Line Organisation vs. Functional Organisation

·     Authority- In Line organisation authority flows from top to bottom while in functional organisation the authority is divided into specific departments.


·     Responsibility / Work - In Line organisation each individual is responsible for everyone under him/her and the work is generic. Everyone handles all functions. In a Functional organisation, the work is divided into small functions like Production, Finance etc. and the concerned manager is responsible for the work of the division.


·     Decision Making - In Line organisation, top level management takes the decision in any matter while in functional organisation the department managers are mostly responsible for making decisions


·     Specialisation - Specialisation is low in Line organisation and highly specialised skill-set specific to the department is need in functional organisation.


·     Size of the company - Generally small and medium businesses can opt for line structure while large business with more number of employees prefer functional structure


·     Coordination - In a line structure, it is easy to coordinate as only one superior is involved whereas functional structure requires one to connect across teams with different people. Hence coordination is generally slightly lower.


·     Cost Structure - The line organisation requires fewer individuals and hence is economical whereas functional structure needs different people who are specialist making it costly.


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