Describe the Four Types of Project Organizational Structures

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Organization is key in business and a project’s organizational structure can make or break a company’s main initiatives. If there’s too much bureaucracy and red tape, it might stifle innovation. If there’s too much freedom, employees might flounder in confusing roles. These four types of project organization structures have had proven success across a number of major companies. The one you choose for your project depends on your goals.

Forms of Project Organization: Functional

There’s a good chance that you’re already deeply acquainted with functional organization, or as it’s commonly called, the bureaucratic organizational structure. This is one of the most popular forms of project organization and is used across Fortune 500 companies and small businesses alike. If you’re running a small business, you probably have already mulled over this dedicated project team structure if you’ve thought about expanding beyond just a handful of employees.

At its heart, a functional organizational structure divides a project or organization into smaller groups that have dedicated, specific tasks. For example: an independently owned string of successful car dealerships might split their workforce into departments like sales, marketing and administration. Each of these departments has a head who reports to the CEO.

Though this is one of the forms of project organization that allows talent to specialize in what they’re truly good at, it also lacks interdepartmental communication. In other words: two departments may have entirely different expectations of the job, which causes disagreements and unexpected slowdowns. It also encourages employees to look at their specific tasks rather than the overall company.

Forms of Project Organization: Divisional

This dedicated project team structure is often chosen by larger companies that have a lot of objectives. It allows a company to focus on different niches within their business and gives a lot more autonomy to the different departments. They essentially function like their very own individual businesses.

For example, a construction business might want to split their company into a commercial division, a residential division and a government division. If they have to build a school, that project would be given to the government division. If they are building an apartment complex, it might go to residential. Companies can also opt to split into geographical divisions. For example, that same construction company might branch off into Northeast, Midwest and Southeast divisions. Each division has its own resources and there isn’t much inter-division face time.

Unlike a functional organizational structure, where a marketing team will rely on the sales team to know what to market, divisional structures allow each department to function alone. This is one of the types of project organizational structures where projects are completed with little bureaucracy among departments and objectives remain clear within each department. It is not a detriment to have so-called “tunnel-vision” like it would be in a functional structure, but it does make taxes a little bit more complicated – especially if departments are split regionally.

Forms of Project Organization: Matrix

This is one of the types of project organizational structures that has the best of both worlds. It’s essentially a hybrid between two forms of project organization: functional and divisional. In this case, a company is split into specialized teams like marketing, sales and administration, but those teams are also split into divisions like – keeping with the construction company example – government, residential and commercial.

Basically, you’ll have workers who primarily focus on the marketing of government contracts and others that focus on the marketing of residential contracts rather than a dedicated, overall marketing team (though members of the marketing team may be on both the government and residential team).

In this structure, employees don’t just have one boss. They have two or more bosses that focus on different objectives. This can make it confusing and hard for employees to define their role, but it can also help pare down the responsibilities of departments. It really just depends on how communicative upper management actually is.

Forms of Project Organization: Flatarchy

Though tall types of project organization structures are most popular among larger companies, startups and small businesses may opt for a flat structure. This means there is no one way of communication. An employee does not report to the project manager, who reports to the department head, who reports to the CEO. The project manager can take decision-making all the way up to the CEO and the CEO can request things from the project manager if needed.

This structure opens up a lot of communication and dispels unnecessary levels of bureaucracy that slow projects down, but it can also be kind of confusing if everyone involved doesn’t agree on the structure. In other words: an employee can easily run with an idea and become the project manager of a team that never previously existed, but that doesn’t mean the employees around her will want to take orders. Goodbye red-tape, and hello innovation. Just make sure to always keep the lines of communication open so the dedicated project team structures don’t get complicated when new teams arise.