Organizational Structures in Project Management
In order to conduct organizational activities and manage projects in an orderly manner, organizations are established in various structures. Likewise organizations, projects involve many tasks from human resources management to budgeting and scheduling. Therefore a weak or rigid organizational structure can not be effective to bring success. A matrix organizational structure is a company structure in which the reporting relationships are established as a matrix. An employee may have vertical and horizontal reporting lines. Also an employee may be part of multiple departments and may have multiple managers. This article discusses the matrix organizational structure and it’s importance in project management.
Matrix Organizational Structure
Every organization needs a well established organizational structure to reach the organizational goals. An organizational structure provides a framework for reporting relationship between employees. It also offers a way for coordinating organizational activities and routines.
A Matrix organization structure is a combination of the functional and divisional organizational structures. Also the PMBOK Guide defines the Matrix organizational structure as a combination of projectized and the functional organization structures.
Functional organizational structures divides the company into departments such as marketing department, engineering department, sales department etc. In Projectized Organization Structure , the whole company is organized by projects rather than functional teams or departments. Divisional organization structures focus on the products, customers, geographical location etc.
Large and multi-project organizations prefer matrix organizational structures where they can relocate employees whenever and wherever their services are needed. Because matrix organizational structures have the flexibility of relocating employees when needed. Also in a matrix organization structure employees may report to multiple managers.
For instance let’s say that you are an electrical engineer in the engineering department of head office and your company has a new project in a different country. In this case you may be assigned to the project for mobilization phase and you have to report to three managers. After completion of mobilization tasks you will turn back to your head office engineering department.
There are three types of matrix organizational structure. This classification depends on the authority and power of the project manager.
1. Strong Matrix Structure
2. Balanced Matrix Structure
3. Weak Matrix Structure
Strong Matrix Organizational Structure
In strong matrix organization structure, the project manager has extensive authority and power and the functional managers have limited roles. The project manager has full authority on the project budget. The strong matrix organization structure have the characteristics of the projectized organizational structure.
Blanced Matrix Organizational Structure
In balanced matrix organization structure, power and authority are shared between the project manager and the functional managers. The project manager and functional managers control the project’s budget together.
Weak Matrix Organizational Structure
In weak matrix organization structure, the project manager has limited role but the functional managers have authority and power. The project manager works like an expediter or a coordinator. Therefore the functional managers have authority on the project budget. The weak matrix organization structure have the characteristics of the functional organizational structure.
Advantages of a Matrix Organizational Structure
Below are some of the advantages of this organizational structure.
- Experts and equipments can be shared across projects. This enables to use resources efficiently and prevents losses.
- Cooperation and communication between departments and units are well.
- Skilled employees can be relocated when needed.
- Employees report both across and up through the organization.
- Enables team members to take some decisions. This encourages a democratic leadership style and increases motivation.
Disadvantages of a Matrix Organizational Structure
Below are some of the disadvantages of the matrix organization structure.
- Some employees may become confused about reporting hierarchy.
- Extra managers and coordinators may be assigned. As a result of this indirect costs may increase because of the need for double management.
- The sharing of employees may cause conflicts between functional managers
- Shared authority and power may cause conflicts between functional managers and the project manager.
- Matrix organizational structre brings more complexity
- It is expensive to mantain the structure
Why do We Use this Organizational Structure ?
The matrix organization structure was born in the aerospace industry in the U.S to handle the sophisticated projects. Then it became popular to manage multiple large and compex projects of an organization. For this purpose organizations establish strong, balanced or weak matrix structures depending on the requirements.
Within an organization, highly hierarchical structure, fragmented functions and skills can cause problems that prevent to reach the goals. This type of organizational structure provides solutions for conflicts that originate from unclear functions and ill-defined responsibilities of managers.
As mentioned above, a matrix organizational structure is a combination of the functional and divisional organizational structures. This combination brings flexibility and efficiency while performing tasks. Unlike the traditional top-down hierarchy, employees and managers make across departments can make more decisions. However, organizations that produce standard products and operate in a static environment may adopt the functional organizational structure rather than the matrix structures.
Organizational structures help organizations to coordinate their business in an effective way. Well-defined roles, responsibilities and reporting hierarchy is key to avoid conflicts. Before to implement an organization structure type to a company, benefits and limitations of the structure should be analyzed. Because for a small company implementing a functional organization structure may be better than implementing a matrix organization structure. Likewise if a company is big and the projects are large and complex, a matrix organization structure will be more effective.