Let's take a look at the advantages and disadvantages of each so you know what you're up against when you join a new structure. Benefits & Disadvantages of a Functional Organizational Structure. 3. Disadvantages. By and large, a senior tech is going to handle a support problem faster than someone with less experience. Referred to as functional units or areas, these specialized units contain personnel with various but related skills grouped by similarities. A company’s culture, in the end, proves to be even more important than their results, especially for some key aspects of mergers. ADVERTISEMENTS: Organizational Structure: Functional Structure and Divisional Structure ! Functional nursing was designed around an efficacy model that seeks to get many tasks accomplished in a short period of time. Disadvantages of the Functional Organization Structure Despite the advantages of the functional organizational structure, it can also twist the fundamental process and decision flow within a business, with the following results: Employees do not report to multiple managers. If promotions are not handled well, an employee may be discouraged if a lower performing peer is promoted over them. What are the disadvantages of using a chart? Lack of teamwork and reduced flexibility may cause conflicts between departments and units. Providing these products freely or at subsidized prices mean the company focuses not only on attaining benefits but also on ensuring the corporate values are. Also learn about its advantages and disadvantages! The vertical separation of divisions and teams can lead to the creation of 'organisational silos' - a mindset where one team hesitates to share information or knowledge with other teams within the same organisation. The primary reason for the firm’s success is its structure. Each functional unit has its own basic work to do and it happens that project responsibilities are set aside to meet these primary obligations. Each employee will report to his direct functional manager. Remedies of functional and operational issues will make up section 5 while the paper ends in section 6 conclusion. section 3, advantages of functional structure will be discussed, in section 4, challenges of functional structure and operational issues. An organization can be arranged according to a variety of structures, which enable the organization to operate and perform. After a while, the employees may start feeling monotony or boredom. Problems may arise among management if department heads are only focused on their department and do not communicate effectively with other departments. The disadvantages of the functional organization are as follows- 1. The functional structure focus on principles of specialization where people will be grouped in broad business activities such as marketing, production, human resources and finance. Suitability: (a) This type of organisational structure is suitable where the size of operation is very … In this article, we are going to review the advantages and disadvantages of each organizational structure: Functional, Projectized, and Matrix. Human Resources employees have their own HR department, for example, as do employees working in sales, marketing, finance and technical support. Instead of one primary nurse performing many functions, several nurses are given one or two assignments. Matrix Structure. Speaking of a multinational organization, accounting activities from all the regional offices and the headquarters would be handled by one accounting department. This tends to eliminate duplication of assignments that waste time and effort and makes it easier for management to direct work to appropriate employees. Because the people in the functional organization are grouped according to their special set of … Since the employees are grouped by their … 4. These days, we have so many potentially labour saving technological devices, which we have deeply inculcated in our daily practices but with a logical question: to what extent do such advances increase rather than decrease workload and stress? This will ease the integration process and generate less pushback from employees at both sides of the deal. Instead of one primary nurse performing many functions, several nurses are given one or two assignments. Disadvantages to a Vertical Organizational Structure. This organisational structure relates to an organisation which has outgrown the entrepreneurial stage. They always give more importance to their departmental objectives. Functional nursing was designed around an efficacy model that seeks to get many tasks accomplished in a short period of time. Its objective is to carry out operations smoothly and efficiently. Projects management in pure product organization Lack of teamwork and reduced flexibility may cause conflicts between departments and units. It is task-oriented in scope. It is task-oriented in scope. In pure product organization the product manager has complete authority to manage all project resources including allocation and merit reviews. The following are some disadvantages of the functional organization structure: 1. 