Is a Functional Organizational Structure Right for Your Company?

We all agree that an organization without organizationcan quickly become a dysfunctional workplace, right? A company’s structure — which includes how work is assigned, the chain of command, and communication flow — plays a huge role in how successful it is.

This is especially true given how much corporate structure influences company culture. In a world where 77% of job applicantsconsider company culture, companies can’t leave structure to chance — and functional organizational structure can be a powerful contributor to a positive work culture. Here’s how it works, and how it can work for you!

What Is a Functional Organizational Structure?

Let’s start by examining the idea of organizational structure, then we can dig into functional structure looks like. 

Organizational structure encompasses how a company is arranged, both in terms of function and leadership. This architecture encompasses how many managers there are, the employees and responsibilities they oversee and lead, how they lead, and how they fit in with other leaders in the organization. Organizational structure also outlines how the activities of your company are directed to achieve the goals of your organization. 

Organizational structure should answer questions like: What are the rules, roles, and responsibilities of your company? What does the chain of command look like? How are different jobs defined and then incorporated into your organization’s system? 

Now let’s explore a functional structure. Functional organizational structure is a popular framework that focuses on dividing departments based on areas of expertise. It uses a top-down hierarchical structure where decisions are usually made by senior leadership of your company and those who report to them. Employees then specialize in the different tasks and fulfillment processes.

Other core characteristics of functional organizational structure include:

• Individual departments of employees are grouped by skills and job function.
• Each department reports to a manager.
• Communication between departments happens through management while employees stick to communication within their department.

Functional organizational structure is great for larger companies that have a decent amount of people with the same specialized area of expertise, and for organizations that use teams to complete tasks. 

So, should your company employ this kind of structure? It may be just the right fit, but let’s discuss both the advantages and disadvantages of this design before you make any decisions.

Advantages of a Functional Organizational Structure

What’s so great about functional organizational structure, anyway? Here are some of its benefits;

• Efficiency: Employees get really good at doing their job, becoming experts who can perform at the top of their field. This can help employees thrive, gain greater confidence in their abilities, and experience more fulfillment and satisfaction at work.
• Clear scope:Employees know what their responsibilities are, the range of their individual role, and the part their department plays in the larger picture. Having clear roles leads to strong teamwork, which makes for a positive work environment and a high-performing workforce.
• Clear communication structures: Employees know where to go to get answers to questions because they have a direct manager who guides them and their work. This helps employees devote more focus to their tasks as their managers handle the primary communication with other departments. 
• Positive training environment: Since roles are so specialized, training for new hires is straightforward and can be facilitated by peers who have a strong handle on the department’s responsibilities. Employees are 80% more likelyto report emotional wellbeing when engaged in honest feedback, collaboration, and mutual respect within teams, so this kind of training and collaboration creates a healthy work environment, too.

Disadvantages of a Functional Organizational Structure

Functional organizational structure works really well for a lot of workplaces, but that doesn’t mean it comes without any drawbacks. Keep these disadvantages in mind as you determine what kind of structure might work best for your organization.

• Creating silos: Since work roles and responsibilities are well-defined and divided, employees may experience fewer innovative opportunities. Staffers may also not see the bigger picture or recognize how their contribution relates to the organization’s goals because of that tunnel vision.
• Communication difficulties: All communication between departments falls to management, which can cause bottlenecks when sharing information or slow processes down. Functional organizational structures can minimize unnecessary communication, but it’s easy to fall into the opposite pattern of poor communication, too.
• Competitive atmosphere:Departments may become competitive or frustrated with each other without ever communicating with them because they are so separate. Members might also be more motivated to work towards department goals rather than broader organizational goals. The limited interaction and connection employees have with those outside of their teams can complicate building positive communication and employee relations. 

Some of these disadvantages of functional organizational structure can be mitigated with other policies and guidelines within the company and how teams are designed. It all varies from organization to organization!

Set Your Employees Up For Success

Functional organizational structure is just one system that you can use to optimize your workplace and your workforce. So, how do you pick? There’s one primary element we recommend focusing on: culture, culture, culture. How does the structure you use shape the experience and environment of the people who make your business thrive? No matter what organizational structure you use, you can set your employees up for success by understanding the culture they need.

Another big part of both a successful functional structure and a successful culture is providing both the right benefits and the best benefits. Benefitssay a lot about how much you value and support employees as they strive for work-life wellness, so if you want to make the most meaningful impact on your company culture, start with competitive benefits.

How do you do that and create a functional organization, you ask? Get in touch with a wellbeing specialist to discover how you can help employees live their healthiest and happiest lives inside and outside of their work life.

References

• Culture Over Cash? Glassdoor Multi-Country Survey Finds More Than Half of Employees Prioritize Workplace Culture Over Salary. (July 10, 2019). Glassdoor. Retrieved January 17, 2023 from https://about-content.glassdoor.com/en-us/workplace-culture-over-salary/?_gl=1*zr1okn*_ga*NDg1NjkyNzczLjE2NDcxMTA1NzI.*_ga_RC95PMVB3H*MTY0NzExMDU3Mi4xLjAuMTY0NzExMDU3Mi42MA.
• Functional Structure: 3 Characteristics of Functional Structure. (December 17, 2021). MasterClass. Retrieved January 17, 2023 from https://www.masterclass.com/articles/functional-structure.
• Functional Organizational Structure: Everything You Need to Know. (August 10, 2020). Upcounsel. Retrieved January 17, 2023 from https://www.upcounsel.com/functional-organizational-structure#:~:text=A%20functional%20organizational%20structure%20is,to%20one%20product%20or%20service.
• Functional Structure: Advantages and Disadvantages. (April 3, 2020). Indeed. Retrieved January 17, 2023 from https://www.indeed.com/career-advice/career-development/functional-structure.
• Openness Predicts a Team’s Strength. Atlassian. Retrieved January 17, 2023 from https://www.atlassian.com/practices/open/research .