Category: Functional organizational structure example company

Functional organizational structure example company

Organizational structures define the hierarchy or an organization, and determine the way information flows within it. In the anatomy of business, the overall structure should be a stable backbone where everything else rests.

functional organizational structure example company

However, the initial establishment of the structure does not end the discussion surrounding them. Each organizational structure brings with it various benefits and challenges that management needs to be aware of.

Some organizational problems may not be brought on by changing times or new employees; it might be the result of an old structure that needs tweaking. While some argue that there are more in existence, organizational structures can typically fall into four types: functional, divisional, matrix, flat. Selecting a structure can either happen organically without pre-planning or intention or with rigid forethought that is not always open to a sometimes-needed update.

Structures have an impact on responsibilities and superior-subordinate relationships, communication flow, and overall management and growth. Therefore, it is essential for business leaders to know what category they fall into and when to make some needed tweaks.

functional organizational structure example company

This is a traditional structure and includes divisions based upon specialty. This forms the well-known hierarchy of senior management, marketing, finance, human resources, and operations. This is one of the more common forms, and it is not necessarily designed to respond to change quickly. A functional structure also facilitates the development of specialists.

Since professionals who do work in the same field are pulled together, this arrangement pulls individuals away from a generalist role. Each specialist group answers to top management. Since each team works in silos, management is expected to guide all departments into one unit. A clear definition of top management and other specialized departments sets the expectation of who reports to who, and how they can communicate with one another.

This set-up also puts professionals who specialize in one thing together. This allows for teams to easily share information between one another and further optimizes the department they are a part of. Also, there is a clear path of promotion for employees, which makes it likely that managers participate in the tasks workers are involved in making them more aware of decisions that need to be made.

Because of the specialized departments, management can forget to implement mechanisms for units to communicate across one another or collaborate when appropriate. It is also easy for departments to slip into a mindset where they only worry about their own results and forget how their numbers impact other departments in the company.

functional organizational structure example company

This type of structure makes it difficult to have a holistic view. As a result, innovation and forward-thinking ideas can quickly become stifled. Divisional Organizational Structure Instead of focusing on specialties, this structure groups individuals based on the products or projects they are undertaking. General Electric is an excellent example of how this style can work. At the top is the CEO, and after them is a hybrid of functional grouping: public relations, legal, finance, global research, business development, and human resources.

What works about this particular structure is the level of autonomy each project receives. Normally, each group has a vice president or director which makes it easier for them to obtain the resources they need. Also, since these individuals know the project the best they can ensure it is treated with the attention it requires. Things can get difficult if an organization-defining project is funneling through a functional structure as a specialized unit might not give the project the same attention it needs since it is not a primary priority.

The main disadvantage of this structure is that it is easy for office politics to take hold and for one divisional team to undermine and compete with another for resources. It is easy for a group to feel their product or project is more important than another because of the amount of time and dedication they spend working on it.

This can create tunnel vision that prevents workers from understanding the needs of co-workers tending to another project. This situation breeds a company personality of competition that can do more harm than good in the long-run. Also, each division has a unique purpose which makes it difficult to be managed.Most of the time, every company will be divided into several departments, such as accounting, human resources, marketing, administration, and engineering.

Sometimes, for example, a start-up business tends to use the following functional organizational chart in which only one member is in charge of a department.

Click here to free download Org Chart Software. Then you can use the built-in organizational chart templates to present your company's organizational strucutres in minutes. Small businesses usually prefer to use flat organizational structures to improve working efficiency and reduce costs.

The picture below shows a kind of functional organizational structure that applies to small businesses. In contrast to small businesses, the functional organizational structures of large-scale companies are more complicate and there are more levels of management shown in the org charts.

Otherwise, the employees will be confused about who they should report the work to. To find more editable and printable org chart templates, you can visit Edraw Org Chart Templates. Except for functional organizational charts, there are other types of organizational charts: matrix organizational charthorizontal organizational chartdivisional organizational chart.

Administrative Structure of a Hospital. Hierarchical Organizational Chart. Organizational Chart Software. IT Department Organizational Chart. How to Draw an Organizational Chart. Review Organizational Chart Templates. More Organizational Chart Examples. Enjoy creating Organizational Chart on multiple platforms with this professional software. Download OrgCharting to create org charts and manage company data. Try it today! A versatile cross-platform mind mapping tool. Get from App Store.

