Functional areas divide an organization into segments with specific purposes, such as HR or accounting. This helps with organization, management, and accountability of each section’s performance. Each functional area has a manager and defined responsibilities.
Functional area refers to the method of dividing an organization into several segments where the respective segments which are thus divided will serve as fully functional units performing stated functions. That is, this segmented unit has a particular purpose in the organization, which can be separated from the function of other segments. An example of such an area within an organization is the HR department, which is a division within the organization separated from other functional areas by specific tasks that are unique to the HR department only.
Such a clear delimitation of functions according to the related functional area helps a company in organizing its business and in determining which division is responsible for which functions. One of the characteristics of this type of area is the fact that it is usually treated as a separate arm of the business, with a manager and subordinates under the manager. For example, if the functional area under consideration is the accounting department, it will have a manager who will oversee general business in that accounting department, as well as a deputy manager, chief accountant, and other junior accountants. The manager will be responsible for the unit and ensure that its operation is aligned with the overall objectives of the organisation.
Another application of the functional area in business is as a means of making the different sections more manageable and also accountable in terms of performance. For example, the marketing department is a functional area within an organization that has its specific duties in relation to the organization. By dividing the marketing section into a functional area, the company can monitor the section’s performance and decide whether it is meeting its stated goals or other objectives. This would not be so easy if the whole company were a unit without division of functions into departments.
The HR department of the organization is aware of their responsibilities i.e. purchasing the right human capital to fill the empty spaces in the company. This department must also anticipate the company’s human capital needs and take proactive steps to meet that need. By dividing this department into its own unit, its responsibilities have been properly defined and the HR department will not perform the functions of the accounting department or the marketing department, for example.
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