A functional org chart groups people by what they do: engineering under one leader, marketing under another, finance under a third. It is the default shape for a company under a few hundred people and it is the default for a good reason, which is that it puts every specialism under somebody who understands it and gives each person exactly one manager. This page is what that chart looks like, the point at which it starts to strain, and the arithmetic behind both. On the worked example four function leaders at a span of seven reach 28 people directly and 228 within three layers, which is why 120 people fit comfortably.
What the functional chart actually is
One box at the top, one box per function under it, and each function's people beneath their own leader. Nothing crosses. It is the easiest chart to draw, the easiest to keep right, and the easiest for a new joiner to read, because every question about who somebody answers to has exactly one answer. Most companies that describe their structure as something more sophisticated are running this with a few dotted lines added.
Where it strains, and the number that shows it
It strains when work needs three functions and no single manager owns the outcome. The symptom is a standing weekly meeting to coordinate something the chart cannot express. At that point either a dotted line or a small cross-functional team is the honest fix, and the dotted line reporting sheet prices the first one: 43 lines on a 140-person company is about $2,428 a month of check-ins.
The headcount at which a function needs its own layer
A function leader at a span of seven can hold seven people directly; past that they need team leads and the function grows a layer. Four leaders reach 28 people in two layers and 228 in three, so the second layer inside functions appears somewhere around 30 people and the third around 200. Knowing that in advance turns a promotion into a plan rather than a reaction.
Questions people ask about functional org chart
Is functional the same as hierarchical?
Functional is a hierarchical chart grouped by discipline. Hierarchical describes the lines; functional describes what the groups are made of.
When should we move away from it?
When a division could carry its own full set of functions and the coordination meetings have become the real management structure. Before that, a divisional chart just multiplies managers.
Where do shared services sit?
Under their own function, with dotted lines to the departments they serve. That keeps one review-writing manager per person and still shows the work.