1. Companies organized by function group employees according to their activities in the organization. The Tempest was suffering the consequences of centralized decision making, where all the pacing decision was. The lack of new challenges can make them unenthusiastic for the job at hand. Disadvantages of Functional Organization. ADVERTISEMENTS: Main disadvantages of functional organisation: (1) Ignorance of Organisational Objectives: ADVERTISEMENTS: Each departmental head works according to his sweet will. The matrix structure is a type of organizational structure in which individuals are … While the decentralized approach will solve the problems and the employee that is closer to the problem will take part in making the solution of the problem. In some instances, managers of other functional groups may not respond helpfully or in a timely way because "it's not our problem." The merits of functional organisation are as follows: (1) Specialisation—It ensures a greater division of labour and enables the concern to take advantage of specialisation of functions. In this respect, companies sometimes overlook a more significant need that offers unified experience one and unified experience for all customers across different channels. This monotony causes loss of enthusiasm. This monotony causes loss of enthusiasm. Staff or Functional Authority Organizational Structure: Functional organizational structure is best for smaller companies or those that focus on a single product or service. Conflicts may ariseif the performance appraisal system is not properly managed. In this type of organizational structure individuals perform only tasks in which they are experts and it is easier to manage the work allocation upfront. In a perfect functional organization, each group's tasks would require no input from other functional groups, but this is often not the case. Disadvantages of a Functional Structure. Organizations may choose from a number of common operating structures. The advantage of functional structure is that the different functional units of th… A Functional organizational structure has several advantages and disadvantages when it comes to managing projects: Advantages. Cooperation and communication between departments and units may be poor. There're probably going to train new staff members faster, too. Advantages and disadvantages of a matrix structure In a matrix structure, the power is delegated on two primary basis, first is the functional are and the second is project to project. Now that we have seen the advantages and disadvantages of the divisional structure, it is … … Functional organization structure is suitable for small as well as those entities that offer one type of services or products regularly; for example, medical clinics, car-repairing shops, hotels, and restaurants. The functional structure is an organizational structure that divides its operations into separate departments or units according to the role of each department. Having a common organizational purpose improves employee morale and performance and is an important predictor of organizational success. Disadvantages of Functional Organizational Structure The work can be quite one dimensional. The viewpoints of one individual division sometimes maybe narrow. What Are the Advantages & Disadvantages of Hierarchical Structure? 2. Functional organizations contain specialized units that report to a single authority, usually called top management. A functional structure c. A divisional structure d. A team-based structure e. A virtual network structure. 4. The functional structure is commonly found in small companies and also in large companies with single product line or narrow product ranges. This will reduce communication channels. It also uses some of its benefits like for example part of its profit to cater for various products such as accident protection insurance, company-paid cancer policy, and employer-paid life insurance for the employees. In a decentralized approach, the employee will feel more comfortable and their productivity will be increased. Different organizational structures that combine to form Starbuck’s matrix structure are divisional structure, functional structure, and team-based structure. Disadvantages of a functional organizational structure Lack of attention. Organizations may choose from a number of common operating structures. If promotions are not handled well, an employee may be discouraged if a lower-performing peer is promoted over them. ... functional organization has both advantages as well disadvantages and any company thinking of adopting this type of structure should carefully analyze both the aspects and then take the decision. Advantages & disadvantages of functional structures Advantages . Functional Structure The benefits of the functional organization structure made it spread widely in the contemporary management. This provides better communication and coordination while executing projects. This caus… We might go as far as calling this a cultural due diligence exercise. Both managers must be on the same page for it to be an effective structure. What Are the Disadvantages and Advantages of Using Employment Teams in an Organization? Work-Life Balance is a comfortable state of equilibrium achieved between a person’s primary priorities of their employment position and their personal lifestyle. Communication across departments becomes difficult … Hindered decision-making. work from home, preparing quick presentations and reports with use of cell phones besides computers and laptop but it can also mean that we cannot ever really get away and switch, Advantages And Disadvantages Of Functional Organization. When each group of specialists in a functional organization is relatively isolated, the common bond that emphasizes a single overarching organizational purpose is almost inevitably weaker than in an organization where different kinds of employees regularly interact. Specialization: This type of organization has the benefit of having specialists in each area. Complexity. Disadvantages of a functional structure. Furthermore, one of the Fayol’s Administrative Management Principles that can be applied in this company is initiative. The omni-channel is nothing but an effortless, high quality and flawless customer experience between or within contact channels. By the time the need for cooperation has been established, the moment when cooperation would have been most effective may already have passed. There are three main types of organizational structure: functional structure, divisional structure and a blend of the two, called matrix structure. Functional Structure 2. The departments have a self-centered mentality. The Advantages of Group Performance Awards. Disadvantages of a functional organizational structure Lack of attention . The following are a few disadvantages of the functional organizational structure: Employees may feel bored because of repetitive work. Features of Secondary Market. 