functional departmentalizationfunctional decompositionfunctional depreciation

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A method for separating the activities performed within an organization into groups

differentiated by the function they perform. For example, a businessemploying

functional departmentalization would tend to group together workers that perform a

particular function, such as accounting, that differs substantially from the tasks

performed by other staff members.

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Functional departmentalization - Grouping activities by functions performed. Activities can be grouped according to function (work being done) to pursue economies of scale by placing employees with shared skills and knowledge into departments for example human resources, IT, accounting, manufacturing, logistics, and engineering. Functional departmentalization can be used in all types of organizations

Functional Departmentation

Advantages of Functional Departmentatlon: The traditional functional approach to departmentation has a number of potential advantages.

1. Economies of scale can be realized. When people with similar, skills are grouped, more efficient equipment can be purchased, and discounts for large purchases can be used.

2. Monitoring of the environment is more effective. Each functional group is more closely attuned to developments in its own field and therefore can adapt more readily.

3. Performance standards are better maintained. People with similar training and interests may develop a shared concern for performance in their jobs.

4. People have greater opportunity for specialized training and in-depth skill development.

5. Technical specialists are relatively free of administrative work.

6. Decision-making and lines of communication are simple and clearly understood.

Disadvantages of Functional Departmentation: The functional form has disadvantages as well as advantages.

1. People may care more about their own function than about the company as whole, and their attention to functional tasks may make them lose focus on overall product quality and customer satisfaction.

2. Managers develop functional expertise but do not acquire knowledge of the other areas of the business; they become specialists, but do not generalists. Between function, conflicts and communication and coordination fall off.

3. In this fragmented environment, it becomes difficult to develop and bring new products to market, and difficult to respond quickly to customer demands and other changes.

4. Particularly when companies are growing and business environments changing, the need arises to integrate work areas more effectively so that the organization can be more flexible and responsive. Other forms of departmentalization can be more flexible and responsive than the functional structure.

5. Responsibility for profits tends to be at the top.