A functional organizational structure organizes a company based on departments, with a vertical hierarchy and horizontal levels. It allows for clear definition of activities, but limits knowledge of other departments. Simple and dividing structures are also common in businesses.
A functional organizational structure is a method of organizing a company based on the department a person or group also belongs to. This is one of the three great organizational structures, the other two being simple, dividing structures. With a functional organizational structure, a company has a vertical hierarchy and horizontal levels. One person is typically responsible, followed by the heads of the various departments. Below them are progressively lower hierarchical levels. The departments are vertical under the department head, but horizontal with the other divisions of the company.
Within a company, an organizational structure lets people know exactly who is responsible for whom and what a particular person’s responsibilities are. This clear definition of activities allows large groups of people to interact with each other without having to worry about locations and location. There are three main methods of organizing businesses.
A simple organizational structure is common in small businesses without many workers. A single person is at the top with a single person or small group below him. This second tier consists of the managers of the organization and they are all roughly equal in power. Occasionally, there’s a group of assistant managers who come next, but a simple structure will go straight to the last level, common workers. All other members of the organization are part of a single group and no one has more or less power than anyone else.
Dividing organizational structures are broken down based on the projects people are working on. Again, one person runs the business, followed by a level of project leaders. These people organize and structure business projects. Below them are successively lower groups all working on the same project. At each level, there may be a team consisting of an engineer, marketer, and technical writer. There is no lateral correlation between the different project teams.
The functional organizational structure breaks things down by department rather than by task. Below the group leader are people who supervise only one area. For example, the VP of Marketing only cares about marketing concerns and all levels below only do marketing. Unlike a divisional organization, a functional organizational structure has lateral relationships. A department three steps away from the head of marketing is about the same level as one three steps away from the head of research and development.
The advantage of a functional organizational structure over the others basically comes from bringing together the talents in one place. For example, with all the marketing people in one area, the department can brainstorm ideas that people might not have on their own. This also ends up being the main drawback. Since there is only one group in any department, their knowledge of the others is limited.
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