CONTENT

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TITLE
INTRODUCTION
CHARACTERISTIC OF FUNCTIONAL STRUCTURE
DIAGRAM OF FUNCTIONAL STRUCTURE
ADVANTANGES AND DISADVANTAGES
CONCLUSION
REFFERENCE

INTRODUCTION

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A functional organizational structure is a structure that consists of activities such as

coordination, supervision and task allocation. The organizational structure determines how the
organization performs or operates. The term organizational structure refers to how the people in
an organization are grouped and to whom they report. One traditional way of organizing people
is by function. Some common functions within an organization include production, marketing,
human resources, and accounting.
This organizing of specialization leads to operational efficiency where employees
become specialists within their own realm of expertise. The most typical problem with a
functional organizational structure is however that communication within the company can be
rather rigid, making the organization slow and inflexible. Therefore, lateral communication
between functions become very important, so that information is disseminated, not only
vertically, but also horizontally within the organization. Communication in organizations with
functional organizational structures can be rigid because of the standardized ways of operation
and the high degree of formalization.
As a whole, a functional organization is best suited as a producer of standardized goods
and services at large volume and low cost. Coordination and specialization of tasks are
centralized in a functional structure, which makes producing a limited amount of products or
services efficient and predictable. Moreover, efficiencies can further be realized as functional
organizations integrate their activities vertically so that products are sold and distributed quickly
and at low cost. For instance, a small business could make components used in production of its
products instead of buying them.
Even though functional units often perform with a high level of efficiency, their level of
cooperation with each other is sometimes compromised. Such groups may have difficulty
working well with each other as they may be territorial and unwilling to cooperate. The
occurrence of infighting among units may cause delays, reduced commitment due to competing
interests, and wasted time, making projects fall behind schedule. This ultimately can bring down
production levels overall, and the company-wide employee commitment toward meeting
organizational goals.

CHARACTERISTIC OF FUNCTIONAL
ORGANIZATIONAL STRUCTURE
Organization is a process of welding together a frame work of positions which can be used as a
management tool for the most effective pursuit of the goals of an enterprise. It is regarded as one of the
most fundamental function of the management because in organization, the work is divided and a
structural plan is prepared; The position of an organization can be compared to that of a human body. As
human body is divided into different system like digestive system, nervous system, vascular system and
the respiratory system.
All these systems function under the control of nervous system. Similarly in organization there
are various departments and each department performs different functions but all these departmental
functions are co-ordinated to attain the organizational end. Organization is a management process by
which people, functions and physical factors are brought together to form a manageable unit.
Organization is a group of people who are co-operating under the direction of leadership direction
of leadership for the accomplishment of a common end.
The above definitions of organization tells us the following features.
1.

It is a function of the management.

2.

It consists of a group of individuals which may be large or small.

3.

The group of individuals work under the direction of executive leadership.

4.

It establishes definite relationship between the divided units.

5.

It is established for the attainment of common objective.

Organization structure refers to the system of staff organization because every staff in the

organization must know his status and position in the organization. There are four forms of organisation
like, line organisation, functional organisation, line and staff organization and committee form of
organization. Line organization is the oldest and simplest form of organisation. In this form of
organisation a superior exercises direct supervision over a subordinate. In functional organization the
management is divided into various major functions. Thus specialists services are given by functional
organization. The line and staff organization is a combination of both line and functional organization. In
committee form of organisation, committees are formed which help in management process.

Functional system refers to a system of organization in which functional departments are created at
all levels to deal with the problems of the business. The management is divided into number of functions
like purchasing, selling, production, financing, personnel and research and development. The credit for
the growth of functional organization can be traced back to Taylor who is regarded as the father of
scientific management. In this form of organization authority does not flow from top to bottom as it is
found in line organization.
In this the entire organization is divided into different sections and each section is in the charge of a
specialist who has a complete control over his function. He is regarded as functional manager. According
to Taylor production function is separated from office function. The clerical aspects of functions are
handled by four persons like time and cost clerk, instruction card clerk, route clerk and shop
disciplinarian.
In framing the structure of functional organization, the following points are to be kept in mind.
(a) The inter-related functions are allotted to each department.
(b) An activity is allotted to each functional department.
(c) An activity allotted to each department can-not be allotted to another departments.
(d) Functional authority is confined to functional advice.
(e) It provides expert service at each functional department

. 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 organizations contain specialized units that report to a single authority, usually
called top management. Refer 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 like 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.

Diagram Of Functional Structure

Advantage: efficiency, communication

Disadvantage: isolation of units

ADVANTAGES OF FUNTIONAL STRUCTURE

1. Benefits of Specialization
When companies use a functional organizational structure, people with similar knowledge
and skills are grouped together. This makes it possible for employees to become specialists in
their field. It requires a performance management system that allows for the promotion,
development and visibility of individual skills within their functional area. The specialization
that functional structures hone helps to bring about in-depth knowledge and skill development
among the employees, and this can help you achieve your company's functional goals.

2. Benefits of Productivity
Specialization leads to operational efficiencies and enhances productivity levels.
Because of their expertise, workers with specialized skills can perform tasks quickly,
efficiently and with more confidence, thus reducing the occurrence of work-related mistakes.
In addition, 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.
The main goal of functional structures in organizations is to bring the entire human and
informational resources together to meet the organizations goals. 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.

3. Managerial Efficiency is increased:

It helps in increasing managerial efficiency because of performing the same work again and
again. Further, this results in increased profit.

4.

Minimal Duplication of Efforts:

In this type of organisation unnecessary duplication of efforts is eliminated. For example, the
function of finance is only carried out by the finance department. There is no need to establish
two or more departments. It makes it possible to utilise the human and other resources
effectively.

5. Training is facilitated:
It facilitates the training of personnel as the focus is only on a limited range of skills. For
example, the employees of finance department are given training of financial issues.

DISADVANTAGES OF FUNTIONAL STRUCTURE

1. Ignorance of Organisational Objectives:

Each departmental head works according to his sweet will. They always give more
importance to their departmental objectives. Hence, overall organisational objectives
suffer. For example, to establish its image, the production department may produce quality
product ignoring the fact that market trend favours accepting medium quality product.

2. Difficulty in Interdepartmental Coordination:

All departmental heads may work as per their own wish. No doubt this facilitates
coordination within the department but it makes interdepartmental coordination difficult.

3. Conflict of Interest:
Every departmental head wants to become a functional empire. To satisfy their ego
every one demands maximum resources for their department. This situation leads to
conflicts among the various departmental heads.

4. Hurdle in Complete Development:

This system is a hurdle in the way of the complete development of the
employees. Each employee specialises only in a small part of the whole job.

CONCLUSION
The functional organization structure helps organizations run their business and earn
profit. This type of structure suits organizations intended to produce some product or service on a
continuous basis. Every organization needs a structure in order to operate systematically. The
organizational structures can be used by any organization if the structure fits into the nature and
the maturity of the organization. Here, employees feel secure, perform well and tend to be highly
skilled. The project manager doesnt have any role in functional organization, and even if he
exists, his role will very limited and he will be known as either the expediter or coordinator.

REFFERENCE
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2. Grundy, T., & Brown, L. (2001). Strategic Project Management: Creating
Organizational Breakthrough. London: Thomson Learning.
3. Kerzner, H. (2003). Advanced Project Management: Best Practices on
Implementation (2nd ed.). New Jersey: Wiley.