Every company has some organizational structures according to its needs. Some follow an autocratic leadership style for its benefits, while others prefer affiliate leaders or an organic organization style. A few organizations also opt for a matrix system to have a dual check on the processes. The project managers and functional managers work together and manage the teams. Besides functional and matrix systems, you may also choose from line organization, divisional organization, organic organizational structure, etc.
Here are all the types of project organization structures in a company.
What is a Project Management Organizational Structure?
Project management organizational structures refer to the leadership or organizational structures applied in a company. Each organizational structure gives authority and responsibilities to the employees and managers in a specific way. Businesses choose a project management organizational structure depending on their requirements. You may find four kinds of organizational structures or 8 types.
We have explained all eight types of organizational structures in an organization.
Types of Project Organization Structure
The functional structure is the most common type of organizational structure. It includes different groups of people in the company based on their expertise and specialization. The functional structure reflects a centralized organizational approach. Such systems have a manager that oversees all the functions. The managers usually have authority over the tasks of the lower hierarchy. Common functional departments in such organizations may include human resources, sales, quality assurance, etc.
A divisional project organization structure is similar to a functional structure. However, it applies to more than one unit of the company. Each division is a separate functional unit that performs its task under its manager’s supervision. They might report to the same top-level hierarchy. One such example is setting up plants for a company in different countries. When multinational companies set up their plants in various countries, many departments multiply. For example, production units may exist in New York, Egypt, Spain, Nepal, etc., at the same time. While the head office could be in New York, the workers report to the head of the respective plant per hierarchy.
The line structure of the organization is well suited for companies with fewer employees. It is a suitable structure for businesses that emphasize crystal clear communication. It simplifies the hierarchy in the form of a line for easy delegation of tasks. Straightforward delegation of tasks enables quick performance and results. It also allows the employees to get in touch with their boss quickly for any confusion instead of waiting for approval from the top.
This kind of structure is often successful with very few problems. Let’s say a department has a manager as the head. An assistant manager works under the manager. The assistant manager manages the executives who oversee the performance of new officers. The officers can ask the assistant manager about any problem directly instead of waiting for the manager to give him time. It also takes less time for modifications due to simplified communication.
Line and Staff Organizational Structure
Unlike line organization, line and staff organizational structures are preferred in larger companies. It is a blend of the functional and line hierarchy systems. When both of them combine, the managers of the line system manage the employees under them. Each specialized functional group has its own manager. The managers of each group (HR, production, quality assurance, etc.) then report to their managers.
For example, the marketing department in a pharmaceutical organization has further sub-divisions like gynae, ortho, hepatic, etc. Each sub-team has a manager known as the segment head. All these segment heads eventually report to the marketing manager of their company.
The project structure is one of the most commonly used types of project organization structure. It is applied when the company wants to allow a project to a specific set of individuals. The management picks these employees from different departments and creates a team for the project. The project manager manages each team member to achieve the goal in time. The team members may or may not have the same role in the functional system. Project teams usually constitute people from various domains like marketing, software development, quality assurance, data management, etc. The project structure is less complicated compared to other complex systems like the matrix system.
An organic structure is a decentralized organization system where the employees do not strictly follow a manager’s orders. The employees in such a system work together to achieve goals without pressure from the higher hierarchy. It is similar to the laissez-faire leadership system that allows innovation and flexibility. Project managers in such situations do not possess an authoritative power. Instead, they only provide a structure to work on.
Considering that technology has become an inevitable part of business, many companies are moving towards the virtual structure. The virtual organizational structure may be applied to the organization or some specific departments. It has a proper management system with defined roles. However, it does not restrict the employees from being physically present at the physical location.
One example is the work-from-home model during Covid-19. Many offices have not moved back to working from the office. Instead, they are making working from home more convenient. Another example includes selling your product to an international party without stepping out of your office. Many times you just log into Google Meet and market your product online. Virtual organizational structure has become a popular organization system today.
The matrix structure is a combination of functional and project organization systems. In such a type of project organization structure, the employees report to two managers at once. It is beneficial in a way that the project manager and supervision or functional manager are aware of the progress without communication barriers. It has cons as it can also sometimes be time-taking and confusing to make changes according to the feedback of both managers. An organization may have a weak, strong, or balanced matrix organization system depending on the authority of each manager.
Weak Matrix System
A weak matrix system does not give much authority to the project manager. Instead, the functional manager acts as the fundamental decision-maker in the company. The project manager does not report to the functional manager. The team members wait for the functional manager’s approval.
Strong Matrix System
A strong matrix organizational system is more inclined towards a project structure. It gives more authority to the project manager. He delegates tasks and provides feedback about the progress. The cross-functional staff works with dedication according to the instructions of the project manager.
Balanced Matrix System
As the name suggests, the balanced matrix system gives a balanced authority to both leaders. The functional manager takes the managerial role, and the project manager ensures the smooth functioning of processes.
The Bottom Line
Every organization follows a specific project organization structure per need. You may opt for a simple project structure or a functional structure. Or think of the benefits and choose a matrix system that combines the authority of both managers. Other types of project organization structure include divisional structure, line structure, line and staff structure, organic structure, and virtual organization structure. The virtual system is gaining popularity as it enables managing the functions without the physical presence of the employees.
Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.