Defining the Organizational Structure

The way your organization is structured determines the communication requirements, responsibilities, and reporting structure you have with management. Because all organizations and projects are different from one another (thankfully), they can be broken down into one of three different organizational structure models: functional, matrix, and projectized.

Working in a Functional Organization

Functional organizations are fairly common. These types of organizations are segmented by departments and their “functions.” For example, you may have “Sales,” “Accounting,” “Legal,” “IT,” and so on throughout your organization. In a true functional environment, all team members, including the project manager, report to their functional manager.

The project manager in a functional organization has very little power. Decisions flow through the functional manager—he’s the one running the show. The advantage of the functional organization, however, is there’s a reduction in anxiety and a reduction in communication demands, and team members stay within their departments to complete the project work.

Working in a Matrix Organization

A matrix organization model allows a project team to incorporate resources from around the organization regardless of which department employees may work in. Project team members can be recruited, from anywhere or anyplace, within the organization. In contrast to the functional structure, this model blends the project team based on team members’ individual contributions and abilities.

Technically a matrix structure has three different flavors:

Balanced The project manager and the functional manager have equal power and autonomy over the project team.
Strong matrix The project manager has autonomy over the project and the project team.
Weak matrix The functional manager has autonomy and power over the project team members.

There are some downsides to the matrix structure. Communication demands increase for the project manager because he’ll likely be required to keep all of the project team members’ bosses up-to-date on how the project is moving and how the team members are doing on it. Another downside of this structure is that team members have to report to at least two bosses: their functional manager and the project manager. In addition, team members can expect to be on multiple projects at one time, which, of course, increases their responsibilities, communication requirements, and workload. Further, team members may be expected to complete their regular job duties along with additional responsibilities on the project.

Working in a Projectized Organization

In this structure, the project manager works with complete autonomy over the project. The project team is on the project full-time and reports only to the project manager. The project manager has the most authority in this structure. There are many advantages to this structure:

The project team is on the project full time.
The project team reports to one boss for the duration of the project.
The project manager has the power over the project.
Communication demands are reduced.

However, this can lead to redundancy in some functions, such as tech support, accounting, purchasing, legal, and so on. Additionally, team members do not get the experience they gain when they work in an environment of their peers. This is particularly true for technical fields.

Using Project Management Power

The project managers are the power on the project team. While there may be some resistance of the project team to cooperate with the project manager, complete assigned duties, or participate as requested, the project team should realize the project manager is the project authority. There are five types of powers the project manager yields:

Expert. The authority of the project manager comes from experience with the technology the project focuses on.
Reward. The project manager has the authority to reward the project team.
Formal. The project manager has been assigned by senior management and is in charge of the project. Also known as positional power.
Coercive. The project manager has the authority to discipline the project team members. This is also known as “penalty power.” When the team is afraid of the project manager, it’s coercive.
Referent. The project team personally knows the project manager. Referent can also mean the project manager refers to the person who assigned him the position; for example, “The CEO assigned me to this position so we’ll do it this way.” This power can also mean the project team wants to work on the project or with the project manager due to the high priority and impact of the project.

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Defining the Organizational Structure