What Are The Types of Organization In PMP? – Comprehensive Guide

Last updated on 15th Jul 2020, Blog, General

The type of structure depends on many factors, such as governing style, leadership style, workflow, hierarchy, and many more.

The PMBOK Guide defines eight organizational structures:

• Organic or Simple Organization
• Functional or Centralized Organization
• Multi-divisional Organization
• Matrix Organization
• Project Oriented (Composite or Hybrid) Organization
• Virtual Organization
• Hybrid Organization
• PMO

Wikipedia has six organizational structures:

• Pre-bureaucratic Structure
• Bureaucratic Structure
• Post-bureaucratic Structure
• Functional Structure
• Divisional Structure
• Matrix Structure

Some other sources divide them into the following categories:

• Simple Organization
• Functional Organization
• Divisional Organization
• Matrix Organization
• Team-Based Organization
• Network-Based Organization
• Modular Organization

On the Internet, you will find many more structures. However, the classifications above are the most popular.

Since this blog is dedicated to PMP exam preparation, I will focus on the PMBOK Guide’s definitions and explain the other structures in brief.

Organic or Simple Structure

• Here, you may work alone or side by side.
• You may be the only employee in your company.
• Instances of this type are solopreneur, OPC (One Person Company), or a freelancer.

Functional (Centralized) Organizational Structure

This is the most commonly used organizational structure. Here, the organization comprises various departments, each department has people with similar skills: sales department, marketing department, finance department, to name a few.

This helps organizations enhance the efficiencies of each functional group.

Multi-Divisional Organization

Here you may have many functional divisions with a little centralization. Generally, these divisions are independent. Project managers do not have authority; however, they have part-time staff.

An organization is divided into various divisions. Employees with diverse skills are kept together in the form of groups based on a similar product, service, or geographic location. Each division has the resources required to function and can do the task on its own.

Matrix Organizational Structure

This is a hybrid of a functional and projectized organizational structure. Here you have two command structures: vertical and horizontal. An employee may belong to a functional group, but can also work on a project; this structure uses the best of both worlds.

A matrix organizational structure can be of three types:

1. Strong Matrix Structure
2. Balanced Matrix Structure
3. Weak Matrix Structure

Strong Matrix Structure

Strong matrix organizations are closer to a projectized organization. Here the project managers have the highest authority, control over the budget, and a full-time team reporting to them.

Balanced Matrix Structure

A balanced matrix has properties of both functional and projectized structures. Here, project managers have a low-to-moderate authority and a part-time team. The budget is managed by both the project manager and the functional manager.

Weak Matrix Structure

A weak matrix is closer to a functional structure. Here, project managers have low authority and no control over the budget; they will have a part-time team.

Project Oriented (Composite or Hybrid) Organizational Structure

A projectized organization obviously deals with projects. Project managers have full authority to complete the project successfully, have a full-time role, control over the budget, and a full-time team reporting to them.

A team-based structure is another name for a projectized organizational structure.

Virtual Organization

Many experts call this a virtual corporation. The central organization is connected to outside firms via the internet. The outside firm can be a vendor, client, or associate. This structure helps organizations achieve corporate growth and a greater profit. In a network structure, the organization keeps its core business to itself while the rest of the processes are outsourced. This structure is also known as a hollow corporation, hollow organization, or network structure.

Here the project manager has a low-to-moderate authority, however, they have mixed control over the budget. They may or may not have a full-time team reporting them.

Hybrid

True to its name, this structure may use any combination of the organizational structures.

Suppose yours is a functional organization. It needs a small building, and your organization has the capability to build it. In this case, your organization will create a separate project team to complete this task.

This is a mixed structure. Responsibility, authority, and other factors are also mixed depending on the structure.

PMO

PMO is also a mixed organizational structure. Project managers have the highest authority. They control the budget and have a full team reporting to them.

Here is where the blog post on organizational structure ends.

Now, let’s take a look at other organizational structures that are not mentioned in the PMBOK Guide. This is for your information only. Don’t expect to see a question on these types of structures on your PMP exam.

The Simple Structure

This structure is suitable for small organizations in their early stages. They have just started and are in the development phase.  Here, the authority lies with a single person. These structures have a few rules and work is low skilled.

Some scholars call this a pre-bureaucratic structure.

The Modular Structure

In this structure, the organization outsources some parts of a product.

Keep in mind that in the network structure the organization outsources the processes, while in a modular structure they outsource only a few parts of the product.

Pre-Bureaucratic Structure

Pre-bureaucratic organizations do not have standard procedures and policies. This structure is used by small-scale organizations and has a few employees who handle simple tasks. It has a central command with one decision-maker in the top position.

Communication takes place on a one-on-one basis and it usually is informal.

Bureaucratic Structure

This structure is suitable for huge organizations with complex operations and that need smooth administration. They have standard procedures and processes.

An example of this organizational structure is the food and beverage industry where there are strict rules and regulations.

Post-Bureaucratic Structure

Post-bureaucratic organizations are developed and have various standards and procedures. These organizations have a central command comprising several board members, decisions are made through a democratic process. This encourages employee participation, trust, personal treatment, and responsibility.

The Advantages of an Effective Organizational Structure

An organizational structure has a well-defined reporting structure. It reduces friction among employees by clarifying roles and responsibilities.

Having a proper organizational structure can bring immense benefits to any organization. A few of these benefits are:

• It allows an organization to grow.
• Focuses attention on your strategic goals, instead of each department focusing on its agenda.
• Unites a group of people and points them towards a common goal.
• Encourages employees to enhance their skills.
• It makes the decision-making process efficient, smoother, and faster.
• Facilitates the specialization of employees.
• It enables better control and use of resources.
• Establishes a proper reporting system.
• Enables easier and better communication, which helps in reducing conflicts.
• Allows employees to perform better.
• Helps employees grow their career and streamline new employees.
• Identify clear roles and responsibilities.