Functional organisation

Meaning

Under the unity of command principle a worker should report to one boss. In large and complex organisations, however, one supervisor cannot guide a worker on every matter, such as time scheduling, quality control and material handling, so different superiors command the same worker, each in his own function. This arrangement is called functional organisation; it knowingly departs from unity of command. In a multi-plant firm, for example, a plant's personnel manager answers to the plant head on the plant's personnel problems and to the head-office personnel chief on carrying out personnel policy, so every plant gets the experts' knowledge and policies stay uniform.

Merits

• Each person concentrates on one kind of work, which brings the benefits of specialisation.
• Each gives his best effort within the area of his abilities.
• Supervision is easier, since each manager needs expertise in only a narrow range of skills.

Demerits

• The clear lines of authority and responsibility of the line organisation are lost, and the undefined nature of functional authority confuses procedures of control.
• Workers under several superiors make control more complex, and it becomes hard to fix responsibility for poor results.

Functional structure in the wider sense

The term is also used for a structure in which work is grouped into departments by function (production, purchase, marketing, accounts and personnel), all reporting to a coordinating head. It promotes occupational specialisation and control within each department, but can lead to departmental empires and to coordination problems between departments. It suits a large organisation whose activities need a high degree of specialisation.