Functional organizational structure is best for smaller companies or those that focus on a single product or service.

Not designed to change quickly, functional structure works well in a stable environment where your business strategies are less inclined to need changes or updating. Functional structures are the most common type of structural design and have evolved from the concept of high specialization, high control framework of manufacturing organization turned towards high efficient, reports Practical Management website. Structure Functional organizations contain specialized units that report to a single authority, usually called top management. Refereed to as functional units or areas, these specialized units contain personnel with various but related skills grouped by similarities. Each functional unit handles one aspect of the product or service provided: information technology, marketing, development, research, etc. Top management is responsible for coordinating the efforts of each unit and meshing them together into a cohesive whole. (Ref. 2) Performance The goal of functional structure is to put all the human and informational resources necessary for a single activity in one place. This maximizes performance by facilitating sharing of valuable expertise by superiors with their subordinates, reports Practical Management. Sub-organization leaders are experts both in their field and in the resources available, which allows each unit to reach its greatest potential and prevents over-use of limited resources. Specialized training and involved

management mean that standout employees are quickly recognized and placed where they will be most effective and managers are always on the lookout for helpful skills and ideas. Disadvantages The same qualities that lead to increased production and specialization lead to complicated communication and decisionmaking processes. Since the functional units are not accountable to each other and share decision-making power, the process is more bureaucratic and tends to take longer. While the flow of communication within a department is expedient, communication between departments and synchronization of work and project completion is more difficult to manage. Finally, too much focus leads employees to neglect the larger view of the company and its objectives