The following are some disadvantages of the functional organization structure: 1. Divisional structure prevents organizations from getting the most out of economies of scale. 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. Do not underestimate the importance and repercussion of not communicating changes clearly and efficiently to all the affected personnel. It is an organizational structure formed by grouping together all activities into functional departments and putting each department under one coordinating head. One of the main disadvantages is that it will lead to poor communication and coordination across different functions since functional units are not always accountable to each other. This monotony causes loss of enthusiasm. Ignorance of Organisational Objectives: Each departmental head works according to his sweet will. Here are some examples of the most typical fields where the functional structure is used: This provides better communication and coordination while executing projects. Conflicts may arise if the performance appraisal system is not properly managed. 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. The organizational structure can be classified under following two types: ADVERTISEMENTS: 1. Hindered decision-making. Instead of one primary nurse performing many functions, several nurses are given one or two assignments. As a result he found out that what makes people happy is in what they are doing and the way they are treated is what makes them unhappy. 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. The matrix organizational structure is a combination of two or more different kinds of organizational structures, such as project management or functional management. The benefits of the functional organization structure made it spread widely in the contemporary management. Business Models & Organizational Structure, The Strengths & Weaknesses of Hierarchical Organizations, Advantages & Disadvantages of Team-Based Organizations, Functional Structure Organization Strength & Weakness, How to Build a High-Performance Team in the Workplace, LetsLearnFinance: Advantages and Disadvantages of Functional Organization, Master of Projects Academy: Organizational Structure | 3 Common Types of Organization Structure in Corporate Companies, Describe Each of the Three Major Types of Organizational Structure. Since the employees are grouped by their knowledge and skills, competition may arise between them. 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. The biggest disadvantage of functional organization is that since various departments are segregated on the basis of functions there is no scope of employees of one department helping or meeting the other department employees and hence in a way there are many companies in the form of departments within the company and each department is having separate goal instead of one … Disadvantages of a functional organizational structure Lack of attention. Cooperation and communication between departments and units may be poor. 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. This can cause poor communication and \"silos\" that are too independent from one another. Disadvantages. Not designed to change quickly, functional structure works well in a stable environment where your business strategies are less inclined to need changes or updating. Advantages and Disadvantages of the Functional Organization Structure. What are the disadvantages of using a chart? The following are a few disadvantages of the functional organizational structure: Employees may feel bored because of repetitive work. ADVERTISEMENTS: Functional Organization: Advantages and Disadvantages of Functional Organization! Disadvantages of the virtual network approach include: There're probably going to train new staff members faster, too. Benefits & Disadvantages of a Functional Organizational Structure. 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. Having departments populated by employees specializing in specific work areas means that teams become siloed. The operation of the functional organizational structure is, complicated … Each functional unit has its own basic work to do and it happens that project responsibilities are set aside to meet these primary obligations. Disadvantages of the Functional Organizational Structure Since the employees are grouped by their knowledge and skills, competition may arise between them. Different organizational structures that combine to form Starbuck’s matrix structure are divisional structure, functional structure, and team-based structure. The Functional Organization Structure can be successfully applied in many areas. Employees may feel bored because of repetitive work. Because the people in the functional organization are grouped according to their special set of … Herzberg created his theory of Motivators and Hygiene factors based on all these findings which is also known as the two factor theory. 2. Organizations may choose from a number of common operating structures. This structure is centralized and hierarchical, so information and lines of responsibility flow from top management down through the heads of the various specialized departments and to the employees who carry out the work of each functional unit. I also have a Ph.D. in English and have written more than 4,000 articles for regional and national publications. The functional structure is the most bureaucratic and formal organizational structure because of the rigid hierarchy it follows. The Advantages of Group Performance Awards. II. This organisational structure relates to an organisation which has outgrown the entrepreneurial stage. In a perfect functional organization, each group's tasks would require no input from other functional groups, but this is often not the case. A functional organizational structure is one of several reporting structures a company could implement. In some instances, managers of other functional groups may not respond helpfully or in a timely way because "it's not our problem." Disadvantages of the Functional Organizational Structure. 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. Disadvantages of Functional Organizational Structure The work can be quite one dimensional. New technology can clearly enable us to work faster and more efficiently, and it facilitates flexible and remote working e.g. The inter-department communication is very poor this creates an overall lack of growth as an organization. These structures are reported to be good for a productive resource coordination. Specialization: This type of organization has the benefit of having specialists in each area. To put it in simple words demands of a working individual’s career should not overwhelm his ability to enjoy a satisfying personal life beyond the business environment. Speaking of a multinational organization, accounting activities from all the regional offices and the headquarters would be handled by one accounting department. Divisional structure is a type of organizational structure where operations are grouped based on divisions or separate product categories. The Functional Organization Structure can be successfully applied in many areas. This monotony causes loss of enthusiasm. Cooperation and communication between departments and units may be poor. Structure: Organizing a company in this way has inherent advantages and disadvantages. Having a common organizational purpose improves employee morale and performance and is an important predictor of organizational success. The functional structure is the most bureaucratic and formal organizational structure because of the rigid hierarchy it follows. Firstly he looked at delegation. 