Organisational Structure for Increasing Efficiency: Functional Structure

Functional structure is an organisational structure that assists in increasing managerial and operational efficiency. It is a hierarchical structure where employees are grouped based on their functional areas of expertise, such as marketing, finance, production, and human resources.

Advantages of Functional Structure:

1. Specialization: Functional structure allows employees to specialize in their respective areas of expertise, which leads to increased efficiency and effectiveness in performing their tasks.

2. Clear lines of authority: The hierarchical nature of functional structure provides clear lines of authority and communication, which reduces confusion and conflicts in decision-making.

3. Economies of scale: Functional structure enables organizations to achieve economies of scale by consolidating similar functions and resources, resulting in cost savings.

4. Improved coordination and control: Functional structure allows for improved coordination and control of activities within each functional area, leading to better overall organizational performance.

Disadvantages of Functional Structure:

1. Limited communication and cooperation between functional areas: Functional structure can lead to limited communication and cooperation between functional areas, which may hinder innovation and creativity.

2. Slow decision-making: Functional structure can result in slow decision-making due to the need for coordination and approval from multiple functional areas.

3. Narrow focus: Functional structure may lead to a narrow focus on functional objectives at the expense of overall organizational goals.

Conclusion:

Functional structure is an effective organisational structure that assists in increasing managerial and operational efficiency. However, it is important to balance the benefits of functional structure with the potential drawbacks to ensure overall organizational success.

The organisational structure which helps in increasing the managerial & operational efficiency is referred as “Functional structure”.