11 Advantages and Disadvantages of Functional Organizational Structure

When staff Specialists are incorporated into the organization and are placed upon the same (line) Authoritative level as the line executives. This type of structure is called a functional organizational structure or line and functional organization.

In this type of organization, the emphasis is on managing some functions wherever the function may be performed in the enterprise.

For example, the total work activities of an enterprise may be divided into various functions like purchases, production, marketing, finance, quality control.

One manager would be responsible for each of these functions separately, which means that the finance manager would be responsible for financial activities and would have direct command over all such activities carried out in the enterprise.

He will have an official command or formal power finance function and perform it.

Wherever The function of the person may be located in the enterprise. This is a functional organizational structure chart.

Functional authority occupies a Midway position between ‘line authority’ and ‘stop advice’. It is a means of putting the specialists in top postings throughout the enterprise.

It confers upon the holder an unlimited power of command over the people of other departments concerning their function.

Function authority remains confined to functional guidance to different departments.

It helps in maintaining ability and uniformity in the performance of functional areas throughout the Enterprise.

Advantages of Functional Organizational Structure

Following are the important advantages of functional organizational structure:

1. Specialization

The functional organizational structure helps in achieving the benefits of specialization of work.

Every functional in charge is an expert in his area and can help the subordinate to perform better in his area.

Related: 13 Factors Affecting Structure of Sales Organization.

2. Production of Workload

It reduces the burden on the top executives.

There is pointed supervision in the enterprise, and every function in charge looks after his functional area only.

3. Executive Development

A functional manager is required to have expertise in one function only.

This facilitates better executive development. (functional organizational structure)

4. Scope of Expansion

It offers greater scope for expansion as compared to line Organisation.

It does not face the problem of Limited capabilities of a few line managers.

Related: Top 15 Characteristics of Creativity (Creativity as a skill).

5. More Efficiency

It creates a high degree of efficiency as the groups of employees and the functional heads perform their Limited and specialized operations.

Thus, Thereby bringing expertise in performance and reduction in costs.

Related: 19 Factors Influencing Entrepreneurship Development.

6. Better Control

The expert knowledge of the functional managers facilitates better control and supervision in the Enterprise.

Disadvantages of Functional Organizational Structure 

Following are the disadvantages of functional organizational structure:

1. Complexity

The operation of the functional organizational structure is, complicated and is not easily understood due to its various technicalities. Workers are surprised by a number of instructions from different functional Heads.

Thus, The employees in purchase functions are restricted in several ways by the financial manager and quality control manager also.

This creates confusion in the Enterprise.

2. Dual command

It violates the principles of unity of command since a person is accountable for more than one bosses.

Related: 12 Qualities of Effective Leadership in an Entrepreneur.

3. Limited Perspective

A functional manager tends to create boundaries around himself and thinks only in terms of his own department rather than the whole enterprise.

This results in a loss of overall perspective in dealing with business problems.

4. Delay in Decision Making

There is a general lack of coordination among the functional executives which causes the delay in decision making. When a decision problem requires the involvement of more than one specialist.

Related: 11 Nature and Scope of Marketing (With Examples).

5. Problem of Succession

The functional organizational structure develops specialists rather than generalists.

This may create the problem of succession in top executives.

On the whole, This type of organization has been quite successfully followed in an enterprise like banks, insurance companies. For the division of work into various departments.

But for the division of work within the departments themselves, The structure has not been found to be very successful mainly because there is no clear line of authority.

Thus, Now you understood the concept of advantages and disadvantages of functional organizational structure.

Read More

• 17 Factors Affecting Economic Environment
• Privatization: Meaning, Features, Scope, Objectives
• 18 Nature and Characteristics of Entrepreneurship
• Branch Accounts: Meaning, Definition, Types
• 14 Elements of Good and Effective Planning (How its work)
• External Environmental Analysis: Meaning, Features, Need & Importance
• Top 10 Characteristics of Good and Ideal Project Planning
• 20 Types of Entrepreneurs (Informative Explained)
• 18 Key Success Factors in Retail Business (With Examples)