How can we help? By clicking the button, I agree to the privacy policy and to hear about offers or services. Functional Organizational Chart. The functional organizational chart is structured with executives on the top and employees at the bottom.

People are divided into different departments according to their job responsibilities or functions they serve in the company. Make professional org charts automatically with a few steps no design skills are required Ideal for workforce planning, prioritizing and management Provide professionally-designed org chart templates to get started quickly Powerful data import and resynchronization to freely manage org charts Work on the same org chart with your teammates at any time, on any device Present, export and share your org chart at ease Free Download Free Download Free Download.The functional organizational structure organizes the activities of a business around areas of specialization.

For example, there may be a marketing department that focuses solely on marketing activities, a sales department that only engages in sales activities, and an engineering department that only designs products and manufacturing facilities. The functional organizational structure is the dominant mode of organization in larger companies, since these entities deal with such large sales and production volumes that no other form of organizational structure would be nearly as efficient.

It is particularly effective in the following situations:. Large fixed asset base. Minimal amount of entirely new product line introductions. Minimal changes due to fashion or other changes in taste or technology. Competition is primarily based on cost. In other words, this system works well in a stable environment. Example of the Functional Organization Structure.

Accordingly, he clusters employees into the following functional areas:. Advantages of the Functional Organization Structure. Of the following advantages, the first one is the most important; the functional structure can introduce a great deal of efficiency into the operations of a business.

Starbucks Coffee’s Organizational Structure & Its Characteristics

The advantages are:. When employees are allowed to focus on one specific functional area to the exclusion of all else, they can achieve significant efficiencies in terms of process flow and management methods. Chain of command. There is a very clear chain of command in this structure, so everyone knows which decisions they are allowed to make, and which ones to hand off to their supervisors.

It is easier to set up career paths for employees and monitor their progress toward the goals outlined for their functional areas. A company can use this approach to cultivate a group of extraordinary specialists who can strongly impact the functions of the company.

It is easier to monitor and update the training of employees when they are focused on narrow functional areas.An organization with a functional structure is divided based on functional areas, such as IT, finance, or marketing. Explain the functional structure within the larger context of organizational structures in general. An organization can be arranged according to a variety of structures, which determine how the organization will operate and perform. In a functional structure, a common configuration, an organization is divided into smaller groups by areas of specialty such as IT, finance, operations, and marketing.

Communication generally occurs within each functional department and is transmitted across departments through the department heads. Functional structure at FedEx : This organizational chart shows a broad functional structure at FedEx. Each different functions e. Functional departments arguably permit greater operational efficiency because employees with shared skills and knowledge are grouped together by functions performed.

Each group of specialists can therefore operate independently with management acting as the point of cross-communication between functional areas. This arrangement allows for increased specialization.

A disadvantage of this structure is that the different functional groups may not communicate with one another, potentially decreasing flexibility and innovation. Functional structures may also be susceptible to tunnel vision, with each function perceiving the organization only from within the frame of its own operation.

Recent trends that aim to combat these disadvantages include the use of teams that cross traditional departmental lines and the promotion of cross-functional communication.

Functional structures appear in a variety of organizations across many industries. They may be most effective within large corporations that produce relatively homogeneous goods. Smaller companies that require more adaptability and creativity may feel confined by the communicative and creative silos functional structures tend to produce.

Describe the basic premise behind divisional structures within the general framework of organizational structure. Organizations can be structured in various ways, with each structure determining the manner in which the organization operates and performs. A divisional organization groups each organizational function into a division. Department of Energy organization chart : The DOE organization chart shows a divisional structure with different divisions under each of three under-secretaries for energy.

Each of the three division is in charge of a different set of tasks: environmental responsibilities, nuclear-energy responsibilities, or research responsibilities. Each division within this structure can correspond to either products or geographies of the organization. Each division contains all the necessary resources and functions within it to support that particular product line or geography for example, its own finance, IT, and marketing departments.

