The functional organizational structure is characterized by grouping employees based on their functional expertise, such as marketing, finance, or operations. In this structure, project teams are formed by pulling resources from different functional departments. Each team member reports to their respective functional manager and works on multiple projects simultaneously.
The functional structure offers several benefits. Firstly, it allows for efficient utilization of functional expertise, as team members can focus on their areas of specialization. This specialization enhances the quality of work and promotes in-depth knowledge and skill development within functional areas. Secondly, the functional structure provides clear career paths within functional departments, giving employees a sense of direction and growth opportunities. Lastly, the functional structure often results in cost-effective resource allocation across projects, as resources can be shared among different projects.
However, there are some drawbacks to this structure. Due to its focus on functional areas, it may lack project focus and accountability. Team members may prioritize their functional objectives over project objectives, leading to a silo mentality. Slow decision-making can occur due to multiple layers of hierarchy, as project-related decisions often require approvals from functional managers. Furthermore, there may be limited communication and coordination between functional departments, as team members primarily interact within their own functions.