3. Disadvantages of a Functional Organizational Structure In the long term, employees tend to feel bored and the monotony of the job can be off-putting. A highly skilled employee costs more. Each one of them becomes a small company in itself because of the number of people working in it. If you want to learn more about organizational structure types in Project Management you should check out our 100% Online and Self-Paced Project Management Professional Certification Training . Functional Organizational Structure In a functional organization structure, the project manager and all the resources work in the same company division, such as the sales and marketing department. Without strong teamwork, it can be difficult for managers and executives to determine which staff members can best accomplish job tasks. Functional Structure: Under the functional structure, the organisation is designed on the basis of the basic functions, namely, production, finance and accounting, marketing and personnel. Lack of teamwork and reduced flexibility may cause conflicts between departments and units. Things that make people satisfied at work are different from those that cause dissatisfaction therefore those two feelings cant be opposite. Here are some examples of the most typical fields where the functional structure is used: For example the accounting activities of different operations are grouped in on accounting department. This is particularly so for large organizations that have several functional levels within a department – a particular tech group that follows up on tech issues not resolved by the primary telephone tech support group, for example. I am a retired Registered Investment Advisor with 12 years experience as head of an investment management firm. Employees may find it boring to repeat the same task over and over, and become less enthusiastic over time. As a result, single division trends to only concern about their own duties and tasks. The matrix structure followed by Starbucks coffee is one of the best organizational structure examples. These disputes may have to do with disagreements over goals, budgetary competition or any number of issues that stem from a clash of egos that occur when each department has its own separate functional structure or where a strong sense of a common purpose is lacking. For example, when initiative principle had been applied in a company, the employees are able to work enjoyably in the workplace because it will boosts up their enthusiasm and eagerness. Membership in this group could require a bachelor's degree in computer science, a manager's recommendation and a minimum number of years of field experience. Disadvantages of the Functional Organizational Structure Employees may find it boring to repeat the same task over and over, and become less enthusiastic over time. Divisional structure is a type of organizational structure where operations are grouped based on divisions or separate product categories. Disadvantages of Functional Structure: Besides certain advantages there are certain disadvantages that are associated with functional structure. Difference between Mixed Economy and Socialism. Employees only have knowledge of their respective areas and they have no knowledge and concern outside their functional area. Copyright © 2020 IPL.org All rights reserved. Advantage – Clear Chain of Command. Cooperation and communication between departments and units may be poor. Communication across departments becomes difficult because all of them are so distinct from each other. One of the benefits of strong teamwork in the workplace is that team leaders and members become proficient at dividing up tasks so they are done by the most qualified people. Companies that have a vertical organizational structure have many layers of management. Functional managers pay more attention to their own departments and ignore others’ interests. If an organization gets larger, it will be difficult t… Functional Structure: Under the functional structure, the organisation is designed on the basis of the basic functions, namely, production, finance and accounting, marketing and personnel. Benefits & Disadvantages of a Functional Organizational Structure.  Do not underestimate the importance and repercussion of not communicating changes clearly and efficiently to all the affected personnel. The Functional Organization Structure can be successfully applied in many areas. Employees in different teams do not get the opportunity to meet and share perspectives, which can be harmful for the progress of the business in the long run. As communication becomes increasingly dominant in organizations, isolated groups may underperform or even fail because they have no institutionally recognized way of communicating needs and issues to other functional groups that might have helped. Functional Organisational Structure – With Advantages and Disadvantages Under the line type of organisation, one person is in charge of all the activities relating to a department or section but there is a difficulty of getting men with sufficient capacity and training who can … Disadvantages Functional structure has some disadvantages as well, including: People specialized in certain functions may find difficulties in understanding other functions and hence they are reluctant to change. The Functional Organization Structure can be successfully applied in many areas. 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