Impact of technology on work-life balance This provides better communication and coordination while executing projects. The inter-department communication is very poor this creates an overall lack of growth as an organization. Ignorance of Organisational Objectives: Each departmental head works according to his sweet will. Without strong teamwork, it can be difficult for managers and executives to determine which staff members can best accomplish job tasks. This caus… A functional organizational structure is the most common of the three organizational structures adopted by most companies. A Functional organizational structure has several advantages and disadvantages when it comes to managing projects: Advantages. The benefits of the functional organization structure made it spread widely in the contemporary management. This monotony causes loss of enthusiasm. section 3, advantages of functional structure will be discussed, in section 4, challenges of functional structure and operational issues. Disadvantages of the Functional Organization Structure Despite the advantages of the functional organizational structure, it can also twist the fundamental process and decision flow within a business, with the following results: 1. A functional structure c. A divisional structure d. A team-based structure e. A virtual network structure. Cooperation and communication between departments and units may be poor. When each group of specialists in a functional organization is relatively isolated, the common bond that emphasizes a single overarching organizational purpose is almost inevitably weaker than in an organization where different kinds of employees regularly interact. A functional organizational structure is one of several reporting structures a company could implement. Every decision then, takes time to materialize. Disadvantages. It also uses some of its benefits like for example part of its profit to cater for various products such as accident protection insurance, company-paid cancer policy, and employer-paid life insurance for the employees. When graphically represented on an organizational chart, this hierarchy creates a tall structure. Rather than duplicating roles in different parts of the company, similar activities are grouped together so leading to: lower costs ; standardisation of output/systems, etc. Also learn about its advantages and disadvantages! Things that make people satisfied at work are different from those that cause dissatisfaction therefore those two feelings cant be opposite. Creating and Organizing Divisions Implementing a multidivisional organizational structure requires identifying the various functions that different parts of your business perform and dividing the business up according to those functions. Organizing a company in this way has inherent advantages and disadvantages. They always give more importance to their departmental objectives. Disadvantages of the Functional Organizational Structure Since the employees are grouped by their knowledge and skills, competition may arise between them. Functional Organizational Structure In a functional organization structure, the project manager and all the resources work in the same company division, such as the sales and marketing department. After a while, the employees may start feeling monotony or boredom. Where else some of the factors leading to satisfaction are accomplishment, acknowledgment, the work or job itself, responsibility, advancement and their employee growth. In this analysis, include any best practices they possess and how the other company might benefit from them. Disadvantages. In this respect, companies sometimes overlook a more significant need that offers unified experience one and unified experience for all customers across different channels. As the organization grows bigger, functional areas become difficult to manage. Its objective is to carry out operations smoothly and efficiently. Because of the reporting structure an effective communication channel is established and it results in a very rapid reaction, One of the corporate values of this company is to provide an enriching and rewarding workplace for its employees. A Functional organizational structure has several advantages and disadvantages when it comes to managing projects: Advantages. Herzberg created his theory of Motivators and Hygiene factors based on all these findings which is also known as the two factor theory. Advantages & disadvantages of functional structures Advantages . The primary reason for the firm’s success is its structure. A team that works well together understands the strengths and weaknesses of each team member. Disadvantages of a Functional Organizational Structure In the long term, employees tend to feel bored and the monotony of the job can be off-putting. Advantage – Clear Chain of Command. This will reduce communication channels. I am a retired Registered Investment Advisor with 12 years experience as head of an investment management firm. In pure product organization the product manager has complete authority to manage all project resources including allocation and merit reviews. Firstly he looked at delegation. The matrix organizational structure is a combination of two or more different kinds of organizational structures, such as project management or functional management. Since the employees are grouped by their knowledge and skills, competition may arise between them. Communication across departments becomes difficult … … Functional Structure 2. A related benefit of this kind of organizational specialization is operational speed. As communication becomes increasingly dominant in organizations, isolated groups may underperform or even fail because they have no institutionally recognized way of communicating needs and issues to other functional groups that might have helped. Furthermore, one of the Fayol’s Administrative Management Principles that can be applied in this company is initiative. Some of the factors causing dissatisfactions are company policies, supervisions, work conditions and also relationship with the employer and other working colleagues. Communication