8 Types of Widely Used Organizational Structures In Project Management

Download ebook

Overview of Organizational Structures in Project Management

We all know that organizations need to achieve strategic goals to stay competitive in their respective markets. They undertake numerous projects day in and day out to translate these business goals into actionable deliverables. To do it perfectly they employ a planned organizational structure. Let’s look at the eight types of most commonly used organizational structures in project management. 

Are you aim to get into the role of project manager? Are you capable of handling a variety of projects? Checkout Henry Harvin’s PMP certification training course

Importance of Projects

People undertake projects to ensure the smooth functioning of their organizations. Projects are the potential enough to either make or break organizations. So, projects need careful evaluation while designing and executing projects. The most important part of designing a project layout is defining the hierarchy.

Hierarchy is segregating project objectives and tasks into different levels of importance. These structures associate people with completing these tasks at various levels and play a major role in delivering the project output. You can read “Project Management And Agile Essentials” to gain an elementary understanding of organizational structures in project management.

Hierarchies in Organizational structures

As defining hierarchies is critical to projects, project management organizational structures are crucial to effectively design project layouts. Let’s look at different organizational structures of project management you could employ in your upcoming projects. 

Leaders should have profound knowledge of which structure they need to follow. A minor mistake can cost millions of dollars to organizations. Effective leadership helps internal stakeholders involved in the project deliver better quality outcomes quickly and with little to no pressure.

What are Organizational Structures in Project Management?

Simply put, organizational structure in project management is dividing tasks and employees into groups according to their level of importance in the project and enabling co-ordinating among these groups. 

Benefits of Organizational Structures in Project Management

Project management organizational structures are important because of the following reasons.

Defining The Boss 

Organizational structures of project management begin with centralization. Centralization help to set up a structured line of command. It means every member of an organization knows exactly whom to report to. 

For instance, junior employees know whom to approach if they encounter a problem. Likewise, senior executives know their juniors’ capabilities and can efficiently plan work allocation. 

Organizations prefer this approach when they need to take decisions quickly. If we look at a centralized project management structure, decision-making lies in the hands of the head of the project. Centralized project management practices have a reputation for achieving economies of scale.

Likewise, in decentralized project management practices, power lies in the hands of low-level officers to some extent. This way, they take important decisions quickly with minimum or no prior approval.

Grouping Employees

Managers use organizational structures in two ways to run projects that produce quality deliverables quickly. One way is to sort employees into defined groups based on their specialized capabilities. This ensures quality 

Secondly, managers divide employees into smaller groups. This way it is more convenient to delegate workload across numerous small teams and complete tasks quickly. 

For example, a project manager got an emergency research task to complete. The deadline is tough. In such a scenario, the project manager divides the research task into multiple smaller tasks and assigns them to a smaller group of employees. 

After the compilation of work, the manager then compiles all the completed tasks into a single deliverable and submits the task to the top management. This way organizational structures in project management complete tasks quickly and efficiently. 

Defining The Responsibilities

Organizational structures in project management play a major role in communicating rules, procedures, and responsibilities across project teams. 

In this way, project managers are well aware of each group’s role. Also, project managers will have better control over tasks and complete projects efficiently. 

8 Types of Organizational Structures In Project Management

1. Functional Structure

The first among different organizational structures in project management is functional structure. This structure is commonly used in corporations. In this structure, power lies in the hands of the company manager. Company manager groups employees based on their specializations such as:

• Research and Development Team
• Operations Team
• Quality Assurance Team
• HR Team  
• Sales Team 
• Customer Support Team, etc.

These groups of specialized professionals are entitled to deliver their work. They report to their respective managers. These reporting managers of different groups in turn report to the company manager. This organizational structure ensures overall project efficiency. 

Disadvantages

The disadvantage of a functional structure is that as the teams are specialized, they often find cross-functional or Inter-team communication very difficult.

Though teams work in individual groups their potential amplifies if they work to achieve a common organizational goal. It may be difficult to motivate these specialized groups of employees to work toward common goals.

2. Line Structure

Second, on the list of organizational structures in project management is line structure. Line structure is ideal for smaller firms. This structure defines the company’s hierarchical structure in a simplified way. This eliminates confusion about who is the boss. 

Line structure has two advantages:

• It enables the free flow of communication between employees and managers
• It helps to complete tasks quickly and efficiently.

In line structure, the company manager oversees the functioning of different departments such as research, marketing, sales, etc. Defining hierarchy and roles within the organizations are much easier with line structure as the organization is small.

