A function based business is the most common type of organizational structure that is operating in the world today. This type of business will departmentalize the organization so that common job functions are grouped together in a common-sense chain of command. You’ll see this when you look at how the management areas are grouped together. Starting from the CEO, each department reports on up based on the functions that it provides the company. Sales, Human Resources, Marketing… each has its own branch in the chain of command.
This helps the functions of a business to be efficient, but it also means that every department is forced to be multi-faceted in its approach to various market divisions and structures. Are there other business structures that could be more beneficial than this common structure? Here are the key points to consider when looking at the pros and cons of function based businesses.
What Are the Pros of Function Based Businesses?
1. It allows employees to focus on their specialization.
Vocational skill development is based on the inherent talents and skills that individual workers possess. When someone goes to college or a university, they receive a degree in a specific area. You don’t get a bachelor’s degree in “Everything.” You get them in Political Science, Criminal Justice, Psychology, and so forth. The function based business allows employees to use these specialized talents and skills.
2. It is incredibly scalable.
If a function based business needs new functions, then it just adds another branch to its chain of command. Then all it needs to do is recruit people who have the talents and skills to be able to complete those functions in a competitive way. There are no other changes that need to take place in the organization to provide for these new functions, which lessens the amount of change that needs to take place.
3. It encourages the development of diverse opinions.
What makes us all different is also what can make an organization incredibly strong. The human foot, for example, has a different role to play than the human eye does in the overall functioning of the body. Both are very different from each other, but both also contribute to the well-being of an individual. The same is true for a Human Resources department, the Sales department, and every other functional group.
4. It provides clarity throughout the chain of command.
When a function based business is operating smoothly, then everyone knows who their primary supervisor happens to be. This clarity allows workers to develop reporting relationships that help to keep communication lines open and transparent.
What Are the Cons of Function Based Businesses?
1. It creates competition within the chain of command.
Although functions are treated equally within this type of structure, the workers involved in each function don’t necessarily see things in this way. The end result is a high degree of competition within the ranks because everyone wants a “fair” piece of the budget so they can complete their functions adequately. Competition can encourage innovation, but if it is done as a method of survival, it can also create barriers between each functional department within the organization.
2. It is not always efficient.
If an organization has a variety of different needs that must be fulfilled, then the chain of command becomes somewhat inefficient because different branches of it don’t understand what role each function plays. Imagine a phone book company having a landscaping division and a contract processing division try to have a meeting together to develop new ideas. The two different experiences don’t relate to each other even though both have a role to play in the success of a business.
3. No one has a clear picture of what the goals of an organization happen to be.
Unless it is important to the function of a worker, each department is only responsible for one component of a company’s overall mission and long-term plan. Information does not flow readily from the top down and the top functional department will always have influence over its direct reports. This creates uncertainty that must be faced at some level every day.
4. It exposes flaws within the organization.
Inevitably function based businesses will face workplace conflict between its different functions. This will expose the flaws of the organization’s design and ineffective areas within the chain of command. Although this also provides the company a chance to fix these issues, it is almost a guarantee that the workers involved will lose their creativity and desire to provide their functions, changing the overall attitude of that part of the chain of command.
The pros and cons of function based businesses show that the system is incredibly efficient when it is operating properly. Although no system of operations is 100% perfect, the reason why this structure is so common today is because it is so flexible. When the negatives are addressed proactively, a business can grow as slow or fast as it prefers while letting workers focus on their specialties, giving everyone the chance to be content.
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