Functional Organization: Definition & Structure

Instructor: Lizette Rivera
Organizations have various management styles and ways of structuring departments and leadership roles. In this lesson, we will look at the functional organization management style and how is it structured.

The Functional Organization and The Strict Family

All businesses and organizations have their own style of management, regardless if it is a government agency, a non-profit organization or capital business. There are different organization types and each have their own system or structure for how they manage authority and employee tasks. One type of organization is the functional organization.

Growing up, you may have noticed how different your friends' families were from your own. They each had a different system for handling chores and allowances (if any), and you could always tell who was in charge, if anyone at all. Some families had an open policy where all decisions were made by the entire family over calm 'family meetings'; let's call them the 'Casual Family'. Some families, however, have a 'do as you're told' structure; let's call them the 'Strict Family.'

The strict families had a strong household structure where everyone knew their place and everyone knew who was in charge in every situation. The strict household would have one of the parents (not both) be the firm authority figure of the home, possibly the sole bread-winner, making him/her responsible for the financial decisions, family vacations, allowances, and final punishments.

While the second parent did look toward the first parent for leadership, he/she would be responsible for managing the upkeep of the house and the authority over the children. It was up to this parent to make sure the children were in school, doing homework and behaving. At the first sign of misbehavior, the second parent would be responsible for deciding the initial punishment until the first parent got home. The children looked at each other for leadership. The oldest sibling managed the younger children, the middle child managed the youngest and the youngest got no say at all. In the business world, the strict family would be considered a perfect example of a 'functional organization'.


Functional organizations are characterized by their classical organizational structure where leadership is performed through a top-down or hierarchy approach, and all employees and leaders answer to one sole person of authority. As we saw with the strict family structure, there was one leader who made all the final decisions, yet the second parent did have a leadership role as well, but only to the children. The children in turn only had leadership over each other and that was based on age. This is considered a hierarchical chain of command; in other words, leadership starts at the top and works its way down.

Where else have we seen this type of structure?

Military Colors
Military Colors

The military is a perfect example of how a large functional organization works. There is one main commander but each platoon has its own captain, and the soldiers in that platoon have to obey him/her; however, that captain is getting orders from another leader who is getting orders from someone of even higher authority.

You may recognize examples of this leadership in your own past job experiences. In a business atmosphere, a functional organization has a CEO, an executive director, and then several departments (communication, IT, customer service), each with its own directors and staff. The staff is responsible for their tasks, and there may even be a group leader who is responsible for making sure the team delivers the assignment to their department's director; who received their orders from the executive director; who received their orders from the CEO. What we are talking about here is the structure of a functional organization.

To unlock this lesson you must be a Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use

Become a member and start learning now.
Become a Member  Back
What teachers are saying about
Try it now

Earning College Credit

Did you know… We have over 220 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Used by over 30 million students worldwide
Create an account