8 Types of Project Management Organizational Structures

By Indeed Editorial Team

Updated August 23, 2022

Published February 8, 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Properly designing a project's layout is important for fulfilling its objectives. It clearly defines the hierarchy of the employees associated with the project and thus fosters efficient operations. One effective way to design a project layout is by using project management organizational structures. 

In this article, we define project management organizational structures, show why they're important and explain several types of structures you might consider for your next project.

What are project management organizational structures?

Project management organizational structures are different ways to divide and coordinate groups of employees. A structure is often a hierarchy that defines different positions and lists the tasks required to achieve a goal or complete a project.

What are the benefits of using a project management organizational structure?

Organizational structures can be an important part of your project management because they can help:

Define who's in charge

An organizational structure determines how a project is centralized. It clearly lays out the chain of command and reporting relationships, which, in turn, facilitates efficient communication and task delegation. It also shows who has the power to make important decisions. In a centralized structure, the deciding power remains with the head of the project. In a decentralized structure, the project manager distributes some of their power to lower-level supervisors, allowing them to make important decisions quickly and equally without approval.

Read more: 7 Types of Company Reporting Structures That Every Company Should Consider

Group employees more efficiently

An organizational structure allows you to run a project more efficiently in a couple of ways. One is by sorting individuals into specialized groups. Certain employees may be better suited for particular tasks. For example, a group of employees who specialize in 3D design would be best equipped for creating prototypes, while another group may be better skilled at testing prototypes.

Another is that it lets you create smaller groups, with whom you could delegate more tasks across a broader selection of teams to achieve quicker completion times. Imagine, for example, a project manager who wants to complete research concerning a product's benefits to customers. They might delegate specific research topics to different groups in the organizational structure. Each group would then have less work to complete. Once they've all finished, the project manager can compile all of the research into a single cohesive document.

Related: How To Improve Your Delegation Skills in 7 Steps

Define responsibilities

Another important reason to use organizational structures is that they help to communicate rules, responsibilities and procedures. By generating a clearly defined structure for a project, the project manager has a clearer sense of each group's role. They can then better inform those groups of their tasks and plan out how to complete the project more efficiently.

Related: How To Define Team Roles and Responsibilities in 4 Steps

8 types of organizational structures

The following are eight types of organizational structure, with explanations of how you can use them:

1. Functional structure

The functional organizational structure is fairly common in corporations. The leader of the structure is the company manager. The employees of the company are grouped based on their specializations, such as:

  • Human resources

  • Customer service

  • Research and development

  • Quality assurance

  • Sales

These specialized groups make up different departments of the organization. Each department produces its own work and reports to its own manager, who, in turn, reports to the company manager. Altogether, the structure fosters greater efficiency.

Related: Your Guide to Functional Structure for Business: Advantages and Disadvantages

2. Line structure

Smaller companies might use a line organizational structure. This structure simplifies and clearly defines the hierarchical structure of the company, so there is no confusion as to who's in charge. It not only facilitates communication between employees and managers but also promotes faster, more efficient completion of work. In a line structure, the leader is typically the company manager, who oversees the sales, marketing and development managers. The sales and marketing managers work alone in their respective departments, while the development manager oversees the research manager. Because the company is so small, this is a simple way to define its hierarchy and each role within it.

Related: Director vs. Manager: Responsibilities and Differences

3. Line-and-staff structure

The line-and-staff structure is a combination of the line structure and the functional structure. It involves a hierarchy of managers who work with several specialized groups. These groups report to their respective managers, and those managers then report to their own managers. For example, a production manager who oversees specialized production teams—such as the research and development staff and the technical experts—reports to the company manager, who oversees the specialized financial and technical adviser groups. Each manager has their own groups to oversee, as in the functional structure, except they're not equal since they occupy ranks of different levels.

Related: What Is a Line-Staff Organization? (With Features, Pros and Cons)

4. Matrix structure

The matrix structure uses two types of managers who can delegate tasks to employees across departments:

  • Project managers: Project managers focus on project planning, execution and completion, often working with employees from different departments.

  • Functional managers: Functional managers focus on operational and technical management within their own departments. They work hard to ensure their employees are working as efficiently as possible so the project managers can do their job more efficiently.

There can be many functional and project managers throughout a company, each with its own department or tasks. These managers then work together by combining their resources to meet the company's goals. Picture, for example, a company that has research, sales and marketing departments, each with its own functional manager. The company then starts three different projects, each with its own project manager. Those project managers work with the functional managers, using material and human resources from each department to complete their respective tasks.

Related: FAQ: What Is the Business Matrix Organizational Structure?

5. Divisional structure

The divisional structure takes techniques from the functional structure and applies them to multiple divisions within a company. If a company has multiple locations around the world, it might use a divisional structure to create a functional hierarchy at each one. Each location should be its own division and have specialized groups that help it to function. For example, one division of a company in England could have research and development, human resources and marketing departments. Another division of the company in Japan may have those same departments, but they can operate exclusively for Japan's division and not England's.

Related: Pros and Cons of Implementing a Divisional Structure

6. Organic structure

An organic structure is a fairly undefined and decentralized organizational system. It may be beneficial to a company that works in a quickly changing market, allowing it to be more adaptable. The employees in this structure work together towards a common goal with no authority from a major leader. If a project manager is involved, they generally work to provide some form of structure but may not have any power over the project's staff.

Related: What Is an Organic Organizational Structure? (Plus Tips)

7. Virtual structure

A virtual organizational structure uses a clearly defined structure system but implements it remotely. This allows the company to work more easily from multiple locations and hire employees all over the world. Companies that deliver a virtual product often benefit the most from the virtual structure, as it allows each of their employees to use resources regardless of their geographical location. For example, a social media marketing company might use a virtual structure to complete a majority of its work because the company's product doesn't require all of the employees to be physically present.

8. Project structure

A project organizational structure is a temporary structure implemented when a company wishes to start and complete a specific project or goal. This structure often involves a project manager as the leader, who oversees distinct groups or departments that each have a specific duty. For example, if a company needs to create a piece of technology to do their work more efficiently, they might create a project with a research team, a hardware development team and a software development team. The company would then hire a project manager to oversee each team and execute a plan to complete the goal.

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