What is meant by ‘Functional Structure’ of an organisation? State any five advantages of this form of organisational structure.

Meaning: Functional structure refers to the division of whole organisation according to major functions to be performed by it.

Advantages of Functional Structure:

(i) Benefits of Specialisation: The whole company is divided into many departments on the basis of major activities to be performed. Each department is headed by an expert manager. This results in more and better work being accomplished in much lesser time. Hence, the benefits of specialisation become available.

(ii) Coordination is Established: All the persons working within a department are specialists of their respective jobs. It makes the coordination easier at department level.

(iii) Managerial Efficiency is Increased: It helps in increasing managerial efficiency because of performing the same work once and again. Further, this results in increased profit.

(iv) Minimal Duplication of Efforts: In this type of organisation unnecessary duplication of efforts is eliminated. For example, the function of finance is only carried out by the finance department. There is no need to establish two or more departments. It makes it possible to utilise the human and other resources effectively.

(v) Training is Facilitated: It facilities the training of personnel as the focus is only on a limited range of skills. For example, the employees of finance department are given training of financial issues.