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A functional organization is an organizational structure in which the organization is divided into separate units based on roles, specialities, or functional areas such as finance, accounting, marketing and production

It is an organization that is built around essential functions such as finance, sales, production, marketing and human resources.

It is an organization in which functional departments are created to deal with problems at various levels of management.

Considered to be the most widely used organisation, a functional organization contains specialized units that report directly to a single authority, called the top management

Each specialized unit is headed by a functional manager and these functional managers report directly to the Chief Executive Officer (CEO) of the organisation.

Functional organization structure

The term "functional organization" was introduced by Fredrick Winslow Taylor, who advise that specialists should be appointed in every functional area of the organization


1.  Division of jobs: In a functional organization, work is divided into different functional departments and each department is headed by functional managers

2. Decision-making: Most decisions in functional organizations are made by functional managers.

Functional specialists must first be consulted before any decision can be made in any functional area of the organization

3. Vertical hierarchy system: Functional organisation follows a vertical system as subordinates are required to report to one functional manager only.


1. Helps in the  achievement Of an  organizational goal: Functional organization helps in the achievement of organizational objectives because work is divided among various departments

2. Scope of training: Functional organization encourages learning from others doing similar jobs

3. Easy performance evaluation: In a functional organization, individuals are evaluated based on their functional roles in the organization.

4. Benefit of specialization: Functional organizations make maximum use of the principle of specialization as every functional unit is managed by specialized experts.

This ensures that functional organizations benefit from the expertise of a professional.

5. Encourages teamwork: Because there is no room for one-man control of an organization, functional organizations encourage cooperation and teamwork among their members.

6. Reduces the burden of top executives: As every department is headed and managed by functional managers, top executives are relieved of the stress of managing each department

7. Increases efficiency: With a functional organization, a company can increase its efficiency and productivity.

Employees that are experts in a specific functional area of the company can complete tasks quickly and efficiently, increasing productivity.

Workers who are skilled in their job can proceed with confidence and make fewer mistakes, reducing waste and increasing efficiency.

8. It is logical, simple and straightforward: Functional organization is very logical as it makes sense to build departments around the basic function in which the enterprise must engage.


1. Violates the principle of unity of command: Functional organization, by definition, violates the principle of unity of command since workers are accountable to a large number of superiors and supervisors.

Moreover, the disciplinary control is reduced in functional organizations subordinates are allowed to work more than bosses.

2. Slow decision: Lack of coordination among functional leaders may cause decision-making to be delayed.

3. Lose focus: Managers may become so preoccupied with the department tasks that they lose sight of organizational goals.

Moreover, functional managers may set boundaries for themselves and focus solely on their department's goals, ignoring the whole organization's goals.

4. Expensive: Each sub-unit in the functional organization is headed by functional specialists, who must be remunerated.

This makes a functional organization expensive to operate.

5. Autocratic tendencies: Because functional managers have such strong control over their departments, abuse of power is possible.

For instance, the functional manager may not listen to his subordinate, or co-operate with other functional heads.

All of this could have a negative influence on the company.

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