Organizational Structures
Organizational structures define how an organization is organized and how its resources, including people, are managed. Understanding these structures is crucial for project managers as they influence how projects are planned, executed, and controlled. There are several types of organizational structures, each with its own characteristics and implications for project management.
1. Functional Organization
In a functional organization, employees are grouped based on their specific skills and expertise. Each department is managed by a functional manager who oversees all activities related to that function. Projects in a functional organization are typically managed by functional managers, and project managers may have limited authority.
Example: A manufacturing company with departments for engineering, production, and marketing operates as a functional organization. Each department has its own manager, and projects are managed within these departments. For instance, a new product development project would be led by the engineering department manager.
2. Projectized Organization
In a projectized organization, resources are dedicated to specific projects. Project managers have full authority over their projects, including the ability to hire and manage team members. This structure allows for greater flexibility and responsiveness to project needs, but it can also lead to resource conflicts if multiple projects compete for the same resources.
Example: A construction company that takes on various building projects operates as a projectized organization. Each project has its own dedicated team, and the project manager has complete control over the project's scope, schedule, and budget. For example, a residential construction project would have its own team of architects, engineers, and construction workers.
3. Matrix Organization
A matrix organization combines elements of both functional and projectized structures. Employees report to both a functional manager and a project manager. This structure allows for better resource utilization and cross-functional collaboration, but it can also lead to confusion and conflict due to dual reporting lines.
Example: A software development company that works on multiple projects simultaneously operates as a matrix organization. Engineers report to both their functional manager (e.g., the engineering department head) and the project manager for the specific project they are working on. For instance, an engineer working on a mobile app project would report to both the engineering department manager and the mobile app project manager.
4. Composite Organization
A composite organization is a hybrid structure that combines elements of multiple organizational types. This structure is often used in large, complex organizations where different parts of the organization may operate under different structures. For example, a multinational corporation might use a functional structure in its headquarters but a projectized structure in its subsidiaries.
Example: A global consulting firm operates as a composite organization. The firm's headquarters uses a functional structure to manage core operations like finance and human resources, while its regional offices use a projectized structure to manage client projects. For example, the regional office in Europe might use a projectized structure to manage consulting projects for various clients.