Types of organizational structure

An organisational structure shows how people and activities are grouped, who reports to whom and how authority flows. PMBOK identifies three major types and several hybrids.

Types of organisational structure

1. Functional (classical) organisation
   • Staff are grouped by speciality (engineering, finance, marketing).
   • Each employee reports to one functional manager.
   • The project manager has little or no authority.
2. Projectized organisation
   • Team members are grouped by project and report to the project manager, who has high authority.
   • Staff may be released after the project is completed.
3. Matrix organisation
   • A mix of functional and project structures; members report to both a functional manager and a project manager.
   • Weak, balanced or strong matrix, according to the authority of the project manager.
4. Composite/hybrid structures that combine the above, and project-based or virtual structures.

 Functional       Projectized       Matrix
   CEO               CEO              CEO
 /  |  \          /  |  \        F1  F2  F3
F1  F2  F3        P1  P2  P3     P1 x   x   x
(staff)           (staff)        P2 x   x   x

Influence of structure on projects

• Structure affects decision speed, conflict, use of resources, communication and team morale.
• A functional structure suits routine work, while a projectized one suits large or urgent projects.
• A matrix balances resource sharing and project focus but can cause conflict because staff have two bosses.

Example: A software firm that runs several client projects at once commonly uses a matrix structure.