One disadvantage to this sort of structure is that it tends to be bureaucratic and does not foster communication between people at different levels. St. Thomas University: What is Bureaucratic Leadership? For instance, software developers belong to the IT department or sales specialists belong to the sales department. Do you want to earn money just by sharing this article? { 5 Advantages and Disadvantages of the Matrix Organizational Structure Using the matrix organizational structure. It’s a must for avoiding any misunderstandings between the departments. This increases the effective and efficient communication among the project team. The last disadvantage of the functional organization is that the project manager has little or no authority. Home — Essay Samples — Business — Organizational Structure — Organizational Culture: Advantages And Disadvantages This essay has been submitted by a student. In case of a lack of technical knowledge, the resources can consult to their senior colleagues or managers within the same functional domain. 2. More than one boss for project teams. Advantages: easy to understand, Specializations develop, Economies of scale, Communication within functions, Career paths, Fewer people. However, it barely allows flexibility, long-term-planning, and creativity, ending with stiffness and dictatorship in management. In our previous articles we’ve covered types of org charts and best practices to follow when creating org charts.Now lets look at advantages and disadvantages of organizational charts so you can make an informed decision to whether to have one or not. This dedication automatically increases the focus and motivation of team members for the success of the project. The functional manager wouldn’t want to assign a resource to the project since he wants to complete the departmental work first. They're also quite rigid in what specific departments are designed and permitted to do for the company.This organizational structure is much more formal than organic structure, using specific standards and practices to govern every decision the business makes. Let us now take a look at its limitations.1. The advantages of this structure are: Resources are used efficiently and can move around between projects as needed. Since there are not departments for the resources based on their specialties, if there won’t be a new project, resources are released at the end of the project. 13 Flat Organizational Structure Advantages and Disadvantages. It establishes the reporting relationships between people and their span of control. Naturally, this will also bring the need of additional administration. Disadvantages are that as the company grows, there may be a lack of integration across the different functions or departments leading to inefficiencies. Organizational Structures | What are the Advantages and the Disadvantages of Different Organizational Structures? One of the advantages in having a formal organization is that when there is a problem employees know where to look for answers. Let’s consider that a department has its own works and a project manager is requiring a new resource from this department. 1. Also, there will be several resources from different functional disciplines in a project. Hierarchical structure of an organization usually has vertical levels leading up to the top head – the CEO or Managing director. Briefly, Project manager’s role, resource availability, control of the project manager on the project are highest in projectized organizations, while the functional manager’s is the lowest. Because team members of the project are reporting to the project manager as well and this gives respective authority to the project manager. There is more support from functional areas. List of the Advantages of the Matrix Organizational Structure. Did you take a look at our Certification Courses? First and the most important advantage of this organizational structure type is the efficient project organization. Matrix organizations need extensive policies and procedures. One advantage of this sort of flatter hierarchy is that it is easier for employees to communicate with each other and it facilitates learning. There are only line… This video outlines the 6 key reasons why organizations introduce a matrix and the importance of communicating these reasons clearly. If you want to learn more about these three types of organizational structures a detailed article can be found here. Because their ultimate manager is their functional manager. The first advantage of functional organization is that it makes the management of specialists easier. Project Management Professional Certification Training, Certified Ethical Hacker Certification Training. "aggregateRating":{"ratingValue":"4.7","reviewCount":"228","bestRating":5,"worstRating":1}}. Workers are surprised by a number of instructions from different functional Heads. This structure strengthens the dissemination of information and better coordination of the staff. By eliminating multiple ... 2. Divisional structure prevents organizations from getting the most out of economies of scale. Because resources specialized in one area, report to the same manager who knows the domain or area as well. So, we have already pointed out the advantages of a flat organizational structure. If you want to learn more about organizational structure types in Project Management you should check out our 100% Online and Self-Paced Project Management Professional Certification Training. At the end of the project, if he leaves the organization, his know-how will be lost as well. Disadvantages of a Functional Organizational Structure In the long term, employees tend to feel bored and the monotony of the job can be off-putting. The main reason of this is, there will be lots of projects needing resources from a single functional department. This causes duplication of the same testing tool for the 2nd project and means additional cost for the organization. This is mainly applied in large projects or product development processes, and hiring employees from different disciplines.. The first disadvantage of this organizational structure type, is that people place more emphasis on their functional specialty to the detriment of the project. Copyright 2020 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. … And whil… Which organizational structure gives the most authority to the project managers? This informal structure, also known as the "company grapevine," influences how information flows within the company. Roles outlined within the matrix organizational structure. Even if he has enough time to do additional work, he is fully dedicated to the project and this unutilized time of the resource cannot be used. This is a type of organizational structure which facilitates a horizontal flow of skills and informations. "description":"Master of Project Academy offers online & self-paced certification courses", 1. A company can change its organizational structure according to the internal or the external conditions or requirements. Simplicity. The operation of the functional organizational structure is, complicated and is not easily understood due to its various technicalities. All courses are 100% Online, Self-Paced and 30 Day Money Back Guaranteed. There are three different organizational structures, Functional Organization, Projectized