Functional Organizational System
Key Facts
- Functional Organizational System: This is the most common and traditional form of organizational structure. In this system, employees are grouped together based on their specific functions or departments, such as sales, marketing, finance, and human resources. Each department has a senior manager who oversees the operations, and there is a clear chain of command. This structure allows employees to specialize in their respective areas and provides a clear path for promotion and growth. However, communication between different departments may be limited, and the system may be slow to adapt to change.
- Divisional Organizational System: This system divides the business into teams or divisions based on projects, products, markets, or geographical locations. Each division has its own set of functional departments, such as sales, accounting, and marketing. This structure allows employees to become intensively familiar with their team’s work and be accountable for their results. It also reduces bureaucracy and hierarchy problems, enabling quick decision-making. However, there may be little communication between divisions, and inter-divisional conflicts may arise.
The functional organizational system is a traditional structure where employees are grouped according to their specific functions or departments, such as sales, marketing, finance, and human resources. Each department has a senior manager who oversees the operations, and there is a clear chain of command. This structure allows employees to specialize in their respective areas and provides a clear path for promotion and growth. However, communication between different departments may be limited, and the system may be slow to adapt to change.
Divisional Organizational System
The divisional organizational system divides the business into teams or divisions based on projects, products, markets, or geographical locations. Each division has its own set of functional departments, such as sales, accounting, and marketing. This structure allows employees to become intensively familiar with their team’s work and be accountable for their results. It also reduces bureaucracy and hierarchy problems, enabling quick decision-making. However, there may be little communication between divisions, and inter-divisional conflicts may arise.
Sources
- Rupert Morrison, “Organizational System: The Key to Organizational Stability,” Orgvue, November 16, 2023, https://www.orgvue.com/resources/articles/an-organisation-is-a-system/.
- Owen McGab Enaohwo, “Design an Efficient Organizational System to Grow Your Business,” SweetProcess, January 23, 2022, https://www.sweetprocess.com/organizational-systems/.
- Abby Lawson, “10 Organizational Systems That Are Essential for Every House,” Just a Girl and Her Blog, December 2, 2022, https://justagirlandherblog.com/essential-organizational-systems/.
FAQs
What are the two main organizational systems?
The two main organizational systems are the functional organizational system and the divisional organizational system.
What is a functional organizational system?
A functional organizational system is a traditional structure where employees are grouped according to their specific functions or departments, such as sales, marketing, finance, and human resources.
What is a divisional organizational system?
A divisional organizational system divides the business into teams or divisions based on projects, products, markets, or geographical locations.
What are the advantages of a functional organizational system?
The advantages of a functional organizational system include specialization of employees, a clear path for promotion and growth, and a clear chain of command.
What are the disadvantages of a functional organizational system?
The disadvantages of a functional organizational system include limited communication between departments, isolation of employees within their departments, and a slow adaptation to change.
What are the advantages of a divisional organizational system?
The advantages of a divisional organizational system include intensive familiarity with team’s work, accountability for results, reduced bureaucracy, and quick decision-making.
What are the disadvantages of a divisional organizational system?
The disadvantages of a divisional organizational system include little communication between divisions, inter-divisional conflicts, and high costs.
Which organizational system is better?
The choice of organizational system depends on the specific needs and circumstances of the business. There is no one-size-fits-all answer.