Organizational Structure System is a hierarchical setup based on power, responsibilities, functions, and workflow to achieve the ultimate goals of any organization.
It is an enterprise environmental factor depends on the organization’s culture, political climate, structure, governance, geographic distribution, framework, and many other factors.
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Types of Organizational Structure
Every school of thought has its different classifications, like a business model may have only four types of structures; others may have 6. But as we will follow PMBOK. It defines 10-ten kinds of structures as in below infographic.
Functional Organization, Projectized Organization, and Matrix Organization are the most prominent Organizational Structure System.
What Is a Functional Organizational Structure?
Functional Organization Structure is a hierarchical organizational structure in which people are grouped by areas of their specialization.
For example, a hierarchical structure is created based on ranking, a group of specialization must have the same set of skills and they are reported to one single manager.
In Functional organization, members are organized by function, their ability, relevant expertise for a direct single manager.
In the below infographic, a functional organizational structure is explained. You can see Four different departments staff is being controlled by only one respective head called the functional manager and then these managers are reported to the Executive.
Each functional manager is exclusively dealing with his own product or service within the organization like in below:
These are also called silos structure as every department works independently. each employee is working exclusively for his/her functional manager.
This “exclusive or Silos” is not the case when we go for matrix organization, matrix organizational structure or any covered in PMI’s PMBOK.
Advantage of a Functional type of Organizational Structure
Two parties the Organization & the Employee have direct benefits from this type of organization structure
Benefits to the Organization
- Communication is excellent within the department. As you are communicating only to one manager directly and hence will reduce the number of communication channels.
- A higher degree of Performance as everyone is specialized
- The organization has a clear accountable person for every deliverable.
- No duplication in jobs
Benefits to the Employee
- Job security and no fear that a project will end as is the job
- As everyone is specialized and hence can groom skills better especially for newcomers
- He/she will remain loyal to the firm
- A clear path to grow
Disadvantage of a Functional type of Organizational Structure
- As work is monotonous and repetitive and the employee will not get more skills
- Poor coordination with the other departments of the organization
- Poorer inter-department communication within the organization
- Every department like Engineering, procurement, etc. is busy to achieve own objective and does not really care about others.
- Self-centered at all levels staff to managers and it ultimately hurts the strategic objectives of the organization.
- As only one person is handling the hierarchical structure that may harm the organization.
- Cost is higher as the organization needs to recruit only specialized staff
- Employees will get bored by performing the same task over and over again that may reduce productivity.
- Decisions making is not through proper brainstorming and hence a single bad may Leeds to increase in cost.
The functional organization structure is the best suited for big manufacturing firms to have a stable environment that deals with ongoing operations. Job security is at a top-notch level in this than other organizational structures. Everyone has clear cut instructions to be followed. But it’s boring too as one performs the same types of tasks in routine. It helps organizations to run a business for profit, that is what matters the most at the end.