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Types of Organizational Structures in Project Management

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Project management structure is critical to any project team's performance; a structured organisation or project team provides support for the job that is being done. Project management teams or organisations that are not aligned have a detrimental impact on the project's outcome. This is due to the fact that the project manager's authority is influenced by the organisational structure, which has an impact on how projects are managed. 

Non-structured project management teams, by definition, lack guidance, but a directed team leads to successful projects. The organizational structure is the standard hierarchy of activities. It defines how to divide, coordinate and lead groups. In addition, it defines the position and describes the tasks required to achieve the organization's goals and vision.The organizational structure is not static, but adjusted according to the organization's scale, needs, and ideas.

In this article, you will learn about the different types of organizational structures and their working principles in project management. Within an organisation, an organisational structure can be defined as the official line of power and control. The reporting relationships in a company's project management structure tell us how they work. Depending on the context in which the organisation operates, the goals it sets for itself, and the type of the job being done. The several types of organizational structures in project management will help employees to grow  an organization as well for the growth of their business.

8 common types of organizational structure in Project Management are:

  1. Line Organization
  2. Functional Organization
  3. Project Organization
  4. Virtual Organization
  5. Matrix Organization
  6. Divisional organization
  7. Organic or Simple Organization
  8. Line and Staff organization

Elements of organizational structure in Project Management

When choosing an organizational structure, certain characteristics should not be overlooked. The main elements that contribute to the establishment of an appropriate organizational structure are as follows:

 

  1. Physical locations
  2. Simplicity of design
  3. Accountability assignment
  4. Delegation of capabilities
  5. Degree of alignment with organizational objectives

8 common types of organizational structure in Project Management

1. Line Organization:-

This is the simplest form of organizational structure you will find in a small business. It has a clearly defined level of authority in the hierarchy. Power flows from top to bottom to different levels of the company or workers.The hierarchical structure clearly defines the power, responsibility, and accountability at all levels. Because of its simplicity, authorization and responsibilities are transparent and easy to understand. As employees receive quick feedback and react quickly, communication becomes quick and easy. 

The project manager performs tasks according to the position or authority in the hierarchy. Some organizations do not have this position, but when they have this position, they may have little or nothing to do.

 

2. Functional Organization:-

The functional organization groups workers according to their profession. This structure is an extension of linear organization. The functional manager leads the team and manages any operation or business. The head of the functional organization executes instructions within a clearly defined scope of responsibility. This concept comes from Fredrick W. Taylor. Here, you can classify employees according to their functional roles and departments. Some general divisions below are:-

 

  1. Customer Service
  2. Sales
  3. HR
  4. Finance
  5. Supply chain, etc.

 

The head of the organization is the president, followed by the vice president, and the chain continues. In addition, department heads made predictions about their department performance. Together, they help organizations control quality and consistency. 

This structure positions the department vertically and separates it from other departments. Hence the name "Silos". The head of the department controls the communication between the senior management and their subordinates. The role of the project manager is small, or there may not be a specific position. Typically, you act as an accelerator or coordinator. As a functional manager, you have to deal with -

  • Decision making
  • Budget Allocation
  • Resource Allocation

This type of organization is suitable for manufacturing or engineering companies. It supports the daily operations and practices of manufacturing standard products.

 

3. Project Organization:-

Project organization is a temporary facility set up for a specific project. It is also referred to as the "projectized organizational structure". The project manager assigned to the project is the person in charge of the structure. After the project is completed, you can immediately cancel this setting or move it to a new project. 

If it is a new project, the project manager may need to rearrange employees to adapt to the new plan. You hire resources or experts from different functional departments. As a project manager, you can use the allocated resources until completion and completion. 

Although you are responsible for the timely completion of all activities and projects. In other words, you need to spend according to the project budget. The manager assigns clear tasks to each team member and has a complete timetable. These types of organizations are useful in the following situations:

 

  • Project is unique and independent
  • The scope of the project is complete and the objectives are clear

 

4. Virtual Organization:-

Virtual organization is a new development that spans different locations. If your team runs a project in one area, you can manage it from anywhere else. In this way, you can allocate resources to your project team regardless of location. You can connect to almost any location. The other name of this organizational structure is:

 

  • Modular Organization
  • Network Organization
  • Digital Organization

 

ICT (Information and Communication Technology) is the support of virtual organizations. The virtual organization is a social network without vertical and horizontal boundaries.

The resource is not bound to a specific workstation (desk). You can also work from any mobile device. You can manage almost any project activity, including meetings. The team reports digitally, unless in some cases a physical meeting is required. Therefore, virtual offices, virtual teams and virtual leaders are often heard. This setting is most suitable for software or IT companies.

 

5. Matrix Organization:-

This is a combination of planning organization and functional organization. This hybrid organization overcomes the boundaries of any organization. Here, functional managers and project managers share their respective powers. Project Managers are usually responsible for:

  1. Execution of the project
  2. Completion of project activities
  3. Project Planning
  4. Overall Integration

All activities must be carried out using allocated resources. The functional manager handles the operational aspects of the project. You are also responsible for providing technical advice. Technicians specialize in the skills required for the project. Although the project manager leads the project staff, the functional manager controls the process. This type of organization is most useful when employees need to share available resources. 

 

This combination achieves high efficiency and better utilization of available resources. They are also better able to adapt to changing trends. You can divided Matrix Organization into:-

  • Weak
  • Strong
  • Balanced

The power shared by functional managers and project managers determines their strength.

 

6. Divisional organization:-

This type of organization is usually similar to a functional organization. Team members work in different departments. This setup divides employees into multiple market segments based on products, markets, or services. However, the divisional organization’s segments or divisions are autonomous. The functional units supporting this structure include:

 

  1. Operations
  2. Personnel
  3. Marketing
  4. R&D Department

 

This design focuses on service lines such as product, customer, region, and time. Because they operate as small organizations, they are called "independent structures."

So your independent work area target. But all departments jointly meet the company's guidelines and business goals. This type of organization is suitable for the following companies:

 

  • Banking and insurance business
  • Chain stores with Subsidiaries
  • Operate in different geographical location

 

7. Organic or Simple Organization:-

This type of organization is very flexible and can adapt well to market changes. This structure is characterized by fewer regulations and management levels, and decentralized decision-making. The organic organization is designed to respond well to the rapidly changing environment. People work side by side to communicate quickly and often solve unforeseen problems, problems, and requirements. The project manager has little or no authority here, and may or may not have a specific job role.

8. Line and Staff organization:-

The line and personnel organization are modifications of the line organization. Here, experts work with line managers to provide them with guidance and advice. This structure is more common today, and most large organizations use this type of list. The employees are divided into two categories; General and Professional teams.

 

  • General employees - Ordinary or general employees consist of simple employees who support senior management. These people are not experts.
  • Professional employees - The team is composed of experts who provide services to the organization. Their role can be advisory, control (such as quality control) or service (such as maintenance). Th line and employee organizations use the expertise of experts. In this way, the managers can become better in several ways.

These are the total 8 types of organizational structure in project management.

Wrapping up

Through different types of organizational structures, it is easy to know what you need. Although each structure has its limitations, a large and complex organization has taken over the matrix organization. Lines and staff organizations are clearly structured. Therefore, it is used for simple organization. Software or information technology companies usually use virtual organizations.

 

Even if you choose the right organization, type will ensure that you are doing well in the market. This elaborated article “Types of organizational structures in project management” will help employees to create a good structure in their project for the betterment of their organization.

 

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