What is the functional structure of a company?

Ester Maicas

2021-09-23

In Lexington, after 40 years as flex spaces operators, we know that each company is unique. Every day we encounter new business, all different from one another, with their own needs and internal organization. You know what they say… There is indeed more than one way to skin a cat! Today we wanted to go over one of the corporate structures you could find in a company. This one is the most traditional, logic and basic one: the functional structure. But, what is the functional structure of a company?

What is the functional structure of a company?

The functional structure of a company was born out of the necessity of having true professionals on every field and hierarchical level. Under this organizational structure, employees are gathered together into groups based on their speciality. This means each team responds to a supervisor 100% committed to one department in particular such as graphic design, marketing, web development, production or sales. Companies with this structure are able to make the most of their specialised resources, always putting efficiency first. Because of that, the functional structure is a perfect fit for both companies with a smaller, low-cost mass-produced product portfolio, and also multinational companies.

A functional structure allows a company to make the best of their specialised resources to output low-cost mass-produced products or services.

Interesting, isn’t it? 😉 If you want to know more about the functional structure of a business, stay here because you’ll find a pros and cons list of this corporate structure and some examples to picture it better. Once you’ve read everything, you’ll see the light! If this functional structure is the best match for your company, you will know.

Advantages of the functional structure of a company

The functional structure of a company has established itself as an efficient organizational model that offers various advantages, but it also presents challenges that must be addressed to ensure its long-term success. Among the numerous advantages of this hierarchical work structure, we would like to highlight the following:

1. Maximum specialization: This functional organization allows for the maximum specialization of departments, as each position focuses exclusively on its tasks, surrounded by colleagues in the same profession, thereby increasing the efficiency and productivity of each worker.
2. Facilitated technical supervision: This specialization greatly facilitates the technical supervision of each area. In fact, we provide an article below on functional charts, a very useful tool in companies with a functional structure, precisely for conducting these reviews at a glance.
3. Direct and efficient communication: It promotes communication within each work team without intermediaries, directly. This opportunity to receive feedback quickly also contributes to the productivity and efficiency of the team.
4. Delegation of responsibilities: It also reduces pressure on a single person, as within a group of professionals in the sector, it is much easier to delegate and share responsibilities.
5. Development of expertise: The functional structure encourages the development of expertise in each area, as employees have the opportunity to refine their specific skills and knowledge. This leads to a high level of competence and excellence in the assigned functions.

Disadvantages of the functional structure of a company

On the other hand, not everything is always rosy, as the simplicity of this structure can affect different levels. We wanted to highlight these disadvantages of the functional structure of a company:

1. Authority conflicts: Authority conflicts can arise within the company when the principle of unity of command is lost.
2. Confusion: Due to multiple subordination, confusion and multiplicity of objectives can occur, leading to conflicts in the general functions of the company.
3. Competition and rivalry: This functional structure tends to foster competition and rivalry among specialists, as everyone is a professional in their work and, in many cases, may try to impose their point of view or approach within the team.

How to manage competition and rivalry through the functional structure?

As inevitable as conflicts in the workplace may seem, these strategies combine to create a work environment where competition and rivalry can be transformed into collaboration and synergy, maximizing the effectiveness and cohesion of the team in a functional structure:

1. Establish common goals
2. Foster collaboration
3. Encourage open communication
4. Recognition and collective rewards
5. Clear roles and responsibilities
6. Professional development programs
7. Positive leadership
8. Fair performance evaluation

And if you’re a leader and want to learn how to motivate your employees for even better work relationships, don’t miss this Ted Talk:

Functional structure examples

Companies like Apple, Walt Disney’s theme parks or the overseas CNN and Wal-Mart, of whom we are sure you have heard, chose this functional structure.

As we’ve said, a clear example of this would be the company Apple. Since their early stages, this company has gone for a start-up-like internal structure, something that allowed them to address topics such as marketing or design with a cross-cutting approach for all their products and services. This way they can avoid departments fighting against one another for resources or attention.

According to this Applesfera article: “there is no single person in charge of Mac, IPhone or IPad. (…) The whole team works for the whole company.”

The functional structure and the workplace

Even though there may be some issues related to this model, some companies and moments in time are screaming out for this easy and traditional organizational structure.

If your company has a professional team whose members understand one another, with the same goals and a strong feeling of belonging, half the job is done! You’ll also need a strong leader to guide these experts, right? If you can check both charts, congrats! This structure may be like tailor-made for your business.

Oh, and of course, you shall not worry if not! Now that you know what a functional structure of a company is, if you are not 100% on board with the idea of implementing it on your company, here you have a basic guide on organizational structures for a company. You choose!

The functional structure is ideal for well-united teams and strong capable leaders, both with a clear feeling of belonging and common goals.

Besides, with the new concepts of hybrid office and flex spaces as Lexington’s, you’ll find the perfect work environment to face any inconvenience that may come your way. If this corporate structure lacks flexibility, take it from somewhere else! Get in touch now to know more about our flex spaces in Madrid and Barcelona. 

“The achievements of an organization are the results of the combined effort of each individual.”

Vince Lombardi