Types of Organization Structure

types of organization structure - Types of Organization Structure

Here’s the obvious thing about Organization Structure – every organization has one!

So no matter the size, the industry, the OPM, each and every single one of the organization that you can think of has a certain structure. From project management perspective, below are the type of structures that you should be aware of,

1. Organic Organization Structure

This is a typical organization structure that you would see in a small company. Project Management isn’t necessarily a full time function here. Someone from the project team can take the responsibility of project management. For instance, an Engineering Manager can take up the additional responsibility of ‘managing’ the project. But some of the key project management responsibilities like budget decisions are beyond the acting Project Manager’s control.

2. Functional Organization Structure

This is where the teams work in separate silos. Each ‘silo’ rolls up to (or reports to) a Functional Manager. The Project Manager in such an organization has no authority and works as more of an expediter to get things done on time. Most of Project Manager’s time is spent in handling administrative tasks. The Functional Manager has total authority in this organization structure.

3. Multidivisional Organization Structure

Although not very different from a Functional organization structure as far as the Project Manager’s role is concerned, Multidivisional organization structure does offer the possibility of a Project Manager performing some amount of coordination work as well. This may include hosting meetings, communicating project status etc. The Project Manager is more of a Project Coordinator in this structure. Decisions pertaining to budget or resource allocation are still a function of the Functional Manager. One of the key aspects of this organization structure is the fact that each division might have a completely different way of managing projects with its own governance framework and management roles. This is almost as if the divisions are operating as different companies.

4. Matrix Organization Structure

Matrix organizations are very popular especially because many organizations fall into this category. This is where the Functional and the Project Manager share authority. Matrix organizations are further divided into three subcategories,

a. Weak Matrix

In Weak Matrix organization structure, the Functional Manager has higher authority as compared to the Project Manager. Functional Managers are responsible for resource related decisions as well as approving all other major project decisions. With some limited say in decision making, the Project Manager is still an Expediter or a Coordinator in this setting.

b. Balanced Matrix

In Balanced Matrix organization structure, the project team members practically report to two bosses! Project Managers and Functional Managers share authority. This is achieved by Project Managers getting the people management decisions approved by Functional Managers while Functional Managers too getting the project related decisions approved by the Project Manager.

c. Strong Matrix

While you might have guessed by now that the Strong Matrix organization structure provides higher authority to the Project Manager, it should be noted that the project team members still report to two bosses. The delivery of the project becomes most important and thus the team members’ performance assessment is not solely based on their functional expertise but on their project performance too. Needless to say, the Project Manager has a say in this assessment.

From PMP exam perspective, consider yourself a PM in a Matrix organization structure unless stated otherwise.

5. Project Oriented Organization Structure

This is a setting where teams are organized around projects. After the completion of the project, the team resources have ‘no home’ and can be released not just from the project but from the organization itself. Obviously, the Project Manager has the most power in this organization structure and is responsible for project’s budget, schedule, quality, resources and other areas. Of all the organization structures, the Project Manager has the most authority in the Project Oriented organization structure.

6. Virtual Organization Structure

Virtual teams are on the rise, thanks to the consistently improving communication technologies. People from different geographies, different departments within the organization and even external consultants can be a part of the project. Project Managers often facilitate team communications and can even have authority over project budget, resource allocation and other areas.

7. Hybrid Organization Structure

The aim of a Hybrid organization structure can be considered twofold,

  1. Bringing in the best practices from different organization structures into one
  2. Ensuring organizations can have adaptive life cycles as well as predictive life cycles based on the project requirements (Know more about Types of Project Management Life Cycle)

While predictive life cycle tends to rely more on management for a clear understanding of project scope in the initial phase of the project itself, adaptive life cycle focuses on the self-management within each team. Since different teams use a different combination of practices, the functioning of the Project Manager varies while dealing with different teams.

8. Project Management Office (PMO)

While PMO is a separate topic in all its might, as an organization structure, this is where the PMO has full authority over every project within an organization. The way a PMO functions is heavily dependent on the way the organization decides to set it up.

Check more articles on Project Management Basics

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