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Functional area refers to the method of dividing an organization into different segments where the respective segments that are thus divided will serve as fully functional units that perform stated functions. That is to say that such a segmented unit serves a particular purpose in the organization, which can be separated from the function of other segments. An example of such an area within an organization is the human resource department, which is a division within the organization separated from other functional areas by the specific duties that are peculiar to only the human resource department.
Such a clear delineation of duties according to the related functional area assists a company in the organization of the business and in the determination of what division is responsible for specific duties. One of the characteristics of this type of area is the fact that it is usually treated as a separate arm of the business, with a manager and subordinates under the manager. For instance, if the functional area under consideration is the accounting department it will have a manager who will oversee the general activities in that accounting department as well as a deputy manager, chief accountant and other junior accountants. The manager will be responsible for the unit and will ensure that its operation is aligned with the general goals of the organization.
Another application of the functional area in the business is as a means to make the different sections more manageable and also accountable in terms of performance. For instance, the marketing department is a functional area within an organization that has its own specific duties in relation to the organization. By dividing the marketing section into a functional area, the company can monitor the performance of the section and decide if it is meeting any stated targets or other objectives. This would not be so easy if the whole business was one unit without any divisions of functions into departments.
The human resource department in the organization is aware of its responsibilities, which is the procurement of the right human capital to fill empty slots in the company. This department must also anticipate the human capital requirement of the company and take proactive steps to provide for such a need. By dividing this department into its own unit its responsibilities have been properly defined, and the human resource department will not perform the duties of the accounting department or the marketing department, for instance.