is weak among the departments. The merits of functional organisation are as follows: (1) Specialisation—It ensures a greater division of labour and enables the concern to take advantage of specialisation of functions. As a single division does not produce enough to take great benefits out of the economies of scale. List of the Disadvantages of the Matrix Organizational Structure. Organizations may choose from a number of common operating structures. In this article, we are going to review the advantages and disadvantages of each organizational structure: Functional, Projectized, and Matrix. Functional structure is organizational structure in which the organization is divided into smaller groups based on specialized functional areas such as production, marketing, and sales. Cooperation and communication between departments and units may be poor. ADVERTISEMENTS: Organizational Structure: Functional Structure and Divisional Structure ! Employees in different teams do not get the opportunity to meet and share perspectives, which can be harmful for the progress of the business in the long run. Instead of one primary nurse performing many functions, several nurses are given one or two assignments. The most obvious advantage of a functional organization is that grouping employees by specialization ensures a dependable level of departmental competence. For example, when initiative principle had been applied in a company, the employees are able to work enjoyably in the workplace because it will boosts up their enthusiasm and eagerness. These disputes may have to do with disagreements over goals, budgetary competition or any number of issues that stem from a clash of egos that occur when each department has its own separate functional structure or where a strong sense of a common purpose is lacking. Advantage – Clear Paths of Advancement. Disadvantages of the virtual network approach include: work from home, preparing quick presentations and reports with use of cell phones besides computers and laptop but it can also mean that we cannot ever really get away and switch, Advantages And Disadvantages Of Functional Organization. In a functional organizational structure, the employee would be hired by the company in general and then grouped based on skill or a need to fill a certain role. Difference between Mixed Economy and Socialism. To put it in simple words demands of a working individual’s career should not overwhelm his ability to enjoy a satisfying personal life beyond the business environment. A disadvantage of this structure is that the different functional groups may not communicate with one another, potentially decreasing flexibility and innovation. It is an organizational structure formed by grouping together all activities into functional departments and putting each department under one coordinating head. The functional structure is commonly found in small companies and also in large companies with single product line or narrow product ranges. Disadvantages of Functional Organizational Structure The work can be quite one dimensional. Problems may arise among management if department heads are only focused on their department and do not communicate effectively with other departments. Companies organized by function group employees according to their activities in the organization. If promotions are not handled well, an employee may be discouraged if a lower-performing peer is promoted over them. Every decision then, takes time to materialize. Copyright © 2020 IPL.org All rights reserved. Disadvantages of a functional organizational structure Lack of attention . Disadvantages of the Functional Organizational Structure. Advantages: When shifts in the market environment occur, decisions on how to react come slowly as proposed changes are forced to travel through various chains … In an hierarchical structure, members know to whom they report and who reports to them. The functional structure focus on principles of specialization where people will be grouped in broad business activities such as marketing, production, human resources and finance. 4. The diversity that develops from the matrix organizational structure often makes the teams created in this format stronger than those that are purely functional in their overall approach. This monotony causes loss of enthusiasm. This can result in mismanagement and discord. ADVERTISEMENTS: Main disadvantages of functional organisation: (1) Ignorance of Organisational Objectives: ADVERTISEMENTS: Each departmental head works according to his sweet will. Disadvantages of the Functional Organizational Structure Since the employees are grouped by their knowledge and skills, competition may arise between them. There are three main types of organizational structure: functional structure, divisional structure and a blend of the two, called matrix structure. Features of Secondary Market. The following are some disadvantages of the functional organization structure: Employees may get bored because they do the same repetitive type of work all the time. A functional organization structure is one of the most popular organizational structures that is used to run a business effectively and earn great revenues for the company. Projects management in pure product organization If promotions are not handled well, an employee may be discouraged if a lower performing peer is promoted over them. The departments have a self-centered mentality. 3. Lack of teamwork and reduced flexibility may cause conflicts between departments and units. The advantage of functional structure is that the different functional units of th… The following are some disadvantages of the functional organization structure: 1. Hence, overall organisational objectives suffer. In a perfect functional organization, each group's tasks would require no input from other functional groups, but this is often not the case. Speaking of a multinational organization, accounting activities from all the regional offices and the headquarters would be handled by one accounting department. Providing these products freely or at subsidized prices mean the company focuses not only on attaining benefits but also on ensuring the corporate values are. Benefits & Disadvantages of a Functional Organizational Structure. 