Organizational Structure: In this module, you will learn about Organization and "Organizational Structure", Organizational structure Types (Organic or Simple, Functional, Multi-divisional, Matrix- Strong, Weak and Balanced, Project-oriented, Virtual, Hybrid and PMO), Project Manager Authority in various structures.
“Organization refers
to a social group designed to achieve certain goals.
Organization involves
developing a structural relationship among individuals working for the desired outcomes”.
What is Organizational
Structure?
Every
organization should have a defined organizational structure in
order to work efficiently and accomplish its business objectives. Some state
that Organization won’t succeed without a defined organization type and
structure which helps support its objectives.
As a project manager, it’s very important to know
which type of organization you’re working with. This understanding will help
you identify the associated stakeholders and other team members in the project
with whom you will be working.
The organizational
structure has a major impact on the execution of the project.
Organizational structure also helps to decide the resources, communication
methods and other aspects of project management.
What is Organizational Structure?
Types of Organizational Structure
The PMBOK® Guide,
Sixth Edition lists the following types of organizational structures:
- Organic or Simple
- Functional (centralized)
- Multi-divisional (may replicate functions for each division with
little centralization)]
- Matrix- Strong, Weak and Balanced
- Project-oriented
- Virtual
- Hybrid
- PMO
1. Organic or Simple Organization
This is one of the least
complex or simplest types of organizational structure. This is a
simple and straightforward project handled by a small group of people working
side-by-side. The project sponsor is responsible for controlling the
overall budget. Businesses made from just a single individual are also included in this
category.
Freelancers are also included
in this type of organization. Examples of this type are solopreneur, OPC (One
Person Company), or a freelancer. The role of the project manager is partly
covered by the owner or the professional, who personally manage the workflows.
2. Functional (Centralized) Organization
This is the most regularly used organizational
structure. In this type of organizational structure, the organization
is grouped into several departments where people with similar skills are kept
together in forms of groups; e.g., sales department, marketing department,
finance department, etc. This will help organizations enhance the efficiencies
of each functional group.
In functional organization, all
authority for example budget allocation, resource allocation, decision-making,
etc. belongs to the functional manager.
Resources in functional
organizations report directly to the functional manager and the functional
manager holds the authority to release human resources based on their subject
matter expertise. At the point when the project ends, the resources are come
back to the functional manager again for routine work.
Project managers commonly don’t
exist in this type of organizational structure; if this
position exists, the role of the project manager will be very limited. In
functional organization, the project manager may have the title of a
coordinator or an expediter.
3. Multi-divisional Organization
Multi-divisional organization involves people from different parts of
the same organization, although they are usually still co-located (working in
the same building). You can have many functional divisions with a
small centralization. Most of the time these divisions are independent of each
other.
In this type of structure, the
functional manager who is the one who probably manages the project
budget. Project
managers do not have authority; however, they have part-time staff.
4. Matrix Organization
The matrix organization structure is a mix of two or more types of organizational
structures, such as the projectized organizational
structure and the functional organizational structure.
This combination can assist organizations improve efficiency, readiness, and
market adaptation.
This kind of structure is most suitable for organizations operating in a
dynamic environment; they frequently can respond quicker to customer demand
decreasing the lead time to produce a new product.
In this type of organizational structure, the authority of a functional
manager moves vertically downwards, and the authority of the project manager moves
sideways. Since these authorities flow downward and sideways, this structure is
known as the matrix organization structure.
A matrix organizational structure can be
of three types:
A. Strong
Matrix
In a strong matrix structure, the project manager has the highest
authority, control over the budget, and a full-time team reporting to them. For
example, the project manager has a state in resources allocation. Strong
matrix organizations are more like a projectized organization.
B. Weak Matrix
In a weak matrix structure, a project manager works like a project
coordinator or project expeditor. A project coordinator has something to do
with the allocation of resources, while a project expeditor serves just a point
of communication between the customer and team members.
In general, in a weak matrix, the functional manager reigns
supreme. A weak matrix is more like as functional structure.
C. Balanced Matrix
In a balanced matrix, both project manager and the functional manager have
equal power. The project manager and the functional manager both involved
in managing budget. Here, the project manager has a medium-low authority
and a part-time team.
Resources working on a project may face communication difficulties because
of the absence of clearness on whom to report.
5. Projectized Organization
A
projectized organization is the perfect organization type for a project manager
in which the project manager has budget control, full-time role and full-time
team available. It means to say that in this type of organization structure,
project manager has full authority to complete the project successfully. The
main disadvantage of projectized organization is once a project is delivered,
project managers become redundant and there will be lack of job security.
6. Virtual Organization
This organizational
structure is also called as virtual society or virtual corporation. In
a virtual organization structure, the organization maintains its core business,
while the rest of the processes are outsourced. Some of the time, this kind of
organization is also called as an empty organization. The budgets
authority will typically be shared by functional managers in the different
branches.
In
this type of organization structure, the project manager has a low-to-moderate
authority, however, they have mixed control over the budget. They may or may
not have a full-time team reporting them.
7. Composite Organization
A composite organization mixes
the functional structure, matrix structure, and projectized structure types of
organizations. A composite is only at least two models which are adapted for a
special project either for simplicity, or to keep power in check. Most modern
businesses are of the composite type. Depending on the structure, responsibility,
authority, and other factors are also mixed.
Here are two examples which helps
to understand composite organizations:
A.
An organization may
deliver one project in a Functional way, while another is being performed in a Balanced
Matrix way. They additionally have one or more project that’s being done as
Projectized.
B. Functional organization needs a small building. An organization has ability
to construct the building itself. This would turn into a Composite organization
because the organization creates a separate project team to complete this task.
8. Project Management Office (PMO)
Project management office (PMO) is also a mixed organizational
structure. A project management office is an organizational structure
that standardizes the project-related governance processes and facilitates
the sharing of resources, methodologies, tools, and techniques.
The responsibilities of a PMO can range from providing project
management support functions to the direct management of one or more
projects.
The PMO integrates data and information from organizational
strategic projects and assesses how more significant level strategic
objectives are being fulfilled. In this type of organizational structure, the
project manager has the highest authority, controls the budget, and has a
team completely at his disposal.
Types of PMOs in organizations are:
A. Supportive
Supportive PMOs provide a consultative role to projects by
supplying templates, best practices, training, access to information, and
lessons learned from other projects. This type of PMO serves as a project
repository. The degree of control provided by the PMO is low.
B.
Controlling
Controlling PMOs provide support and require compliance
through various means. The degree of control provided by the PMO is moderate.
C. Directive
Directive PMOs take control of the projects by directly
managing the projects. Project managers are assigned by and report to the PMO.
The degree of control provided by the PMO is high.
Conclusion
Most hopefully, you
would like this information, and this will provide you more help to understand your organizational structure in the company you are working.
The information
provided above about Organizational structure is crucial for every Project
manager in an organization. Few questions you can get from this chapter in PMP examination.
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views/questions about this script in the comment box below which would be
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