Definition of Functional Structure

Functional structure is one of the most used structures in an organization. In a functional structure, people with certain special skills and skill types are grouped together in the form of departments and functional divisions.


The hierarchy of the organization is based on the roles, CEO, sales department, finance department, production department, and then the people working in those departments are part of that organizational structure.


Example of Functional structure:

An insurance company has many departments including sales, finance, customer care, and administration. All of the departments have specialized tasks and duties to perform and then the heads of each department report to the CEO/President.

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