Advantages and Disadvantages of Functional Organization

Functional organization, as the name suggests, refers to that organization in which departments are created according to functions or specialization so that any matter related to the particular function is dealt by that particular functional department only and not by other departments. So for example, if in any company which has a functional organization in place and it has divided the department as IT department, finance department, marketing department, purchasing department and so on then any problem related to purchasing department will be handed over or solved by purchasing department only and not by any other department. In order to understand this better let’s look at some of the advantages and disadvantages of functional organization –

Advantages of Functional Organization

  1. The first and foremost advantage of functional organization is that of specialization because since each department is created according to specialization there is that security that whichever task is assigned to any functional department it will be done in professional manner as it is done by the specialist so for example if there was no functional organization and some problem related to IT came in the company then the whole company would have been confused and disturbed regarding how and by whom the problem will be solved.
  2. Another benefit of a functional organization is that it leads to more efficiency and speed of work because a specialist who is the expert in his or her field is likely to do the task much efficiently and effectively than normal people. So, for example, a normal person is likely to take more time in taking the decision regarding finance related matter than a financial analyst handling the finance department.
  3. Another benefit of the functional organization is that it enables management to segregate work according to functions and thus avoid any duplication of work and also management can allocate the work to the concerned department quickly due to functional specialization.

Disadvantages of Functional Organization

  1. 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 common goal which can be harmful for the progress of the company in the long run.
  2. Another disadvantage of the functional organization is that if some work requires the intervention of two departments then it may be delayed due to lack of coordination between the departments which in turn will lead to the company losing its competitiveness with respect to competitors. So for example, if marketing department requires some IT support for marketing of the new product and IT department is slow to respond then the whole process of marketing of a product can be a failure leading to a loss for the company.
  3. Another limitation of the functional organization is that there is increased chances of conflicts among department’s heads due to various reasons like ego, same position, budget and much more which in turn can hamper the progress of the company.

As one can see from the above that functional organization has both advantages as well disadvantages and any company thinking of adopting this type of structure should carefully analyze both the aspects and then take the decision.


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