Organization and Matrix Organization. Do you want to earn money just by sharing this article? In this type of organizational structure, an extra administration is required. The system can pose a problem to the whole organization when the ratio of employees to managers become too out of proportion. And this affects the success of projects respectively. Advantages of a Bureaucratic Structure Even though the bureaucratic structure has received a lot of criticism, it has some advantages. As you see in this table, the authority of the Project managers, resource availability, who manages the project budget, project managers role and how project management administrative staff works are compared and listed for the different organizational structures. Teams and individuals can be very responsive. If the same tool will be needed for a second project in the organization, a new tool needs to be aligned for the new project team since the existing tool solely belongs to the first project team. Matrix organizations are more complex to monitor and control. A horizontal structure is a flatter organizational structure that groups together people based on their skills or functions. So even if they are released from projects, they turn back to their department and start doing departmental work. Disadvantages: Weak customer or product focus, Potentially weak communication among functions, Weak grasp of broader organizational issues, Hierarchical structure. This structure makes it easier to share resources in different divisions. An organizational structure is the hierarchy by which a company outlines its management and communications. After a while, the employees may start feeling monotony or boredom. Let’s consider that a project needs a testing tool to complete its quality assurance activities in a project. For each resource, there will be two bosses: functional and project manager. Master of Project Academy This means the power and the responsibilities of each department. The organizational structure, as the name suggests, affetcts the whole organization’s structure. Project objectives are highly visible in matrix organizations. Unifie… Disadvantages of organizational structure include lopsided management lines, increased bureaucracy, slowed communications, and increased inflexibility. Or when a new project is initiated, they can be re-assigned to new projects. The last advantage of Functional organizations is that they define clear career paths for the staff. Find actual examples of both centralized and decentralized organizational structures. The functional structure is an organizational structure that divides its operations into separate departments or units according to the role of each department. Because there are several disciplines and there will be several resources from these several functional departments in a project. © Because there will be two managers of a resource: functional manager and project manager. The 6 key advantages and disadvantages of a matrix organization. Functional managers may have different priorities than project managers and this causes higher potential for conflict. Furthermore, a bureaucratic culture is based on impersonal relationships, discouraging favoritism. In functional organizations, Project manager’s role, resource availability, control of the project manager on the project are lowest. Businesses working on a specific project could also have a matrix organizational structure that sets up the relationship among the people working on the project. Below are some merits and advantages of line organization or vertical organization 1. Project teams work in the same location, even in the same room in projectized organizations. Another disadvantage of functional organization structure is that these functional groups may not be able to communicate more often which decreases flexibility and innovation. Matrix organizations keep the power and influence of functional and project managers in balance. Some leaders may be overburdened while some coordinates stay idle; some departments may pay too much attention to local target and interests but ignore overall objective and interests; schedule of the whole project might be affected extremely when some leaders are out of work. Learn How. The advantages and disadvantages of a matrix organizational structure make it easier to move resources to the most important projects which need to be completed. The matrix type of project management system involves putting together people from different functional areas, such as marketing and systems, to work together for the project time frame. The advantages and disadvantages of a hierarchical organizational structure involve communication, innovation, and collaboration. Which organizational structure works the best for the company’s overall sustainability. Organizational structures play a key role in effective communication and decision-making. One advantage of such a grapevine is that employees who interact outside the confines of the formal organizational structure often cooperate better, benefiting the organization. Vertical Organizational Structure. Complexity. A large manufacturing firm with multiple factories is likely to have a different organizational structure than a financial services firm with only one office. There is not a career path in project management. Now that we have seen the advantages and disadvantages of the divisional structure, it is … "@context":"http:\/\/\/", Team members report to only one supervisor. Since project resources are dedicated to a project, even if this resource is not 100% utilized, they cannot be allocated to another task. As long as […] The Matrix Organization Structure can deliver this, provided people have the skills to make the matrix work. This will require management and coordination of different functional managers. What needs to be achieved to complete a project successfully is clearly defined and understandable for the project team. For instance, for a software developer working in software development department, developer, senior developer, expert developer, and architect can be a career path as long as he improves his skills and competence. Because their ultimate manager is the project manager. This kind of organizational structure give fair power balance to both functional manager and project manager, that’s why Matrix organizations are the most common organizational structure type in the industry. These disadvantages may not always persist in an organization. This causes the organization to lose its professionalism in disciplines. Because the team members are dedicated to a project and their existence in the organization solely depends on the project they are working for. Compare and contrast the advantages (and disadvantages) of decision making in each. Tools and resources of a project belong to only one project in projectized organizations. How Rules Can Guide People, LinkedIn: Benefits of Grapevine Communication in an Organization, Forbes: The 5 Types Of Organizational Structures: Part 1, The Hierarchy, Forbes: The 5 Types Of Organizational Structures: Part 2, 'Flatter' Organizations. Matrix organizations enable better coordination, better horizontal and vertical dissemination of information. Accountability, predictability, structure and job security are just a few to mention. Firms have