Functional organizational structure advantages and disadvantages
Functional organizational structure advantages and disadvantages

Functional organizational structure advantages and disadvantages which can be can be defined as “An organizational structure in which workers are distributed across departments according to areas of specialization as indicated on the organizational chart. Under functional Organizational Structure, the project manager has limitation in the amount of authority to assign work and share resources.” A functional structure divides the organization into departments based on their functions.

Each is headed by a functional manager and employees are grouped according to their roles. Functional managers typically have experience in the roles they supervise. This ensures that employees are using their skills effectively. A functional structure that maximizes department expertise helps companies achieve their business objectives.

Read: Advantages and disadvantages of bureaucracy

Employees are often organized according to their function in an organizational chart. This functional organization chart shows the role hierarchy i.e. president, vice president, finance, sales, customer service, administration, etc. Functional organizational structure advantages and disadvantages outline that each department has a head responsible for it, helping the organization control the consistency and quality of its performance.

Sometimes referred to as “silos” Functional departments operate on a vertical hierarchy which means each department is vertical and disconnected from the others, and communication flows straight up through the department heads to top management.
The functional organization structure is ideal in businesses dealing with operations or projects, for example, organizations who are in manufacturing industries show Functional organizational structure advantages and disadvantages.

Functional organizational structure advantages and disadvantages
Functional organizational structure advantages and disadvantages

Efficiency and specialization are two strengths of functional organizational structures. For small companies, it is recommended to only those with a limited number of products and services. In Functional organizations, the employees are mostly highly-skilled due to executing the same work over and over, which means they feature high efficiency and superior performance.

Functional organizational structure advantages and disadvantages

Since employees are grouped in relation to their skills and experience, they gain more knowledge and expertise and become specialists, making them highly efficient and productive. Highly efficient and productive means that they will perform quickly, with less chance of error, and their output will be of high quality.

Advantages of Functional Structure organizations

When employees who have similar skills and experiences are grouped together, it makes production more efficient and of a higher quality. Roles and tasks do not change very much so there is little time spent learning, and accountability is clear. Since the hierarchy is simple, the following are several benefits or advantages and disadvantages of functional and divisional structure:

  1. Efficiency and productivity
    Employees are grouped by their knowledge and skills, allowing them to achieve high performance. Their roles and responsibilities are fixed. This facilitates easy accountability for the work.
  2. Clear hierarchy
    The hierarchy is clear and transparent. This reduces the number of communication channels.
  3. Cooperation
    Cooperation is excellent within the department. Employees know the one manager they are to answer to, instead of multiple people.
  4. Loyalty
    This streamlines communication and reduces confusion among employees. Employees can feel confident about what they’re doing because it is standardized. They are more likely to feel loyalty to their department and the organization as a whole.
  5. Morale
    This increases morale and work ethic, as there is more job security. There is a clear path of growth for employees which provides motivation, and they are more likely to be corporative with people in their department.
  6. Good learning environment
    A functional organizational structure provides a perfect environment for learning for new employees (especially new college graduates) to be taught the real-world application of theoretical information.

Disadvantages of the Functional Organizational Structure

  1. Boring
    Employees may find it boring to repeat the same task over and over and become less enthusiastic over time.
  2. Leads to conflicts
    If promotions are not handled well, an employee may be discouraged if a lower-performing peer is promoted over them. Problems may arise among management if department heads are only focused on their department and do not communicate effectively with other departments.
  3. Poor communication
    This can cause poor communication and “silos” that are too independent of one another. If employees and management are only loyal to their teams, there will be a lack of teamwork and coordination.
  4. No sufficient cooperation
    One of the major weaknesses of a functional structure is the fact that there can be insufficient cooperation among different departments and management problems. Though they record high efficiency and productivity they lack coordination among functional units or departments, this has a way of slowing down productivity. Departments tend to compete against each other hence, putting their department’s interests above the organization’s.
  5. Low morale
    There is usually low morale among employees in functional organizations affecting the productivity level and leading to a fall behind the target. This is because top management often changes procedures and modifies the work environment without taking input from employees on the ground. This negatively affects the morale of the employees and lowers efficiency, ultimately setting back innovation.
  6. Rigid
    Lack of teamwork amongst these departments leads to a rigid structure where changes, innovations, and flexibility can be difficult to implement. An employee in any department may lack knowledge of information about all other departments. Managers tend to make decisions without consulting the department first, which can lead to problems.
  7. A department can become too autocratic and put its goals above those of the organization as a whole. With so many specialists involved in a process, it is difficult to pin the blame for a specific product or service malfunction on any individual.
  8. Growth
    As the organization grows larger, managing functional areas becomes challenging. Each department may start behaving like a small company, i.e., the “silo” effect. and Employees that do not learn any new skills, and their roles don’t change often, these cause stagnation.


The functional organizational structure helps run the organization’s businesses, especially those with projects that are ongoing. Most employees tend to feel secure, perform well, and tend to be highly skilled. Project managers who have limited roles or no authority in a functional organizational structure typically do not have any role in a functional organization.

Finally, Companies that are ideal to use functional organizational structure produce the same goods consistently and have routine operations. This is because a functional organizational structure has a rigid structure that provides predictable stability. An organization can adapt to any structure it requires.

But If the business mainly handles projects, it will choose a project structure. Whereas an organization dealing with operations will stick with a functional structure.

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