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. 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? Features of Secondary Market. This will ease the integration process and generate less pushback from employees at both sides of the deal. For example the accounting activities of different operations are grouped in on accounting department. Each one of them becomes a small company in itself because of the number of people working in it. A functional structure c. A divisional structure d. A team-based structure e. A virtual network structure. According to Root he discusses the importance of teamwork in the workplace. 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. As the organization grows bigger, functional areas become difficult to manage. Redgate also had low formalization because it only focuses on what are the outcomes of the project being carried out by the team members. The key difference between matrix structure and functional structure is that matrix structure is a type of organizational structure where employees are grouped concurrently by two different operational dimensions whereas functional structure is a s… Disadvantages to a Vertical Organizational Structure. Both managers must be on the same page for it to be an effective structure. After a while, the employees may start feeling monotony or boredom. 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 . Disadvantages of a functional structure. The advantage of functional structure is that the different functional units of th… When nearly similar skilled people are working together, conflicts may arise when one employee is promoted whereas others are not. Projects management in pure product organization Companies organized by function group employees according to their activities in the organization. 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. 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. Here are some examples of the most typical fields where the functional structure is used: If promotions are not handled well, an employee may be discouraged if a lower-performing peer is promoted over them. 4. Its management strives to attain this by focusing to deliver quality services to its staff members through trying to mirror the viewpoint that its customers have concerning the company. This will reduce communication channels. In this article, we are going to review the advantages and disadvantages of each organizational structure: Functional, Projectized, and Matrix. A functional organizational structure is the most common of the three organizational structures adopted by most companies. The benefits of the functional organization structure made it spread widely in the contemporary management. A related benefit of this kind of organizational specialization is operational speed. 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. c. All functions in a specific country or region report to the same division manager in _____ divisions. A company’s culture, in the end, proves to be even more important than their results, especially for some key aspects of mergers. 3. A further disadvantage of a functional organization closely related to the failure of functional groups to cooperate with one another is the possibility of territorial disputes. The disadvantages of Functional Organization: * The functional organization may have unhealthy competition working with the other areas. The functional structure is commonly found in small companies and also in large companies with single product line or narrow product ranges. Advantages & disadvantages of functional structures Advantages . Because of the reporting structure an effective communication channel is established and it results in a very rapid reaction, One of the corporate values of this company is to provide an enriching and rewarding workplace for its employees. By and large, a senior tech is going to handle a support problem faster than someone with less experience. Where else some of the factors leading to satisfaction are accomplishment, acknowledgment, the work or job itself, responsibility, advancement and their employee growth. Also learn about its advantages and disadvantages! When graphically represented on an organizational chart, this hierarchy creates a tall structure. Problems may arise among management if department heads are only focused on their department and do not communicate effectively with other departments. Functional structure is the most common type of organizational structure, especially among small to medium-sized companies. Functional organizations contain specialized units that report to a single authority, usually called top management. Disadvantages of the Functional Organizational Structure Since the employees are grouped by their knowledge and skills, competition may arise between them. As the company starts growing, the departments also become larger. An organization can be arranged acc… The work is performed by those who have the specialist knowledge of that work. Functional Structure There is a very low level of communication between the two departments, and it results in po… 2. ADVERTISEMENTS: Organizational Structure: Functional Structure and Divisional Structure ! The functional organizational structure groups employees according to broad business activities, resulting in departments such as finance, marketing and production. The omni-channel is nothing but an effortless, high quality and flawless customer experience between or within contact channels. In this article, we are going to review the advantages and disadvantages of each organizational structure: Functional, Projectized, and Matrix. Suitability: (a) This type of organisational structure is suitable where the size of operation is very … Human Resources employees have their own HR department, for example, as do employees working in sales, marketing, finance and technical support. In a decentralized approach, the employee will feel more comfortable and their productivity will be increased. The departments have a self-centered mentality. They always give more importance to their departmental objectives. As the organization grows bigger, functional areas become difficult to manage. 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