Org Design, Org structure

A Brief Explanation of Business Functions

By: Functionly

Every organization launches with the goal of providing a product, service, or some collection of those to customers or clients. The overarching function of a business is to fulfill its reason for existing. What these items are and how they are prioritized can vary significantly from one business to another.

What Are Business Functions?

Business functions are the things a business does to provide the product or service that it offers. At the highest level is the primary business function. This principal function reflects why the company exists. 

Examples of a primary business function include:

  • Providing tutoring services to college students
  • Manufacturing precision parts for airplanes
  • Building custom homes

Some businesses have one primary business function, while others may have more than one. However, it’s possible to articulate these as a single function. For example, a business that provides computer security and help desk management might have a primary function of providing comprehensive IT services.

As you drill down into your own business, you will probably uncover that its primary function is supported by other mission-critical functions. 

The primary function of building customized homes may be split into:

  • Design
  • Construction
  • Quality control
  • User consultation

To figure out your organization’s primary function, start with a simple question: “What do we do?” The answer is your primary function. 

What are the Five Core Business Functions?

Core business functions are five key areas that you must execute in addition to your primary function. They are human resources, finance, marketing, sales, and strategy. These are universal functions, which means that they are necessary for the success of any business.

Human Resources

HR is the function of building and maintaining a successful team of employees who have the skills and experience to achieve the company’s primary and core functions.

Finance

Finance is the function of handling the company’s money. This core function exists to ensure that the business spends and invests money properly so that it can continue to operate successfully.

Marketing

Every business needs its target audience to:

  • Know that it exists
  • Understand what it does
  • Regard it as being trustworthy
  • View it as a provider of products or services they need

The core function of marketing creates brand awareness and engages potential customers.

Sales

Ultimately, all businesses have products or services to sell. The sales function helps prospective customers see the benefits and features of products and services and then make a purchase.

Strategy

The strategy function involves all of the necessary planning required for growth and success. This function is what businesses use to make choices on product development and workforce planning. Strategy helps ensure that a business has a plan for the future and can remain competitive.

In addition to these core functions, other functions are also important to your business. Building upkeep and maintenance, IT, and customer service are just a few examples. You may determine that additional proprietary functions are necessary for your business operations.

Functions and Responsibilities

Once a business has clearly defined its functions, leaders must determine which teams or individuals are responsible for them. This is a complex process that influences organizational design, team structures, and eventually, the assignment of roles and responsibilities.

Consider the core function of human resources. The role of chief human resources officer (CHRO) may be created with HR as its assigned responsibility.

Next, that role may break down into smaller functions, such as:

  • Recruiting and hiring
  • Payroll and benefits
  • Training and development

These functions may be assigned as responsibilities for individuals or team leaders within HR. The functions and responsibilities may be divided as follows:

CHRO 

The CHRO is responsible for the core function of human resources. They are also responsible for the sub-functions of recruiting, training, and payroll.

Payroll and Benefits Administrator

This role is responsible for the HR function of paying employees and ensuring that appropriate benefits are available to them. Although training and recruiting are also HR functions, this role is not responsible for these.

What Is the Relationship Between Functions and Processes?

Business processes are a series of related activities that contribute to a specific function. Some processes create a direct functional outcome. One example is the process of demonstrating a product to a customer, helping them overcome doubts, and convincing them to make a purchase.

Other processes provide input that supports a function. The HR process of providing sales training gives the salesperson the skills they need to execute the processes they use to sell products.

How Do Business Functions Work Together?

All of the functions within a business impact one another. If a primary or core function isn’t being executed, then others will also fail. Because of this, it’s important to understand where lines of communication must exist between business areas and where shared responsibilities exist. 

Additionally, as part of organizational planning, businesses can use org chart software to document the relationships among functional areas. The software can increase understanding of how communication and reporting need to flow from one area to another.

What Is the Most Important Function of a Business?

The primary function of your business is the most important because it allows you to deliver your product or service to your customers. It is your company’s reason for existing.

However, that doesn’t mean this will always be the function that has the highest priority. Different functions within an organization will require more or less focus, depending on your goals, challenges that have emerged, changes in the market, or high-demand projects.

A Solution for Documenting Business Functions

An accountability chart is a document that business leaders can create in addition to a traditional org chart. It illustrates the key business functions necessary for the business to operate successfully. It also details the employee roles supporting those functions along with areas of responsibility.

Functionly is the tool that many businesses use to create org and accountability charts. These documents ensure that all responsibilities get properly recorded so that mission-critical functions get completed. Start for free with Functionly.

 

Trial Functionly for free

Take your first step towards a more effective organization