3. This organisational structure relates to an organisation which has outgrown the entrepreneurial stage. For example the accounting activities of different operations are grouped in on accounting department. This can cause poor communication and \"silos\" that are too independent from one another. The lack of new challenges can make them unenthusiastic for the job at hand. The viewpoints of one individual division sometimes maybe narrow. Functional Structure: Under the functional structure, the organisation is designed on the basis of the basic functions, namely, production, finance and accounting, marketing and personnel. Employees may find it boring to repeat the same task over and over, and become less enthusiastic over time. As the company starts growing, the departments also become larger. Advantages and disadvantages of a matrix structure In a matrix structure, the power is delegated on two primary basis, first is the functional are and the second is project to project. An organization can be arranged according to a variety of structures, which enable the organization to operate and perform. Both managers must be on the same page for it to be an effective structure. Functional organization structure “Functional structures are the most common type of structural design and have evolved from the concept of high specialization, high control framework of manufacturing organization turned towards high efficient,” reports Practical Management website. The functional structure is an organizational structure that divides its operations into separate departments or units according to the role of each department. Functional nursing was designed around an efficacy model that seeks to get many tasks accomplished in a short period of time. Disadvantages of the Functional Organizational Structure Employees may find it boring to repeat the same task over and over, and become less enthusiastic over time. Disadvantages of a functional organizational structure Lack of attention. ADVERTISEMENTS: Functional Organization: Advantages and Disadvantages of Functional Organization! Divisional Structure Functional Structure: This is the simplest & the most prevalent form of organizational structure. The operation of the functional organizational structure is, complicated … Companies that have a vertical organizational structure have many layers of management. Disadvantages of the Functional Organizational Structure Since the employees are grouped by their knowledge and skills, competition may arise between them. Functional Organisational Structure – With Advantages and Disadvantages Under the line type of organisation, one person is in charge of all the activities relating to a department or section but there is a difficulty of getting men with sufficient capacity and training who can … Disadvantages Functional structure has some disadvantages as well, including: People specialized in certain functions may find difficulties in understanding other functions and hence they are reluctant to change. Employees only have knowledge of their respective areas and they have no knowledge and concern outside their functional area. An organization can be arranged acc… Referred to as functional units or areas, these specialized units contain personnel with various but related skills grouped by similarities. Conflicts may arise if the performance appraisal system is not properly managed. Segregating the workforce according to function clarifies organizational responsibility and allocation of tasks. Hindered decision-making. Benefits & Disadvantages of a Functional Organizational Structure. One of the benefits of strong teamwork in the workplace is that team leaders and members become proficient at dividing up tasks so they are done by the most qualified people. Now that we have seen the advantages and disadvantages of the divisional structure, it is … The benefits of the functional organization structure made it spread widely in the contemporary management. The Tempest was suffering the consequences of centralized decision making, where all the pacing decision was. Cooperation and communication between departments and units may be poor. Functional structure has some disadvantages as well, including:  People specialized in certain functions may find difficulties in understanding other functions and hence they are reluctant to change. New technology can clearly enable us to work faster and more efficiently, and it facilitates flexible and remote working e.g. The functional structure is commonly found in small companies and also in large companies with single product line or narrow product ranges. The functional organizational structure groups employees according to broad business activities, resulting in departments such as finance, marketing and production. Specialization: This type of organization has the benefit of having specialists in each area. Communication across departments becomes difficult because all of them are so distinct from each other. Functional managers pay more attention to their own departments and ignore others’ interests. A highly skilled employee costs more. The following are a few disadvantages of the functional organizational structure: Employees may feel bored because of repetitive work. Since the employees are grouped by their … Each functional unit has its own basic work to do and it happens that project responsibilities are set aside to meet these primary obligations. The major disadvantage of using charts and graphs is that these aids may oversimplify data, which can provide a misleading view of the data. The key difference between matrix structure and functional structure is that matrix structure is a type of organizational structure where employees are grouped concurrently by two different operational dimensions whereas functional structure is a s… c. All functions in a specific country or region report to the same division manager in _____ divisions.

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