[Commerce Class Notes] on Functional Organization Pdf for Exam

The organization is the collection of people who work together, to achieve a common objective or a goal. In other words, Organisation is a place where people gather together, working on a different set of duties and responsibilities to fulfill the goals of the organization.

Functional Organization

A functional organization structure differentiates the employees by their skill, specialty, etc. It completely depends on a ranking system that consists of several departments under the guidance of expert leadership. Most businesses operate under the functional structure because it combines workers who have similar knowledge and skills, when used in a team environment, it will be helpful for the company to achieve their desired goals.

Advantages of Functional Organization

• The executive or the team leader has good knowledge and experience in that particular field. For example, the person heading the marketing department will have the knowledge and skill necessary to carry the process with full responsibility and successfully run his team.

• As the employees are experts in that particular field, the work becomes more efficient and precise. Reduces the rate of mistakes as this could motivate the employees of the company.

• Since every member comes from a similar background it allows them to share their thoughts and come up with better solutions. As sharing of knowledge is always beneficial.

• The employees also can have a clear idea of the hierarchy and need not have to report or answer to several managers.

• Also, the employees can feel the work security as their work and efforts are not going unnoticed. This can help them to perform better.

Disadvantages of Functional Organization

• The work can become one-dimensional. After some time, the employees may start to feel repetitive or bored. The lack of new challenges will make them unenthusiastic.

• In this type of structure, the manager must keep an eye on the appraisal system. If the right approach is not made then there can be high chances of conflicts between the employees regarding their promotions or appraisals.

• Also, this type of organization needs a high specialization degree which can be difficult to establish

• If there is a change of personnel in the team, it can literally affect the whole system and its balance. Also, it is a rigid structure, where there are not a lot of scopes for adaptation.

• In a Functional Organizational Structure, the employees can never gain any knowledge or skills out of their own department. This can be a big cause for inter-departmental communication.