The term functional organizational is defined as an organization in which the line authority, staff authority and a third type of authority known as functional authority exist together. Let us understand the concept of functional authority. It is limited form of the line authority given to the functional experts over certain specializes activities under the normal supervision of managers belonging to other departments. Managers who are given functional authority have the right to issue directions on matters over which they do not have direct line authority otherwise. For example, the personnel manager is a staff expert and has advisory staff authority in a line and staff organization. But in a functional organizational, he is given a limited line authority to ensure that personnel policies are observed in all departments throughout the organization. This is a case of functional authority given to the personnel manager. The personnel authority of the personnel manager is similar to line authority of line manager but is restricted to some specialized activities only. Just like the personnel manager, other staff managers like accountants, legal advisors, quality control managers and maintenance experts, are given limited line authority over a specific part of activities in other line or staff departments.
Features of functional organizational:
1. It is a more complex type of organization than line organization and staff organization.
2. These types of authority relationships exist line authority relationships, staff authority relationships, and functional authority relationships.
3. More importance to given to staff specialists. It addition to their staff authority, they are entrusted with the authority to decide and do things in a limited way.
4. The principal of unity of the command does not apply to this form of organization, managers and other get instruction from more than one superior.
2. Large scale production
3. Improved efficiency
5. Reduction of workload
6. Better control
1. Multiplicity of authority
3. Shifting of authority
4. Lack of coordination
6. Delay in the decision making
Suitability: this type of organization may suit the big organizations but it is rarely favoured in the business units because of multiplicity of authority. Only staff officers who want more authority advocate for it.