Functional Organization

21/12/2020 0 By indiafreenotes

Functional organization is a type of organizational structure that uses the principle of specialization based on function or role.

Functional organisation can be used at higher as well as at lower levels of management. At higher levels it involves grouping of all functions into major functional departments and placing each department under an expert executive. Each functional head issues orders throughout the organisation with respect to functions in question.

It allows decisions to be decentralized since issues are delegated to specialized persons or units, leaving them the responsibility of implementing, evaluating, or controlling the given procedures or goals.

Features of Functional Organization

  • The entire organizational activities are divided into specific functions such as operations, finance, marketing and personal relations.
  • Complex form of administrative organization compared to the other two.
  • Three authorities exist- Line, staff and function.
  • Each functional area is put under the charge of functional specialists and he has got the authority to give all decisions regarding the function whenever the function is performed throughout the enterprise.
  • Principle of unity of command does not apply to such organization as it is present in line organization.

Advantages of Functional Organisation:

Functional organisation has the following advantages:


This type of organisation has the benefit of having specialists in each area. The work is performed by those who have the specialist knowledge of that work. The workers have the advantage of getting instructions from specialists. This makes possible the fullest use of energy in the organisation.

Increase in Efficiency:

There is a division of labour up to manager level. Planning and execution are also separated. This helps to increase the overall efficiency in the organisation. The workers get guidance from expert supervisors and this enhances their performance at work.

Scope for Growth:

The functional organisation provides wide scope for growth and mass production. The employment of specialists at various levels of work enables the organisation to grow as per the needs of the situation.


Functional organisation allows changes in organisation without disturbing the whole work. The span of supervision can also be adjusted according to the requirements.

Relief to Top Executives:

Top executives are not unnecessarily burdened as happens in line organisation. The line officer is supposed to be a jack of all trades and is burdened with all types of works. On the contrary a specialist is a master of his line and he has the expertise and capability of taking his own decisions.

Economy of Operations:

The use of specialists helps in controlling the waste of materials, money and time. The consolidation of activities leads to optimum use of facilities like office accommodation, plant and machinery, etc.

Better Supervision:

Every superior is an expert in his own area and he will be successful in making proper planning and execution. The superiors, being well acquainted with the work, will be able to improve the level of supervision.

Democratic Control:

This type of organisation eliminates one-man control. There will be a joint control and supervision in the organisation. This boosts the morale of employees and also enthuses a sense of co-operation among them. The democratic approach motivates workers to go deep into their work and make suggestions for work improvement.

Disadvantages of Functional Organizational Structure

  • The work can be quite one dimensional. After a while, the employees may start feeling monotony or boredom. The lack of new challenges can make them unenthusiastic for the job at hand.
  • In this structure, the manager must take care of the appraisal system. If the correct approach is not taken then conflicts may arise between the employees regarding promotions or appraisals.
  • Also, this form of organization requires a high degree of specialization which is difficult to establish
  • If there is a necessary change of personnel it can disrupt the whole system and its balance. Also, it is quite a rigid structure, not leaving a lot of scope for adaptation.
  • In Functional Organizational Structure, the employees never gain any knowledge or skills outside their own department. This can cause difficulties in inter-departmental communication.