Types of Organizational Structures

Types of Organizational Structures




Imagine you are the HR director of a growing international staffing organization that services both North America and South America. The CEO and Board of Directors are considering that much of the expected growth will involve many projects of varying size and duration. To support this expectation, the HR group, which is currently decentralized, may benefit from restructuring in order to handle the growth in business and the increase in the number of projects. The CEO has asked for your opinion on how to best restructure the firm – focusing on the HR function. Recommend an organizational structure (examples: functional, matrix, or projectized – See Kloppenborg 4e: 4-1 Types of Organizational Structures), that will provide for the growth of the firm. Explain how organizational structure affects project management and the customers. Is an organizational restructuring such as this a good candidate for a project?

1 Types of Organizational Structures

Contemporary companies choose among various methods for establishing their organi- zational structure. Organization structure is often developed by grouping people together based on criteria such as functional or technical skills or long-term activities. The struc- ture size and complexity increase with the increase in the number of employees. The structure is the way in which an organization divides its people into distinct tasks to achieve coordination among all these groups. Organizational structure can be considered to include work assignments, reporting relationships, and decision-making responsibility. Each method of structuring organizations has strengths and weaknesses. In this section, we will investigate various organizational methods and the impact of each on managing projects. The advantages and disadvantages of each organizational form are discussed in the following sections and then summarized in Exhibit 4.5.

4-1a Functional

A functional organization is an organizational structure in which staff is grouped by areas of specialization and the project manager has limited authority to assign work and apply resources. 2 This is the traditional approach in which there are clear lines of authority according to type of work. For example, all accountants might report to a head of accounting, all marketers report to a head of marketing, and so on. An organizational chart for a functional organization is shown in Exhibit 4.2. Note that everyone in the organization reports up through one and only one supervisor. That supervisor is the head of a discipline or function (such as marketing).

The functional manager generally controls the project budget, makes most project decisions, and is the primary person who coordinates project communications outside the functional areas by contacting his or her peer functional managers.

ADVANTAGES One advantage of the functional form of organization is called unity of command all workers understand clearly what they need to do because only one boss is.

Kloppenborg, T., Anantatmula, V. S., & Wells, K. (2018). Contemporary Project Management (4th Edition). Cengage Learning US. https://strayer.vitalsource.com/books/9781337670500


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