Product vs. Function: What is the best option for an organization?

Companies continuously seek for the best organizational structure that will allow employees to be as effective and efficient as possible. The question many managers must ask themselves is whether to organize their departments by product or by function. Managers must decide between having specialist grouped together by function regardless of the product they work on or having them grouped by specific products and which option will be best suited for their organization (Walker & Lorsch, 1968, p. 1). Walker and Lorsch in their article “Organizational Choice: Product vs. Function” (1968) take an in-depth look at two companies, Plant F and Plant P, in order to examine these two structures in action and determine some of the advantages and downfalls of each.

Plant F and Plant P

When examining both Plant F and Plant P, it was important that they be similar in terms of the products, market and technology in order to view a better comparison of organizational structure. Both plants had very similar management styles and had the same two objectives: one “maximizing current output within existing capabilities” and two “improving the capabilities of the plant” (Walker & Lorsch, 1968, p. 8). The plants main differentiation was in the organizational structure; Plant F had a more functional basis while Plant P had a more product basis.

Plant F, according to Walker and Lorsch (1968), focused more on their specific goals and maintained a focus on short-term deadlines and problems. Having a focus on individual goals, communication among different position or departments was seen as unnecessary and when communication was needed it was approached in a more formal manner. Conflict was also dealt with formally by upper management and often found del...

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...e” there is no easy answer and there is never a perfect solution for organizations. Each must determine their needs and there over all goals to have a better understanding of which organizational structure will better suit their organizational needs. Choosing between function and product is not as easy as flipping a coin or following the model of another organization because every company is different and only they can determine what is the best choice. Management has the tough job of determining what is best for the company and although their first decision may not be correct it is important to continue to redevelop and adapt to the changes.

Works Cited

Walker, A. H., & Lorsch, J. W. (1968). Organizational Choice: Product vs. Function. Harvard

Business Review. Retrieved April 29, 2014, from http://hbr.org/1968/11/organizational-choice-product-vs-function/ar/