Functionally Good Organizations

In the functionally good organization, activities are grouped together by common functions. Each functional unit has a different set of duties and responsibilities. In a University functionally good organization would mean a set of departments like marketing, management, business economies, finance, etc. Thus, similar and related occupational specialities are grouped together.  Functionally good organizations try to incorporate the positive aspects of specializations.

Features of functionally good organizations

Functionally good organizations are characterized by the following:

Advantages of functionally good organizations:

Clarity: Functional design has the great advantage of clarity. Everybody has a responsibility. Everybody understands his own task. As a result, functionally good organizations bring order and clarity to organizational activities.

Economies of scale within function: It provides economy of scale within functions. It reduces duplication and waste. For example, the total floor space shared by several products in functional organizations leading to economy of operations.

Specialization: Each departmental manager is concerned with only one kind of work and can concentrate all his energies upon it with minimum diversion. Specialization being built into the organization brings about competitive advantage for the firm. By putting its limited resources into one specialized activity even a small company can compete with a giant corporation on quantity, delivery and price.

Coordination: Coordination within functions is easy. Centralized decision making ensures unity of performance.

In depth skill development:  The functionally good organizations also promote skill development of employees. Employees are exposed to a range of functional activities within their departments allowing them to embody their outstanding skills in every activity of the company.

Suitability: The functional type of organization is best for small to medium sized organization producing one or a few products where the dominant competitive issue and goals of the organization emphasize functional specialization, efficiency and quality.

Limitations of Functionally Good Organizations

The weakness of the functionally good organization, unfortunately are legendary as the following list indicates:

Effort focus: Every functional manager considers his function to be the most  important and develops a narrow dimension of the organization. He becomes so enamoured with his own specialty that he forgets the organization’s overall goals. In his anxiety to achieve departmental goals he may try to subordinate the welfare of the other functions. The lust for aggrandizement on the part of each function is the price paid for the laudable desire of each manager to do a good job. Again functional specialization my lead to extremely narrow, dull and boring jobs in the organization with routine technologies. Functionally good organizations also contribute to a short term perspective on the part of specialists.

Poor decision making: No one except the man at the top sees the entire picture of business. Consequently, decisions are easily misunderstood and poorly executed. Questions like who is right? Who has scored better? Force organizational participants into a tug-of –war.

Sub unit conflicts: As the functional organization balloons to a reasonable size, boundaries are erected between departments. The structure turns out to be a Berlin Wall building. Coordination among departments becomes a tough exercise. No one functional group is totally responsible for performance. As a result tendencies like buck passing, side tracking of issues etc. develop. Overlapping authority and divided responsibility adds to the confusion and chaos prevailing. Accountability suffers. If functionally good organization is employed, important projects may suffer for lack of focused coordinated attention.

Managerial vacuum: Emphasis on functional skills makes a man unfit for top management post requiring a broad perspective on the organization’s activities. A functionally good organization does not prepare people for tomorrow for it has no position in which a functional head can learn and prepare to handle complexities inherent in the chief executive’s position. In course of time a chronic shortage of top management generalists may be felt.

The weaknesses of the functionally good organization are legendary. As the functional organization grows in size it rapidly becomes an organization of misunderstandings, feuds, empires and Berlin Wall building. It soon requires elaborate, expensive clumsy management crutches, coordinator, committees, meetings trouble shooters, special dispatchers which waste everybody’s time without as a rule solving much! The problem of coordination between function becomes more difficult. The administrative distance between top management and functional department grows. Product organization structure helps in relieving this position.

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  • MukulS

    Good article.  I’m looking forward to the article on Product Organization Structure now.

  • Sarma_0158

    Very Good Article….Bhaskar

  • Charuchauhan13

    nice one

  • Enideve

    i like this. i think im in one such hell of an organization now. The irony is we never realise until you read about it. woah! Good article

  • Experience has proven to me that managers and organizations who  focus on clarity in their organizational structure get better results.

  • Valan

    The managers are important for the organization to develop and promote .If all the managers are working together is a great successful to future direction of the organization    

  • Gilbert Okuonzi

    A functionally good organization may not experience bureaucratic dysfunctions such as lack of innovation, slow decision making and rigid structures

  • The strategies to overcome “the administrative distance between top management and functional department” is faced by most companies. Bulding a more horizontal structure is one approach to solving the problem.