3. Line-And-Staff Structure

Third, on the list of organizational structures in project management is a line and staff structure. It is a mix of functional and line structures. In this structure:

• Employees are categorized into specialized groups.
• These specialized groups of employees have their hierarchy of reporting managers.
• These specialized groups of employees report to their respective managers.
• The only difference is that all the managers managing different specialized teams are not equal as they hold ranks at different levels.
• These managers in term report to their managers

For example, the production manager takes care of technical, research, and development teams. He reports to the company manager who takes care of technical and financial expert groups.

4. Matrix Structure

Fourth on the list of top organizational structures in project management is the matrix structure. Unlike others, the matrix structure has two managers who delegate work across teams in an organization. They are:

Project Managers

Project managers are accountable for a project’s planning, execution, and completion. This requires a helping hand from specialized experts across departments. 

Functional Managers

Functional managers focus on technical and operational procedures within the departments they oversee. They strive hard to make sure that their employees work hard to achieve organizational goals which in turn makes the project manager’s life easier.

Based on the size of organizations, there can be many project managers or functional managers with their teams, tasks, and responsibilities. Despite handling different teams and responsibilities project and functional managers work together and share resources to achieve the company’s goals.

For instance, a company started a couple of projects simultaneously. It also employed separate project managers for these projects. If the company follows a matrix organizational structure, then they coordinate with functional managers of different departments and share material, human resources, and others to complete their respective projects.

Leadership

Leadership shifts based on the strength of the organizational structure a firm follows. For instance, In organizations that follow strong matrix organizational structures, power lies in the hands of the project manager.

In a weak matrix organizational structure, power lies in the hands of functional managers. Likewise, in a balanced matrix organizational structure, power is equally distributed among the project and functional managers. 

5. Divisional Structure

Fifth on the list of top organizational structures in project management is the divisional structure. This organizational structure is used to handle teams that are spread across the world. In this structure, a functional hierarchy is set up across these teams. 

Again, these specialized groups can be unique or the same. For example, a few companies build customer support teams in countries like India, the Philippines, etc. Similarly,  they can set up research and development teams in countries like Germany, the US, etc. 

Disadvantage

The disadvantage of a divisional structure is that companies often have similar teams across different locations. In such a scenario, there are high chances that the teams may compete against each other instead of promoting collaboration and strategic thinking.

Divisional structure brings about compartmentalization. This often leads to incompatibilities within project teams in an organization.

6. Organic Structure

Sixth on the list of organizational structures in project management is organic structure. This structure is followed in decentralized and undefined organizational systems. Organizations that cater to volatile markets follow an organic organizational structure. 

This structure helps organizations adapt quickly to changing market needs. The staff works together very hard to achieve common organizational goals No one can exercise authority over the staff.

In this type of organizational structure, project managers set up planned structures for the staff to deliver outcomes without exercising authority over the specialized teams in the project. 

Disadvantages

If the organizational system is rigid, then it is difficult to achieve an organic organizational structure. Also, decision-making in an organic organizational structure is slow compared to other organizational structures of project management.

7. Virtual Structure

Seventh on the list of organizational structures in project management is the virtual structure. As the name suggests, this structure develops and implements a clear and defined structural system in a remote setup.

Organizations can hire employees and work efficiently from multiple locations across the world with the help of this organizational structure. Firms that deliver virtual products use this structure because of the benefits and flexibility it provides.

This structure is ideal for companies that do not necessarily require the physical presence of their staff. Eg, social media marketing companies.

8. Project Structure

Last on the list of organizational structures in project management is the project structure. The company follows this kind of organizational structure for implementing specific projects. 

Just like any other organizational structure, a project structure has groups of specialized teams entitled to perform specific tasks. In this structure, the project manager acts as the leader and looks after each of these groups and the deliverables they are accountable. 

For instance, if a company wants to develop a technology product, it would first decide on the teams that can deliver the aimed product such as research, hardware, and development teams. It will then allocate a project manager to lead and deliver the product.

In this way, organizations employ different organizational structures of project management depending on the type and importance of the projects they undertake.

These organizational structures of project management help in segregating resources of organizations across projects, optimizing production processes, and translating organizational goals into anticipated outcomes with ease.  

The project manager’s role is key to developing successful projects across organizations. Because of this reason, the project management profession is gaining popularity today. If you are interested to become one, you can check out Henry Harvin’s PMP certification training course.

This course comes with a 100% money-back guarantee. It covers best practices that are pointed out in the PMBOK guide. This course comes with complimentary business analytics at zero additional cost.

General FAQs

Download ebook