Organizational Structure

Organizational Structure

The organizational culture of an entity will have a direct influence on the success of a project. Organizations have their own styles and cultures that influence how project work is performed within the organization. One of the keys to determining the type of organization you work in is measuring how much authority senior management is willing to delegate to project managers.

Organizational culture includes

  • Purpose

  • Values

  • Organization policies and procedures

  • Type of business

  • Maturity of business

Types of Organizational Culture:

There are different types of organizational culture available. They are,

a) Weak matrix Organizational Structur

b) Strong matrix Organizational Structure

c) Balanced matrix Organizational Structure

  1. Functional Organizational Structure

  2. Projectized Organizational Structure

  3. Matrix Organizational Structure

  4. Composite Organizational Structure

1. Functional Organizational Structure

Functional Organization is one of the common types of organization. This is the oldest style of organization and is called as the traditional approach to organizing businesses. Functional organizations are centered on specialties and grouped by their function, thats the reason its called as "Functional Organization". Persons in functional organizations specialize in an area of expertise—finance or personnel administration, for instance—and then become the expert/ specialist at their specialty

For an example, organization might have a human resources department, finance department, marketing department, IT department, procurement department, etc. The work in these departments is specialized and requires persons who have the skill sets and experiences in these specialized functions to perform the specific work for that particular department.

Functional organizations do complete the projects, but these projects are specific to the function of the department the project falls into. For example, the IT Department could implement new software for the Finance Department. The role of the IT Department is separate from the Finance Department, but the coordination between the two functional departments would be evident. Communication between departments flows through functional managers down to the project team.

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Project managers in functional organizations have the following attributes:

  • Little power / No power

  • Little autonomy

  • Report directly to a functional manager

  • The project manager may be known as a Project Coordinator or Project Expeditor

  • The project managers role might be part-time

  • The project manager may have part time administrative staff to expedite the project management activities.

2. Projectized Organizational Structure:

Projectized organizations are nearly the opposite of functional organizational structure. The focus of this type of organization is the project itself. The idea behind a projectized organization is to develop more loyalty to the project, not to a functional manager. All the project team members are co-located to complete the project.

These organizational types group employees by activities on a particular project. The project manager in a projectized structure always have ultimate authority over the project. Project managers in a projectized structure enjoy a high level of autonomy over their projects, but also have a higher level of responsibility regarding the projects success.

Project managers in a projectized structure have the following attributes:

  • High to complete authority over the project team

  • Full-time role on the project with the team

  • Has a full-time administrative staff to help expedite the project

Project managers are responsible for making decisions regarding the project and acquiring and assigning resources. They have the authority to choose and assign resources from other areas in the organization or to hire them from outside if needed.

In summary, we can identify the projectized organization structure in many ways:

  • Project managers have the ultimate authority over the project

  • The focus of the organization is the project.

  • The organizations resources are focused on projects and project work

  • Team members are co-located in most of the scenarios.

  • Loyalties are formed to the project, not to a functional manager

  • Project teams are dissolved at the conclusion of the project

  • Persons working in the project are called as "No home" people

3. Matrix Organizational Structure:

Matrix organizations came in the industry to reduce the differences between, and take advantage of, the strengths and weaknesses of functional and projectized organizations structures.

Persons in the matrix organization structure have to report to two bosses. They have to report to the functional manager and to the project manager. Communications becomes complex in these type of organizational structure. Functional managers pick up the administrative portion of the duties and assign employees to projects. They also monitor the work of their employees on the various projects. Project managers are responsible for executing the project and giving out work assignments based on the project activities. Project managers and functional managers share the responsibility of performance reviews for the employee based on the organizational policy.

3. a. Weak MatrixOrganizational Structure:

Weak matrix organizational structures map closely to a functional structure. Functional managers have more power in this structure whereas Project Managers will have limited authority. The project team may come from different departments, but the project manager reports directly to a specific functional manager or program manager.

In weak matrix organizations, the project manager has the following attributes:

  • Limited / Less authority

  • Management of a part-time project team

  • Project managers role is part-time

  • May be known as a project coordinator or project leader

  • May have part-time administrative staff to help expedite the project

3. b. Strong MatrixOrganizational Structure:

Strong matrix organizational structures have many of the characteristics of the projectized organization, and can have full-time project managers with considerable authority and full-time project administrative staff. Project managers will have more power in the strong matrix organization structure. People in this organizational structure will report to the project manager and to the functional manager.

  • A reasonable to high level of power

  • Full-time role as a project manager

  • Has a full-time administrative staff to help expedite the project.

3. c. Balanced MatrixOrganizational Structure:

In between the weak matrix and the strong matrix is an organizational structure called the balanced matrix organizational structure. The power is balanced between project managers and functional managers. Each manager has responsibility for their parts of the project or organization, and employees get assigned to projects based on the needs of the project. A balanced matrix still has time accountability issues for all the project team members since their functional managers will want reports on their time within the project.

Attributes of a project manager in a balanced matrix are

  • Reasonable authority

  • Management of a part-time project team

  • Full-time role as a project manager

  • May have part-time administrative staff to help expedite the project

4. Composite Organizational Structure:

Many organizations involve the combination of all these structures at various levels in the organization. There composite of functional, projectized, and matrix organizational structures. Its rare that an organization would be purely functional or purely projectized. For example,projectized structures can coexist within functional organizations. Even a fundamentally functional organization may create a special project team tohandle one of their important project for their organization. Such a team may have many of the characteristics of a project team in a Projectized organization. The team may include full-time staff from different functional departments, may develop its ownset of operating procedures, and may operate outside the standard, formalized reporting structure.


Stakeholders are persons or organizations who are actively involved in the project or whose interests may be positively or negatively affected by the performance or completion of the project. The project management team must identify both internal and external stakeholders in order to determine the project requirements and expectations of all parties involved.

Example of stakeholders in the projects is given below.

  • Customers / Users

  • Performing organization

  • Sponsor

  • Project Managers

  • Project Team

  • Functional Managers & Operations Management

  • Portfolio Managers / Program Managers

  • Project Management Office (PMO)

  • Change Control Board (CCB)

  • Sellers / Business Partners

Key Project Stakeholders:

Project manager: The project manager is the person assigned to direct and manage the project to make it successful. He is the one who assumes responsibility for the success of the project. The project manager should be identified as early as possible in the project. They guide the team through the project phases to completion.

Customer: The customer is the person or group that will use the project deliverable. In some instances, a project may have many different customers. Consider a book publisher published the college books. The bookstores distribute the books. Colleges pay for the book. The students read the book. There is also some consideration given to the user versus the customer. The user uses the product; the customer pays for it. A stakeholder can be both a user and a customer.

Performing organization: You will have a project team for your project. For whom the team members will work for? The performing organization is the entity that employs the people responsible for completing the project work. In some situations, the performing organization can be a vendor whose project team is completing the project work for another entity, the customer

Project team: The project team is the collection of individuals that will, hopefully, work together to ensure the success of the project. The project manager works with the project team to guide, schedule, and oversee the project work. The project team completes the project work.

Project sponsor: The sponsor authorizes the project. This person or group ensures that the project manager has the necessary resources to get the work done. The project sponsor is usually an executive in the organization who has the power and authority to make decisions and settle disputes or conflicts regarding the project. The project sponsor should be named in the project charter and identified as the final authority and decision maker for project issues.

Vendor: Vendor is the person / organization who will supply the product / services / results which are needed for your project from outside the project team

About the Author

Ravikumar is a Certified Project Management Professional (PMP) with 17+ years of rich experience and performed various projects/programs in IT industry.

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