Functional organizational structure

Organizations need a clear structural design and outline of their hierarchy to use as a roadmap for how it survives the vast global village. Functional organizational structure sets up a clear outline of its departments and they need to provide a well-defined process for project success. In business, there are different sizes and types of organizations.

These organizations need a clear organizational structure in order for the business to be successful. Organizations need transparent and effective policies and hierarchies to reach their goals.


Understanding the nature, pros, and cons, and how organizational structures work and how they are implemented, how they support an organization attain the desired results and objectives so that you can decide which is right for your business strategy and begin working toward meeting your goals for greater efficiency, competitive strength, profitability, and more must be the sole purpose of any organization.


From the smallest organization or business to multinational corporations across the global village all depend on any of the following types of organizational structures. They are further discussed in this article, we outlined different types of organizational charts in their mechanistic model: Functional, Divisional, Matrix, and Hybrid

  1. Functional organization structure
    Functional organization structures in which team members are grouped into departments based on their shared skill sets, specializations, accountabilities, and goals.
  2. Matrix organizational structure
    A matrix organization decentralizes decision-making and provides teams with increased autonomy while simultaneously improving cross-functional collaboration to boost overall productivity and encourage innovative approaches to problem solving.3. Divisional organizational structure
    Divisional organizational structure is a type of organizational chart that allows teams to collaborate on broad, shared organizational goals while maintaining a primary focus on their respective, specific goals.


Functional organizational structure example


A functional organization structure is useful for organizing workers. Functional organization structure operates on grouping team members based on their specific skills and knowledge. It structures each department vertically and gives roles that flow from the head of an organization to the lowest member of the hierarchy. The main feature of functional organizations is that they contain specialized units that report to a single authority, usually called top management.


Though this organizational structure is similar to a hierarchical organizational structure, a functional organization structure starts with positions with the highest levels of responsibility at the top of the charts and goes down from there. Workers are grouped according to their skills, specialization, and their corresponding function in the company. Additionally, organizations manage separate departments independently.


For this reason, functional organization structures are sometimes referred to as “silos”. This is because each department operates independently and has its own vertical management structure. Under the functional organizational structure workers from each department communicate with each other without reservation. Further, department heads also communicate with each other.

Read: Functions of Public Administration

In order for this structure to work well, there must be a stable environment with continuous projects. The major goal of a functional structure is to put together every member of the team working on each activity necessary for one activity in a single place. The following are some of the pros and cons of functional organization structure;

Functional organizational structure advantages and disadvantages


Advantages of functional organizational structure

  • Functional organizations allow employees to focus on their roles.
  • They encourage specialization in a certain skill set.
  • Functional organizations help teams and departments feel self-determined.
  • Functional organizations can easily scale in any sized company or corporation.


Disadvantages of functional organizational structure

  • They have the possibility of creating silos within an organization.
  • They hamper interdepartmental communication
  • Functional organizations obscure processes and strategies for different markets or products in a company

Who Is Best Suited for a Functional Organizational Structure?


Large organizations and larger companies work well with a functional organizational structure. These must be organizations that offer or produce just a few types of goods or services. However, functional organization structure can be too constraining.

For projects in which the depth of knowledge is more important than the breadth of information, a functional organization structure is appropriate. For instance, a fundamental research and development program works will within a functional organizational structure. Further, the project can capitalize on the expertise of the department.


Finally, functioning organizational structures helps organizations run their business and earn a profit. Organizations assign their employees responsibilities according to their skills and expertise.

It gives a clear hierarchy and avoids confusion among employees who may be unsure who they are to report to. It is an efficient way to run a business. However, it can have drawbacks as it can lead to a lack of communication between departments and unenthusiastic employees.

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