Every organization has a structure which defines the hierarchy, the distribution of roles or the responsibilities within the organization. The organizational structure of a company affects which department is powerful, which department takes more decisions or which department has less power.
Therefore, organizational structure is one of the main factors which affects the projects in an organization. Depending on the market conditions, competition, industry, and history of the company, different organizational structures can be adopted by companies at different times. So we can not name a particular type of an organizational structure as the best practice. They all have advantages or disadvantages according to the situation.
What is an organizational structure? How many organizational structure types are there? What is the relation between organizational structure and project management?
In this article, we are going to review all organizational structure types and also the difference between the types of organizational structures. We are going to give some examples of the different roles within the organizational structure types to illustrate them better for you.
3 Common Types of Organizational Structure in Project Management
There are three types of organizations in terms of project management in a company. These are Functional Organization, Projectized Organization, and Matrix Organization. We will be going over each type of organizational structures one by one.
Organizational Structure Type #1: Functional Organization
Functional Organization is the most common type of organizational structures in the industry. It is adopted by many multinational and big companies, in many industries.
In Functional Organization, people are grouped by areas of specialization. For instance, marketing professionals are grouped under marketing department, human resources professionals are grouped under human resources department, technical people are grouped under IT department etc. Depending on their size, these groups are managed by managers, directors or vice presidents.
In Functional Organization, the team members do both project work and departmental or operational work at the same time. For instance, if a software engineer from the IT department is also assigned to a project, he has to complete his assignments in this project. On the other hand, if there are defects or problems that need to be resolved, this should be under the responsibility of the IT department, therefore he has to deal with these issues as well.
This is an example of the blueprint or organization chart of a Functional Organization. Staff with the gray background are engaged in project activities and staff with the white background are dedicated to departmental activities. As you can see, staff from different departments work in a project in Functional Organization. And they return to their departmental work when their assignment in the project finishes. Project coordination is done over the functional managers of each department.
Organizational Structure Type #2: Projectized Organization
In Projectized Organization, the entire company is organized by projects. So the resources of the project are fully dedicated to the project activities. Project Managers have control on the projects. Resources only report to project manager and the project manager has the ultimate control of resources.
As there are not any departments in this type of organizational structure, so the resources are not associated with any department. They report to their project managers only. And when the project is over, the project resources are either assigned to a new project or need to find a new job.
This is an example of the blueprint or organizational structure of a Projectized Organization. Staff with the gray background are engaged to project activities. As you see, all the staff belongs to project activities, because there is no other alternative. Project coordination is done over each project.
Organizational Structure Type #3: Matrix Organization
Matrix Organization attempts to get strengths of Projectized and Functional Organizations. Projectized Organizations ensure the dedication of project resources to the project. Therefore, projects have a higher probability of success. On the other hand, Functional Organizations ensure sustainability of the organization since the resources turn back to their departments once the project is over. Therefore, Matrix Organization aims to get the benefits from these two previous organizational structures.
In Matrix organizations, the team members report to their project manager and also to their functional managers. Because their actual managers are their functional manager. If they are assigned to a project, they will be reporting to their project manager as well.
Let’s consider a software engineer. If he is not working on a project, he will be reporting to his functional manager, for instance, software development line manager. But once software development line manager assigns this software engineer to a project, this engineer will start to report to the project manager as well.
Matrix Organization is divided into 3 sub-categories: Strong, Balanced and Weak Matrix.
This figure shows how the power of functional manager and project manager switches in each type of Matrix Organizations. Strong Matrix Organization is closer to the Projectized Organization. Therefore, power resides more on the project manager. Weak Matrix Organization is closer to the Functional Organization. Therefore, power resides more on the functional managers. Balanced Matrix Organization is in the middle, so the power of functional and project managers are equal.
The different roles of Project Manager when the Organizational Structure is Matrix Organization
In weak Matrix Organizations, project managers generally have two roles. First one is Project Expediter. Project expediters act as assistant staff and communications coordinator. They cannot take any decision. They do paperwork of the project, deal with the administrative issues, such as bureaucratic communication between departments etc. They do not have any influence on the project resources.
The second type of role is Project Coordinator. Project Coordinator acts like Project Expediter, but has some power and can take some decisions. So they have slightly higher power and influence over the project compared to project expediters.
This is the blueprint example of a weak Matrix Organization. As you see, the staff with the gray background are assigned to projects and reporting mainly to the functional managers. Project coordination is done by the assigned staff, probably with the help of a project expediter or coordinator.
This is the blueprint example of a balanced Matrix Organization. As you see, staff with the gray background are assigned to projects. Project resources, including the project manager, report to their functional manager. But project coordination is done with the control of project manager. Functional managers also have power and influence on their resources.
And this is the blueprint example for a strong Matrix Organization. As you see the resources with the gray background belong to a project team. Project Manager coordinates and manages these resources and project activities. The difference from the Balanced matrix is that the project managers report to the managers or project managers. For instance to the head of project management office. On the other hand, in the balanced Matrix Organization, the project manager was reporting to a functional manager instead.
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