Organizational Structures

Introduction

The design of a company affects every aspect of the business such as the way its members communicate, how decisions are made, and how the work is delegated, etcetera (Dictionary.com, 2006). This layout is known as the organization structure formally defined by Wikipedia (2006) as, "the way in which the interrelated groups of an organization are constructed. From a managerial point of view the main concerns are ensuring effective communication and coordination." In respects to project management there are three primary organizational break downs they are functional structure, pure project structure, and matrix structure. We will take a look into each of these structures to better identify the similarities and differences between them.

Functional Structure

In a functional arrangement, power or status is defined by a vertical hierarchy. This structure clearly defines the roles and responsibilities of its members and the chain of command is plainly outlined. (Kerzner, 2003). Functional structure is seen in large organizations such as the central government, polices forces and the armed forces. Large businesses have continuous rolling programs of similar repetitive or semi-repetitive work and this structure is typically used to improve systems, procedures, methods or products within the company. Due to the repetitive nature of the functional structure people are able to build a variety of skills that they can use from one project to the next. Projects within this structure would commonly be handled internally rather than externally. (Cogeco, 2006). When modifying systems or methods within a business it is beneficial for the company to have in-house employees who have direct contact with the work to handle the improvements.

A huge disadvantage of this structure is that it is inflexible. (Kerzner, 2003). The flow of communication although clearly laid out has to pass through several different people; creating an issue if a quick decision needed to be made. If there happened to be a fluctuation in the workload this arrangement is unable to easily respond to the changes. Functional output tends to be the primary objective of this type organization. Functional people stick to their own specialization and avoid being involved in cross-functional activities. (Wikipedia, 2006).

Pure Project Structure

A pure project organization is a self contained section or unit within an otherwise purely functional structure. (Cogeco, 2006). In this organizational structure the flow of communication channels through fewer people thus making it flexible and easily adaptable to change leaving room for innovation and evolution. According to the Cogeco Module (2006), "This type of structure is typically used for projects that are difficult to plan accurately and where resource requirement and provision levels cannot be accurately established beforehand." The project manager maintains complete line authority over the whole project (Kerzner, 2003).

With informal lines of communication in place it is suggested that a more centralized direction is needed in this structure. Pure project structure may create a sense of competition between the various project teams so when project deadlines approach members may be likely to take shortcuts to maintain good performance records. If this happens then the project team is sacrificing the quality of their work just to look better on paper.

Matrix

According