Difference Between Functional and Divisional Structure
The management structure is an essential component of any business or organization. It is a crucial element that establishes the division of labor, the flow of information, and the management of teams and personnel. There isn't a management system that works for everyone.
Different structures will be needed by different organizations to set up the management. The functional and divisional structures of an organization will be covered in this article. Gaining a thorough understanding of both would facilitate better decision-making and the execution of the management structure that best suits the given circumstances.
Functional Structure
As the term suggests, an organization's workforce is segmented according to departments and areas of specialization within a functional management structure. Every department has a functional head who oversees all of the staff members working in that area.
Each department inside the organization is responsible for a key function; some examples of these departments include marketing, customer support, sales, human resources, and information technology. The department head, in turn, reports to the executives with more power after receiving reports from the staff.
Advantages of Functional Structure
Better Employee Specialization: Since each person is assigned to a department where they can put their unique skill sets to use, it gives employees the chance to concentrate on that one area, which enables them to acquire more experience, a deeper understanding of the subject, and eventually acquire specialization of that field to become an expert.
Better Efficiency: Within this organizational framework, each employee is designated to a singular department, ensuring that their roles and day-to-day duties are distinctly delineated. This steadfast consistency within the departmental boundaries fosters a sense of transparency, minimizes the potential for overlapping tasks, and contributes to the enhancement of the organization's overall productivity and operational effectiveness.
Accountability: Establishing precise roles and responsibilities cultivates an environment where employees gain a deeper understanding of their obligations, fostering a robust sense of ownership and accountability towards their tasks and the department they serve.
Improved Communication: Since each employee is assigned to a department, departmental communications become more effective since all employees are in the same department and have equal access to information as well as knowledge on the subject.
Resource efficiency: contrary to needing to micromanage resources throughout a number of divisions, a functional organization allows each department to be assigned clearly defined duties and areas of competence. This also makes it possible to allocate resources just once for a certain field.
Faster Decision-making: Since there is no compelling reason to review specific subject matter when all the thoughts on a certain issue are concentrated in one area, individuals with experience may swiftly make better and more informed conclusions.
Disadvantages of Functional Structure
Isolation: Within a department, teams and staff members are often engaged in long-term roles, focusing solely on their designated duties. Such an arrangement limits their chances to engage in cross-departmental collaborations within the organization
Lack of Common Goals: When employees concentrate exclusively on their departmental tasks each day, it tends to orient them towards achieving personal and department-specific objectives, rather than pursuing the overarching goals of the organization.
Resource Conflicts: The likelihood of a dispute emerging increases when many departments require a shared resource due to a deficiency in cooperation and communication. It is a greater challenge for these staff members to build relationships with other departments when they find themselves isolated.
Reduced Adaptability: The work environment is inflexible because employees are only allowed to follow tight pre-defined rules and duties. This means that when the work surroundings shift or employees need to collaborate with other department members on a project, they are frequently less capable of adapting.
Limited Creativity: An employee who is confined to repetitive tasks within the boundaries of their department may find themselves in a monotonous cycle. This lack of variety not only hampers their professional growth but also stifles the spark of innovation and the flourish of creativity that comes from diverse experiences. The continuous engagement in identical work, day in and day out, can lead to a work environment that is not conducive to fresh ideas or novel approaches, ultimately impeding the employee's ability to adapt and innovate.
Divisional Structure
Divisional Structure is the type of Management Structure where the employees are divided into "divisions". These divisions are semi self-governing segments of units. In other words, each of these divisions are operated as a distinct entity from the rest of the division. Each of the divisions have their own management that acts within said division. Today, division structure is considered to be second most common form of organisational structure in the Unites States (source: Zainbooks.com). The divisions are formed based on products, markets, or regions.
Advantages of Divisional Structure
Better Accountability: Since, the employees in various divisions all have their own management supervising them, it enables tracking down the actions of individuals which lead to an outcome, whether negative of positive, to hold them accountable and to assign tasks according to performance.
Competitive Advantage: As divisions focus on a specific product, region or market, their management can make the required decisions within the division without having to worry about external variables. This enables quick adaptation and better appeal to customers, which in turn gives the company a competitive advantage.
Improved Team Work: As everyone in the division strives for the division's success, a divisional structure promotes communication among the members. This approach enhances motivation and boosts the effectiveness of communication because everyone has an understanding of the objectives and requirements of their peers.
Improved Responsiveness: As mentioned earlier, management in each division does not have to worry about the variables from the rest of the company when making decisions within their own scope, and a division is solely focused on one specific product or market. This makes responding to the external changes much faster.
Organisational Culture: A strong organizational culture has the potential to be fostered by the divisional structure, which provides each division's staff members a sense of belonging. Increased employee loyalty as well as fulfilment might stem from this.
Disadvantages of Divisional Structure
Expensive to Operate: The organisation needs to have enough personnel and resources to establish dedicated divisions. Each of these divisions will also require resources to run and a management structure of their own to supervise the staff.
Resource Competition: Competition for limited resources between divisions in the same corporation can result in conflict and inefficient processes. This rivalry can undermine teamwork and result in a wasteful utilization of corporate resources.
Resource Redundancy: Roles, responsibilities, and resources may be duplicated among divisions as a result of the divisional organization. For example, every division would need supervisors, HR personnel, and IT assistance. Because each division has its own set of identical assets, this redundancy can result in inefficiencies as well as increased operating expenses.
Silo Mentality: Within an organization, autonomous divisions may result in the creation of silos. This divide can result in a lack of coordination and communication amongst divisions, which can cause contradictory approaches to the company's ultimate goal.
Unhealthy Competition: When divisions see each other as rivals rather than as members of the same organization, their autonomy can breed competition. This rivalry has the potential to turn into unhealthy competitiveness, which could worsen office politics and management groups' attempts to have the upper hand in the workplace.
Differences Table
Conclusion
A corporation is divided into divisions according to particular functions, such marketing, finance, and HR, under a functional structure. Small to medium-sized businesses that prioritize specialized work within departments should use it. In contrast, the divisional structure is best suited for large, diverse firms as it organizes operations according to goods, services, or markets. Due to the duplication of resources, it might be more expensive but offers better flexibility and responsiveness to changes in the market.
For Videos Join Our Youtube Channel: Join Now
Home
Python
Java
JavaScript
HTML
SQL
PHP
C#
C++
DS
Aptitude
Reasoning
Selenium
DBMS
C
Andriod
Interview Q