Functional Organizational Structure

Organizational structure is of key importance since it outlines how activities are coordinated, supervised, and directed towards the achievement of organizational goals. When developing organizational structure, organizations typically have two approaches, which are either a functional or matrix organization structure. A functional organization is the more traditional organizational structure where the organization is divided into departments based off specialized functional areas, such as information technology, engineering, marketing, and legal. This functional-based design of the organization leads to functional departmentalization. Departmentalization is the process in which an organization is structurally divided by segregating jobs into these departments since jobs within these departments have shared characteristics and objectives.

The fundamental advantage of functional organizations is operational efficiency. Employees within their departments become experts in that area by developing refined skill sets specific to their department’s objectives. By being in an environment where others are experts as well creates efficient processes and work breakdown structures. These employees perform their work with confidence and with little mistakes. Since department objectives are well-defined, employees have the potential to be highly motivated in their work in order to advance their careers. This environment leads to increased efficiency and productivity through a sense of personal achievement, coworker camaraderie, and technical expertise. Along with high levels of operation efficiency, another advantage of functional organizations is specialization. Each department becomes a hub of specialized skills, where employees are trained to become subject matter experts. Since employees are focused on a specific skill set, they are able to develop specialized knowledge on the subject. Through the gathering of this specialized knowledge, employees are capable of large quantities of innovation. This innovation leads to the creation of new products, services, process, and relationships, which drive departmental goals and success.

Although departments thrive in a functional organization, a key disadvantage is the lack of high level organizational alignment. This stems from the fact that organizational goals may be passed up in favor of departmental goals. Employees are often preoccupied with issues within their department, and therefore fail to see the big picture. This can lead to poor horizontal organizational integration because departments may have a lack of teamwork due to poor communication across the department boundaries. Departments tend to integrate vertically amongst themselves and prioritize their problems first, instead of aligning with high level organizational objectives. This poses a challenge to executive management because departments become difficult to manage and control. Management of departments becomes particularly difficult when decision making responsibility is allocated to specific departments, causing coordination activities across the organization to become increasingly difficult.

In order for systems engineering organizations to be successful, they need to be innovative. Therefore, a functional organization that contains a systems engineering department is on the right track for success. In this situation, the systems engineering department will have a clear vision and the functional structure will allow for a balance between creativity, department initiative, and a focus on system engineering specific tasks. Another situation in which a functional structure is preferred for a systems engineering focused organization, is one that is medium sized or has few products. Since one of the major disadvantages of a functional organization is lack of large-scale organization cohesiveness, that would not be an issue if the organization was medium sized. Employees in a medium sized organization would take initiative to interact with one another to accomplish tasks, generate and discuss ideas, promote innovation, and respond to the dynamic nature of the systems engineering environment.