Product and geographic divisional structures may be characterized as follows:. In this form, one parent company owns subsidiary companies, each of which uses its brand and name. The whole organization is ultimately controlled by central management; however, most decisions are left to autonomous divisions.Organizational Structure: do you even need to formalize it when you have a relatively small business?

functional organizational structure example company

Bear this in mind, though. If organizational structure is not clear, there are consequences for your business. Here are some of the things that can go wrong if your organizational structure is fuzzy:.

Use these organizational structure examples to choose the one that works best for your business. It replaces static documents and flowcharts - giving you the power to automate and run your processes. By making ourselves write down our processes and know-how on Tallyfy — we can now ensure that steps are never missed or done out of order.

This is the most traditional of the organizational structures that businesses use. The advantage of this type of organizational structure lies in its simplicity. The disadvantage lies in its rigidity and the length of time needed for information to flow through the organization. Everyone just gets on with the allocated task. As you can see, this structure is very similar to the traditional line structure, but there are far more lines of communication.

Functional Organizational Chart

The purchasing department may want the financial manager to pay an authorized supplier. No problem. The team member goes straight to the financial manager.

A team leader in production needs help from the HR manager, or HR wants to task the production team leader with something. Communication is vital to the successful implementation of this organizational structure example. Staff members are advisors. They provide technical information, advice, and opinions. They may be able to authorize certain activities, and they might compile reports that help with decision-making.

This type of organizational structure works best for companies in specialist fields.A functional organization structure is a structure used to organize workers. A functional organizational structure is a structure used to organize workers. They are grouped based on their specific skills and knowledge.

It vertically structures each department with roles from president to finance and sales departments, to customer service, to employees assigned to one product or service. Functional organizations contain specialized units that report to a single authority, usually called top management. They are referred to as "silos" because the function independently and have their own vertical management structure.

Workers within each functional department communicate with each other exclusively, and then department heads communicate with each other. This structure works well in a stable environment that has continuous operations. The goal of a functional structure is to put together every informational and human resource necessary for one activity in a single place.

The functional organizational structure helps organizations run their business and earn a profit. When employees who have similar skills and experiences are grouped together, it makes production more efficient and of a higher quality.

Roles and tasks do not change very much so there is little time spent learning, and accountability is clear. Since the hierarchy is simple, employees know the one manager they are to answer to, instead of multiple people. This streamlines communication and reduces confusion among employees. Employees can feel confident about what they're doing because it is standardized. They are more likely to feel a loyalty to their department and the organization as a whole. This increases morale and work ethic, as there is more job security.

There is a clear path of growth for employees which provides motivation, and they are more likely to be corporative with people in their department.

Functional Organizational Structure: Everything You Need to Know

Employees may find it boring to repeat the same task over and over, and become less enthusiastic over time. If promotions are not handled well, an employee may be discouraged if a lower performing peer is promoted over them.Your working style depends on your organizational structure.

The organizational structure defines your role and responsibilities and work culture. This culture includes work environment, reporting system, hierarchy, etc. An organization can adapt to any structure as per their requirements.

If they are dealing with the projects, they will choose a projectized organization. However, an organization dealing with operations will stick with a functional structure. Every organizational structure has a different system. In a projectized organizational structureyou report to the project manager. In a functional organizational structure, you report to a functional manager.

In a matrix organizational structureit depends. I have discussed the matrix and projectized structures in other blog posts. Now, we will discuss the functional organizational structure. A functional structure divides the organization into departments based on their function.

Each is headed by a functional manager and employees are grouped as per their role. Functional managers have experience in the roles they supervise.

This ensures that employees are using their skills effectively. It helps organizations in achieving their business objectives. Employees are classified according to their function in this structure. The organizational chart for a functional structure shows the role hierarchy: for example, president, vice president, finance department, sales department, customer service, administration, etc.

Each department has a head responsible for it. This helps the organization control the quality and uniformity of their performance.

Matrix Organisational Structure - Organisational Design - MeanThat

These employees are very skilled. They are experienced in the same work and they perform excellently; productivity is high in a functional structure.

Here, all authority stays with the functional manager. Usually, the project manager does not have any role in this structure. Their role will be minimal, even if they exist. The functional organization structure is suitable for a business dealing with operations, like manufacturing industries.


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