Although there are many other forms of organizational structures available, in recent years, there has been a trend among many companies, particularly "modern" start-up enterprises, to choose alternative structures that better suit their operational demands and represent their beliefs. The most prevalent of the three organizational structures most businesses use is a functional organizational structure. Employees in companies structured by function are grouped according to their activities inside the company.
A functional organisational structure is a corporate structure that organises individuals according to their expertise, skill, or related roles. It is organised into layers of hierarchy that encompass several departments and are led by authorised leaders. Businesses typically utilise functional structures because it groups individuals with a comparable knowledge and, when used in a team setting, helps organisations achieve their goals.
It is a sort of organizational structure in which the organization is divided into smaller units based on specific functional areas such as information technology, finance, human resources, or marketing.
Because individuals with similar abilities and expertise are placed together by function, functional departmentalization may allow for higher operational efficiency. One problem with this arrangement is that the many functional groups may not interact, thereby reducing flexibility and creativity. A new trend aimed at overcoming this disadvantage is the formation of cross-functional teams.
Some people refer to these functional regions as "silos". Similarly, the company's senior management team is often composed of numerous functional heads (such as the chief financial officer and the chief operating officer). Communication takes place inside each functional department and is relayed across departments by the department leaders.
Organizations with extensive operations tend to utilize functional organizational structures. The functional organizational structure connects individuals with comparable and complementary knowledge and abilities. It also helps employees achieve their goals and work together more cohesively.
Typically, functional organizations are divided into expert skill areas like product development, sales, marketing, etc. They can also be divided into categories based on distinct goods, services, and locations, as Amazon and Disney have done. These parts are known as "silos" because they operate independently and have their management structures.
Understanding this structure can significantly help with organizational behaviour as it highlights the critical focus areas, demonstrates how different sections interact and contributes to the company's overall functioning.