If you’re taking project management courses to get your PMP certification, you’ll need to learn a lot of new things, one of which is the PMI’s definition of organization types. Organization types are a framework that determines the hierarchy of people, functions, and workflow in an organization, as well as the reporting system.
Every organization requires a defined organizational structure in order to function efficiently and achieve its business objectives. Some argue that an organization will fail if it does not have a defined organizational type and structure that supports its objectives. As a project manager, this will assist you in identifying stakeholders and other team members.
Here is a list of different types of organizations to help you determine which type of organization you are working with:
1.Organizational Functioning
2. Matrix Structure
3. Planned Organization
4. Composite Structure
Organizational Type
1. Functional Organization
The functional organization, the most commonly used organization type, is covered in project management training for the PMP exam. A functional organizational structure divides the organization into departments where people with similar skills are kept together in groups; for example, a sales department, marketing department, finance department, and so on. This assists the organization in improving the efficiencies of each functional group.
In a functional organization, the functional manager has complete authority (i.e., budget allocation, resource allocation, decision-making, and so on). In functional organizations, resources report directly to the functional manager. The functional manager retains the authority to release resources based on their domain expertise. When the project is completed, the resources are returned to the functional manager for routine tasks.
Project managers are not typically found in this type of organizational structure; if they do exist, the project manager’s role will be very limited. The project manager may also be referred to as a coordinator or an expediter.
2. Matrix Structure
The matrix organizational structure is a hybrid of two or more organizational structures, such as the projectized organizational structure and the functional organizational structure. This combination has the potential to help organizations improve their efficiency, readiness, and market adaptation. This structure is best suited for organizations that operate in a fast-paced environment; they can often respond to market or customer demand more quickly while also shortening the time it takes to produce a new product.
A functional manager’s authority moves vertically downwards, while a project manager’s authority moves sideways. This structure is known as the matrix organization structure because these authorities flow downward and sideways. Employees in a matrix organization structure may report to multiple managers, and some from one section may report to one boss while the rest report to another.
You’ll learn more about the three types of matrix organizations and how the project manager’s power varies depending on the type when you get project management training. A summary is provided below.
3. Stable Matrix
The project manager has more power than the functional manager in a strong matrix structure. The project manager, for example, has a say in resource allocation.
4. Matrix Weakness
A project manager functions as a project coordinator or project expeditor in a weak matrix structure. A project coordinator has some say in resource allocation, whereas a project expeditor is only a point of contact between the customer and the team. Overall, the functional manager rules supreme in a weak matrix.
5. A Well-Balanced Matrix
Both have equal power in a balanced matrix. Due to a lack of clarity on who to report to, resources working on a project may experience communication difficulties.
6. Planned Organization
A projectized organization is the best type of organization for a project manager to work in. The real bosses here are the project managers, who give you the freedom to apply your expertise and have a say in the proceedings. However, once a project is completed, project managers are no longer needed. In this type of organization, there is no job security.
7. Composite Structure
A composite organization combines the functional, matrix, and projectized organizational types. A composite is simply two or more models that have been modified for a specific project, for simplicity, or to keep power under control. The majority of modern businesses are of the composite variety.
Conclusion
It is always beneficial for a project manager to know what type of organization you are working in ahead of time in order to better understand your level of authority. A projectized organization is typically preferred by skilled project managers over others.
Are you interested in advancing your project management career? With SPOTO Learning-class online Project Management training courses, you can add the PMP certification to your resume.
The Project Management Institute, Inc.’s registered trademark is PMP.
