Merits and Demerits of Functional Organization

Functional Organizaion merits and demerits(Image: Functional Organization merits & Demerits)

Merits of functional organization:

The following are the merits of functional organization.

1. Benefit of Specialization: This system provides ample opportunities for minute specialization to its maximum extent.

2. Expertise Knowledge: This system can be entrusted with higher efficiency as knowledge of the experts in the field are involved extensively used. Workers are assisted by experts’ instructions.

3. Division of Work: The whole work process is segregated into functions, and the specialists in the field take care of it. Hence, there is no work burden to executives. The executives perform only a few functions. Mental and manual labors are also separated and so both jobs can be performed with higher degree of efficiency in an organization.

4. Scope for Training: This system also provides opportunity for appropriate training to inspectors and supervisors. This aspect automatically brings flexibility into the organization.

5. Scope for Expansion: Expansion of the enterprise without any dislocation or loss of efficiency is possible.

6. Mass Production: Since specialization is the back bone of the system, the large scale production can be undertaken with minimum costs.

Demerits of Functional Organization:

The functional system is not an unmixed blessing. This system, of course, works very well under a dynamic leadership. Without such leadership qualities it is impossible to attain the same degree of success, due to the following disadvantages:

1. Absence of Unity of Command: The workers have to obey the instructions of many foremen. No individual can work best under two masters. Then how can one serve under many masters. Hence, there is no unity of command and the resultants are conflicts and chaos.

2. Lack of Co-ordination: Without unity of command, co-ordination can not be achieved to the peak level. This system has the effect of destroying co-ordination in the organization, particularly at lower levels..

3. Difficulty in Fixing Responsibility: Since there is no unity of command, fixing of responsibility is a practical impossibility. Thus, this system upsets the very basis of organization which aims at fixing of responsibility.

4. Chances for Indiscipline: Maintaining of discipline is a difficult task because each worker is subject to work under eight bosses. Indiscipline at all levels has the effect of lowering the employees morale.

5. High Clerical Costs: This system also increases the amount of clerical work which ultimately results in the increase in the amount of overhead expenses. Hence, it is uneconomical.

6. Absence of Initiative: Workers, being always spoon fed with technical knowledge, shall lose initiative and become a group of mere automation. The supervisors shall also lose their drive and initiative. Hence, even the routine work shall become complicated.

Leave a Reply

Recent Posts


Related pages

privity of relationshipdisadvantages of being listed on the stock exchangerole of retailer in distribution channelteeming and lading definitionincoterms meanscaveat emptor exampleratio analysis interpretation financial statementsformal and informal organization in managementbill of exchange specimendrawer chequenon banking financial intermediaries in indiamechanization of agriculture advantages and disadvantagesbills receivable meaningredeemable debenturesrole of international monetary fund in developing countrieswhat does gatt stand foradvantages of non statistical samplingdefinition gattbuyer beware principlelabor rate varianceleasing disadvantagesrbi nationalizationlimitation of marginal costingdifference between forwards and futurestypes of busnesswhen did rbi establishedintroduction of sebirelationship between a banker and customerservicescape restaurantdepository institutions in indiacash profit ratiodrawback of e commerceguidelines issued by sebiprocedure of capital budgetingmarginal costing statementparties to a promissory notesundry creditors definition accountingadvantages and disadvantages of retained profitfdis in indiabuyer behaviourlogisticsmeaningunethical advertising definitionautomatic typewriterimportance of underwritingcentrally planned economy advantages and disadvantagesvoid ab initio meaningpresent discounted value calculatorbenefits of sole traderexample of a conglomerate mergerdeductive and inductive meaningspeculation in stock markethow to prepare a cash budgetadvantages and disadvantages of financial intermediariesrbi as bankers bankreceivables turnover ratio definitionhow to calculate profitability index on a financial calculatorwhat are personal liabilitiestraining for salespeoplemodes of land transportationthe cooperative bank loanswhat are vertical mergersinvestigative auditorformula for calculating payback periodunderwriter meaningautocratic leadershipwhat is iou in accountingexample of prime costvalid contract definitiondefinition of speculatorsprivity of contract exceptionspayback meaningexamples of probability sampling methodsbudgeting in managerial accountingcauses of consumerism