or marketing. Employees with similar skills are grouped together, allowing them to share knowledge efficiently. Reporting relationships are based on functional area, with separate areas handling different business concerns. Advantages include experienced managers leading teams, knowledge sharing between employees, clear career paths for promotion within functions, and maximized performance through specialization within small, focused companies.

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Savy Dhillon
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236 views1 page

Functional Organization

A functional organization divides a company into departments based on special functions like IT, finance, or marketing. Employees with similar skills are grouped together, allowing them to share knowledge efficiently. Reporting relationships are based on functional area, with separate areas handling different business concerns. Advantages include experienced managers leading teams, knowledge sharing between employees, clear career paths for promotion within functions, and maximized performance through specialization within small, focused companies.

Uploaded by

Savy Dhillon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Functional Organization :

All of the companies define its organizational structure to determine the reporting
relationships that will exist in the company. It simply states who works for who.
Organizations choose their organizational structure based on many factors like: size, its
geographic location, the manner of delivering different products and services that they will
offer.

A functional organization is the most common type of organizational structure. This is where
the organization is divided into smaller groups based on its special functions such as IT,
finance or marketing. This departmentalization allows greater operational efficiency
because the employees have their skills and knowledge to be shared within the group. The
basis of this functional organization structure is an arrangement where a worker has
different managers for different areas of the organization operation. Since this type of
structure has many departments, it could also have several reporting structures as well.

In a functional organization structure, the reporting relationships are grouped based on the
specialty or functional area. Separate areas are established to take care of different
concerns.

The advantages of Functional Organization:

 The team is managed by an experienced person with a high ability and skills who can
adequately understand and review the entire work.
 The team members work with other people in the field and it allows sharing of
thoughts and knowledge to make the people learn new skills.
 The staffers have the chance to get promoted within their functional areas which can
be a reason for them to stay long term. The company is getting the advantage of
their expertise and knowledge.
 Because of people’s expertise, the workers with specialized skills can perform tasks
quickly, efficiently and with more confidence, while reducing of work-related
mistakes. The clear nature of the career path within the functional unit makes it
possible for employees to be highly motivated to advance their careers as they move
up within the hierarchy. This will keep them aiming for advancement and
development.
 This can be an ideal structure for small businesses that focus on one product or
service because you can maximize performance by encouraging peer cooperation
among different units at various levels of management through supervision and
coordination. Specialization leads to operational efficiencies and enhances
productivity levels.

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