Org chart can be classified into two types: vertical and horizontal, based on the style of the layout. A vertical org chart looks like a pyramid. At the top is the CEO or company president. A single segment consists of a series of middle management and the manager who is responsible for their department. In contrast, a horizontal org chart has no middle management, hence normally all employees need to report to only one manager. Such type is also called the flat org chat. This article is going to explain the most significant differences between vertical org chart and horizontal org chart in terms of decision-making, collaboration, and communication.
Figure 1. Vertical Org Chart Example
The functional org chart is a popular organizational diagram usually implemented by small business companies. In this structure, an organization can be grouped into separated departments by areas of specialty or function. Those departments are vertical and disconnected from each other.
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The functional org chart is one of several common organizational structure diagrams many companies have adopted and a clear depiction of how people are organized. Wherein employees are segmented based on their skills and specialties. Usually, people are grouped into departments and made to report to and follow their department manager. Each functional manager is responsible for supervision and direction with his or her department subordinates. This article aims for an explanation of functional org chart by five characteristics.
It Fits Small Companies Well
As for small companies, their functional org charts get low hierarchy layers, therefore, it’s concise and clear which can make the company operate efficiently. Functional org chart performs well when the hierarchy layer is less than four. While as the company expands to a very large one, functional org chart would be much more complicated and redundant even cause bureaucracy which would make it hard to management and organization to respond to outer market quickly.
The functional org chart is a traditional type of org chart many companies adopt. Under this organizational structure, workers are divided into several departments based on expertise and function each person can perform.
Workers are required to get involved in duties within their departments and they have to report to their functional managers only. The functional org chart does not have a project manager role, which differentiates from matrix org chart where employees need to obey orders from both functional managers and project managers if employees are working on some projects. The figures below are some common functional org chart templates.
Functional Org Chart Baic Concept
The functional org chart is a very common organizational structure that many companies follow, which is supposed to divide people into several departments according to peoples’ specialties and function they perform in the company. Persons with rich experience and profession would be appointed as department manager authorized to be totally responsible for department’s affair such as training, the task allocating and promotion.
Definition of Functional Org Chart
The functional org chart divides people into different groups based on expertise and specialty. This structure gets involved in a great amount of process standardization within a company, with the real decision-making authority centered at the top of the organization. Employees in one department are responsible only for relevant tasks. For instance, an HR department that focuses only on recruitment & training, a sales department that only engages in sales activities, and an engineering department that only designs products and produces facilities.
Hierarchical organizational structure puts the authority and responsibility on the top side of the company and makes them flow down from the top to the lowest level gradually. This model works like a pyramid and centralizes all power and duties on people who stand on the peak of organizational structure. To assess this type of management style, it has advantages as well as disadvantages.
In the functional structure, functions are separated into different groups, resulting in some defects. Here are the major disadvantages you must consider:
When referring to the functional organizational structure, employees are grouped based on their roles and functions, resulting in functional units such as marketing, HR, finance, etc. Generally, the heads of these specialized units will report to the top management of the company. According to the company’s size, the functional units might be further divided into smaller units. The sub-division type of organizational structure seems to be the most common organizational structures that many companies have applied.
What Are the Advantages of Functional Organizational Structure?
To make a stronger framework, it is important to understand the advantages of the functional organizational structure. A major advantage is that it offers a high level of specialization. This allows employees to develop their individual skills rapidly within the functional units in order to be specialists. The continuing development of employees’ skills will increase their working productivity and efficiency, thus improve sales. What’s more, employees will be strongly motivated to develop their careers in line with the hierarchy pathway in their organizational structure.