What Is An Organizational Structure
What Is An Organizational Structure?
An organizational structure defines the reporting relationships in a company - in other words, who works for who. Companies choose an organizational structure based on many factors, including their size, their geographic dispersion, and the number of different products and services they offer.
What Is A Functional Organizational Structure?
In a functional organizational structure , an organization's reporting relationships are grouped based on specialty, or functional area. For example, there might be separate departments for marketing, accounting, and engineering. Generally, all the functional heads will report directly to the company president or CEO.
Advantages
There are some definite advantages to grouping all staff by function:
Staff is managed by a person with experience in their same specialty who can adequately understand and review their work.
Staffers have the opportunity to move up within their functional areas, which gives a reason for them to stay long-term. The company gets the advantage of their expertise and company knowledge over time.
Staffers work with others in their field, which allows for knowledge sharing and lateral job moves to learn new skills.
Disadvantages
The functional structure also has some disadvantages, including:
Functional areas may have difficulties working with other functional areas. There is often a perception that they are competing with other functional areas for resources and a lack of understanding of what other areas do for the company. So, the accounting department may be upset that its request for an additional headcount is denied, but the company financial results point to a need for additional sales people rather than accountants.
As the company grows larger, the functional areas can become difficult to manage due to their size. They can become almost like small companies on their own, with their own cultures, facilities, and management methods.
Functional areas may become
An organizational structure defines the reporting relationships in a company - in other words, who works for who. Companies choose an organizational structure based on many factors, including their size, their geographic dispersion, and the number of different products and services they offer.
What Is A Functional Organizational Structure?
In a functional organizational structure , an organization's reporting relationships are grouped based on specialty, or functional area. For example, there might be separate departments for marketing, accounting, and engineering. Generally, all the functional heads will report directly to the company president or CEO.
Advantages
There are some definite advantages to grouping all staff by function:
Staff is managed by a person with experience in their same specialty who can adequately understand and review their work.
Staffers have the opportunity to move up within their functional areas, which gives a reason for them to stay long-term. The company gets the advantage of their expertise and company knowledge over time.
Staffers work with others in their field, which allows for knowledge sharing and lateral job moves to learn new skills.
Disadvantages
The functional structure also has some disadvantages, including:
Functional areas may have difficulties working with other functional areas. There is often a perception that they are competing with other functional areas for resources and a lack of understanding of what other areas do for the company. So, the accounting department may be upset that its request for an additional headcount is denied, but the company financial results point to a need for additional sales people rather than accountants.
As the company grows larger, the functional areas can become difficult to manage due to their size. They can become almost like small companies on their own, with their own cultures, facilities, and management methods.
Functional areas may become