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PM/U3 Topic 1 Organizational Structure and Quality Issues: Introduction, Concept of Organizational Structure

Concept of Organizational Structure

A project operates in with people, process and technology of an organization. Projects have an impact on the culture, policies, procedures and other aspects of an organization. The organizational structure has a major influence on the execution of the project. The organizational structure decides the resources, communication methods and other aspects of project management.

Different types of organizational structures include:

(i) Functional

This is the most common form of an organization. Organizational departments are grouped by areas of specialization within different functions. In these organizations, the project generally occurs in a silo environment, i.e. within the same function. Team members complete the project work over and above their responsibilities to normal departmental work. Communication primarily occurs within the same function.

(ii) Projectized

In a projectized environment, the entire company is organized by projects, and the project manager is in control of the projects. Individuals or employees are assigned to projects and report to a project manager. One’s the project is over, they need to be assigned to another project. Communication primarily occurs within the same project.

(iii) Matrix

In a matrix organization, the team members report into two bosses: the functional manager and the project manager. Communication goes from team members to both bosses. The matrix organization is created to get the best potential from both functional and projectized type of organizational structure. Team members have departmental work and they also do project work.

Depending on the strength of the matrix organization, the power or level of authority varies between the project manager and the functional manager. In a strong matrix organization, the power remains with the project manager. In a weak matrix organization, the power remains with the functional manager. The project manager is considered to be a coordinator or an escalator. In a balanced matrix, the power is equally balanced between the project manager and the functional manager.

(iv) Smart Study

In the PMP exam, if the organizational structure is not defined, please assume it is a Matrix organization structure. Similarly, if you see a term “tight matrix organization”, please remember it has nothing to do with matrix organization. It simply refers to locating offices of the project team in one room.

Apart from the above, there are more organization types as follows:

  • Organic or simple which is a flexible organization
  • Virtual, in which the project manager makes a connection to others thereby a network of people is created
  • Multi-divisional, wherein functional groups are decentralized across geographies
  • Note: The projectized organization is also called a project-oriented organization. Sometimes this may be derived from a composite (a mix of organization types, or a hybrid organization)

Quality & Organizational Structure

Quality assurance principles require an organizational structure that links responsibility for quality directly to the executive level of the company. Large organizations fulfill this requirement by appointing a quality assurance manager who reports to the CEO. The organizational structure also has to provide the QA manager with direct organizational paths into every department. Small businesses can meet these requirements by assigning the QA responsibilities to someone in management, giving him the authority to manage QA matters throughout the company and creating a QA reporting path to the executive level. Employees continue to report to their department manager for disciplinary and non-QA matters, but report to the person responsible for QA on quality questions.

  • Design: Quality assurance principles require the verification of all design work. In small businesses, designers can check their own work, but they have to do it as a separate process. On an organizational level, this means that the design department doesn’t need a special quality function. All designers are responsible for the quality of their own work, under the supervision of the manager responsible for quality. They sign drawings and design documentation as designer and then check their work, initialing it when verified. They also keep track of revisions. The manager in charge of quality can use his organizational access to perform spot checks.
  • Sales and Marketing: Quality in sales and marketing means that sales and marketing material matches the documented characteristics of the company’s products and services. Typically, sales personnel and marketing managers are responsible for the quality of the materials they create. The manager in charge of quality can use his organizational access to periodically review sales and marketing material. If he finds discrepancies, he may try to resolve them directly with the person responsible through his direct supervisory path in the organization. If he is not satisfied with the results, he can use his organizational access to the executive level to report the problem and suggest solutions.
  • Production: Production is a key company department for quality and normally requires its own quality function. Quality in a product means that the product corresponds with the needs and expectations of the customer. The two aspects of production quality are the specification of the product and its production according to the specification.
  • The responsibility for verifying that the specification matches customer needs and expectations usually rests with the manager responsible for quality. He makes sure production has the appropriate documentation. Within the production department’s organization, responsibility for quality lies with testing. The production department assigns responsibility for quality to a member of the testing group who then reports to the manager in charge of quality on quality issues. The manager can use his organizational direct access to production to identify and solve problems or report them to the executive level of the company.
  • Human Resources: In human resources, quality means that job descriptions are clear, the required education and training is specified for each position and the personnel files include proof of the required education and training for each employee. The responsibility for quality lies with the department manager. The manager responsible for quality works with the department manager through the organizational link, giving him direct access to the department. Together, they verify that employee files satisfy quality requirements.


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