This is a one of the most requested topics for the PMP exam. You will see a few questions on this topic in your exam, and I don’t want you to miss any of these.
Your working style depends on the type of organization you’re working in. The type of organization dictates your role, responsibilities, working culture, and just about everything else.
In a functional organization, you may have a static role, while in other types of organization structures you may have dynamic roles.
In a functional organization structure, you will report to the functional manager, while in other types of structures, you will report either to the project manager or multiple managers.
In a projectized organization structure, you report to the project manager, whereas in a matrix organization structure, it depends on the type of matrix. Your working style, career growth path, and reporting system are all dictated by it.
Functional Organization Structure
A functional organization structure is a hierarchical organization structure wherein people are grouped as per their area of specialization. These people are supervised by a functional manager with expertise in the same field. This expertise helps him effectively utilize the skills of employees, which ultimately helps organizations in achieving its business objectives.
In this kind of organization structure, people are classified according to the function they perform within the organization. The organizational chart for a functional organization structure shows the president, vice president, finance department, sales department, customer service, administration, etc.
Each department will have its own department head who will be responsible for the performance of his section. This helps the organization control the quality and uniformity of performance.
These different departments are sometimes referred to as “silos”. This means the system is vertical and disconnected. The communication flows through the department heads to the top management.
Here, all authority (i.e. budget allocation, resource allocation, decision making, etc.) stays with the functional manager. Usually, the position of the project manager does not exist in this type of organization structure. Even if this position exists, the role of the project manager will be very limited and he will need permission from the functional manager to fulfil his requirements. The project manager may have the title of a coordinator or an expediter.
The functional organization structure is suitable for an organization which has ongoing operations and produces standard products or goods, such as manufacturing industries.
Advantages of the Functional Organization Structure
The following are a few benefits of the functional organization structure:
- Employees are grouped by their knowledge and skills, which helps achieve the highest degree of performance.
- Employees are very skilled. Efficiency is gained because they are experienced in the same work and they perform very well.
- Their roles and responsibilities are fixed, which facilitates easy accountability for the work.
- The hierarchy is very clear and employees don’t have to report to multiple supervisors. Each employee reports to his or her functional manager, which reduces the number of communication channels.
- There is no duplication of work because each department and each employee has a fixed job responsibility.
- Employees feel secure, and therefore, they perform well without fear.
- Since there is a sense of job security, employees tend to be loyal to the organization.
- Employees have a clear career growth path.
- Cooperation and communication are excellent within the department.
Disadvantages of the Functional Organization Structure
The following are a few disadvantages of the functional organization structure:
- Employees may feel bored due to the monotonous, repetitive type of work and may lose enthusiasm for the job.
- If the performance appraisal system is not managed properly, conflicts may arise. For example, an employee may feel demoralized when a lower performing employee is promoted.
- A highly-skilled employee costs more.
- The departments have a self-centered mentality. The functional manager pays more attention to his department; he usually doesn’t care about other departments.
- Communication is poor among the departments, which causes poor inter-department coordination. This decreases flexibility and innovation. Moreover, there is a lack of teamwork among different departments.
- Employees may have little concern and/or knowledge about events outside their department. This causes obstacles in communication and cooperation.
- The functional structure is rigid, making adaptation to changes difficult and slow.
- Due to bureaucratic hierarchy, delays frequently occur in decision making.
- Generally, the functional manager makes decisions autocratically without consulting his team members. This may not always work in favor of the organization.
- When the organization becomes larger, functional areas can become difficult to manage due to their size. Each department may start behaving like a small company with its own facilities, culture, and management style.
- Functional departments may be distracted by departmental goals, and focus on them rather than the organizational goal.
The functional organization structure helps organizations run their business and earn a profit. This type of structure suits organizations intended to produce some product or service on a continuous basis. Here, employees feel secure, perform well, and tend to be highly skilled. The project manager often doesn’t have any role in the functional organization, and even if he exists, his role will be very limited.
This concludes the post on functional organization structure. If you have something to add, you can do so through the comments section.