organizational structures that show the relationship between the company’s employees and the responsibilities of said employees. A line organisation has only direct, vertical relationships between different levels in the firm. They enable a more sustainable and healthier corporate environment. Because all resources of the project are dedicated to project tasks and assignments. Because resources are grouped based on their specialties. Training: A good organizational structure makes employee training easier to administer, and it also … Disadvantages of Functional Organizational Structure The work can be quite one dimensional. You can work on lots of different things, sometimes in parallel—although this point can be argued as a disadvantage as well. For example the accounting activities of different operations are grouped in on accounting department. Create a specific scenario that would be most effective under each setting. Members of the project team are more loyal in projectized organizations. It will lead to poor … When a company uses this type of structure, it groups its people according to their knowledge and skills which help them become specialists on that field. Although extremely useful for many purposes organizational charts are not for everybody. In Functional Organization, people are grouped by areas of specialization. This is not an example of the work written by professional essay writers. A matrix organizational structure is most commonly used in companies to distribute resources and workers across multiple operations. It can be easily define and explain to all staff. One advantage of the matrix organizational structure is that people across different functional areas have a better understanding of their coworkers in other areas. Because all of these three organizational structures has advantages and disadvantages. This causes lack of professionalism in disciplines. Which type of organizational structure has more focus on the projects? They also create uncertainty within the workplace, as workers may not know who needs to … As a single division does not produce enough to take great benefits out of the economies of scale. One of the greatest costs to the annual budget for a business is labor. This dedication automatically increases the focus and motivation of team members for the success of the project. Mechanistic structures, also called bureaucratic structures, are known for having narrow spans of control, as well as high centralization, specialization, and formalization. This decreases the overall efficiency of the employee. The lack of new challenges can make them unenthusiastic for the job at hand. For instance, for the software projects of a company, software engineer resources will be requested from the software development department. "name":"Certification Courses", Since there will be lots of functional departments and resources, these need to be supported with the policies and procedures in order to avoid conflicts. Speaking of a multinational organization, accounting activities from all the regional offices and the headquarters would be handled by one accounting department. This can create some conflict. In this type of organization shifting of responsibility is not possible because responsibilities are fixed. The cost structure of a business is improved. A vertical organizational structure is based on the reporting chain from the head of the company down. In the functional structure, such as shown in the following Facebook organizational chart, functions are separated into different groups, resulting in some defects.Here are the major disadvantages you must consider: Create Your Own Org Charts! This type of structure can have both advantages and disadvantages within the workplace. In this article, we are going to review the advantages and disadvantages of each organizational structure: Functional, Projectized, and Matrix. Definition A matrix organizational structure is a company structure in which the reporting relationships are set up […] It’s not possible to name one organizational structure as the best for every kind of companies or projects. Matrix organization enables maximum utilization of scarce resources. Master of Project Academy delivered online courses to more than 50,000 participants in more than 170 countries around the world. Last advantage is that a more effective communication is ensured in projectized organizations compared to other organizational structures. Master of Project Academy course portfolio includes but not limited to: To learn more, visit our course portfolio. A matrix organizational structure is one of the most complicated reporting structures a company can implement. If he is assigned to a project, he reports to a project manager as well. A disadvantage is that rumors and gossip can spread through the grapevine. The advantages of tall organizational structures are more opportunities for advancement and more specialized managers; the disadvantages are higher costs and reduced empowerment. The success of the project directly depends on the team members and this increases the loyalty to the project. For instance, if a software architect needs to support a project for only 2 days, he can be assigned to other projects or activities for the remaining days of the week. 3. Decision making may be one-sided, too, as the views of the lower ranks may not to be taken into account. The inter-department communication is very poor this creates an … Because the staff belongs to a department specialized in an area. Advantages of the hierarchical organizational structure are many, the most impelling of which is that your employees will have clearly defined roles and responsibilities, and a sense purpose in accomplishing those roles. Let’s consider that project assignments of a software engineer takes 4 out of 5 days of his work week, so he is 80% utilized. Similar resources are centralized in groups. Let’s consider a software engineer worked in a project. Like every other organizational structure, formalization has its own advantages and disadvantages. First and the most important advantage of this organizational structure type is the efficient project organization. For instance, how to request a resource for a project, how to prioritize projects if they need the same resource, how to release a project team member, they all need to be documented clearly. "@type":"Product", However, there are some basic types of organizational structures, each with its own advantages and disadvantages. Whatever an organization’s formal organizational structure, there is an informal organizational structure that develops. Disadvantages of having an organisation structure are as follows: 1. Every person is crystal clear to whom he is answerable and who are accountable to him. In Projectized Organization, the entire company is organized by projects. Tougher problems with resource allocation is another disadvantage of the Matrix organizations. Projectized organizations use resources less efficiently. The organizational structure could group those who work in a specific department together, or the grouping could be based on those who work in a functional area such as finance or marketing. If there will be lots of projects to initiate, this will cause resource allocation problems respectively. The Disadvantages of Team-Based Organizational Structure.