Organizational Structures, Advantages and Disadvantages

Each organization structure has its own set of advantages and disadvantages.

The advantage of functional organizations is that resources may find clearly defined career paths and achieve specialization and skill development in their respective fields. It will be a flexible work force since only one manager will be responsible, avoiding confusion.

The disadvantage of such organization type is that project work is hampered. Department work is always given higher priority than the project work. In addition, there is no career path in project management, which leads to lower interest in projects.

In the case of the projectized organization, one of the clear advantages is better communication within the projects. Since project work is the only work team members are doing, it also leads to loyalty towards the project goals.

The disadvantage of such organization type is the inefficient use of resources, because every project team has their own support function. Therefore, this might lead to the duplication of effort. It also leads to the resources being left with no work, since their roles are over once the project is completed. It also hampers skill development because the project requirements dictate what kind of work team members perform at different stages on a project.

Now, let us look at the matrix organization. It also has the advantage of better coordination and maximum utilization of resources. However, the disadvantage is the higher potential for conflict among the managers, which might lead to communication complexity and overhead management.

To download more project management resources please visit www.managementproject.net

Organization Structure: Matrix Organization

In a matrix organization, the resources report to the functional managers and are managed by the project managers as well. There might even be a function that represents all the project managers in the organization, which provides project management expertise.

The matrix structure has three variants commonly referred to as weak, balanced, and strong. In a weak matrix, the authority of the project manager is the weakest, and strongest in a strong matrix structure.

The titles given to project managers in functional or weak matrix organizations are project expeditor or project coordinator. They would be called project managers in a balanced or strong matrix structure and have slightly more authority over the time of the team members.

The advantage of the matrix structure is that resources can be optimally utilized, while preserving the capacity of the project managers to get projects executed efficiently. Resources can specialize in their functions and have stability in their careers, also contribute to the projects at the same time potentially.

The disadvantage of matrix organization is that the communication overhead increases significantly. This is because every resource in the organization belongs into a project and into a function, leading to a dual reporting structure.
In a matrix organization, project management happens at Project Resource Level.

Organization Structure: Projectized Organization

The projectized organization has all the resources aligned around projects.

The project managers have complete control over the resources working on their projects.

The biggest advantage of the projectized organization is that the resources have loyalty to their projects and project execution becomes easier. This kind of structure is suitable for organizations whose work is in the nature of projects.
There are few disadvantages in this structure as well. Firstly, the role of the resource is over once the project is completed. Secondly, highly specialized roles within a project may not be fully occupied all the time.

For example, a purchase executive may have work for selected periods on a project while purchase activities are going on. However, for the rest of the period, their capability may not be optimally utilized. There is less scope for functional specialization, as the project boundaries limit the kind of work for the resources.

Each project manager is in-charge of a project and its resources.

Organization Structure: Functional Organization

In a functional organization, the resources of the organization are grouped by “functions” – sometimes called departments. Examples of functions could be “sales”, “finance”, “administration”, “manufacturing”, etc.

Each function plays a definite role in the organization and is headed by a functional head or supervisor.
All the resources in such an organization report directly into their functions. Therefore, a sales person would report into the sales organizational hierarchy, a purchase executive would report into procurement, and so on.

You would notice that in a functional organization, the project manager’s role is not explicitly called out. When a functional organization embarks on a project, each of the functions that are involved may volunteer some resources to work on the project. One of these resources may end up playing the project manager’s role. The resource assignments may not even be full time and sometimes even the project manager is part time.

Since the project manager has no authority over any of the resources, they are dependent on the functional heads. This makes it more challenging for the project managers to coordinate in the team.

However, functional organizations provide an opportunity for specialization. For example, if a purchase executive was reporting into the purchase department, that executive would have exposure to all the purchasing that happens within the organization and has a well-defined career path.

In functional organizations, project management happens at the Functional Head level.

To download Free Project Management Templates you can visit www.managementproject.net