One of the most widely used team structures, apart from the hierarchical approach, is the functional organizational structure. In this approach, teams are grouped based on their skills and knowledge. These groups are then vertically structured between each department from the top-down, from the president to individual team members, and so on.

Functional structures organize top management—or a type of single authority—to oversee each department.

While these teams will vary from company to company, the point of the functional structure is to allow for specialized skills and to prepare for organizational growth.

A key feature of the functional structure is the ability to cultivate niche specialties within different departments.