Since project resources are dedicated to a project, even if this resource is not 100% utilized, they cannot be allocated to another task. Lets get started by exploring the benefits of organizational charts. Because the team members are dedicated to a project and their existence in the organization solely depends on the project they are working for. In Functional Organization, people are grouped by areas of specialization. Some advantages for bureaucratic structures for top-level managers are they have a tremendous control over organizational structure decisions. Responsibility is fixed.In this form of organization responsibilities are fixed and defined. This means that there are less wages, fringe benefits, and so on, to pay for management. Every organization should review these matrix organizational structure advantages and disadvantages to see if this approach might offer usefulness. One of the advantages of a functional structure is the positive atmosphere it provides for skill development. 1. There are several advantages to using the matrix organizational structure. For example, in a flat structure in which employees are given wide latitude to make suggestions and take ownership of their work process, decisions are made based on the consensus of employees working in a team. They enable a more sustainable and healthier corporate environment. This is the result of the flow of communication that an organizational structure offers, as well as the establishment of responsibility and respect for the company hierarchy that comes from strong structure. Projectized organizations use resources less efficiently. The success of the project directly depends on the team members and this increases the loyalty to the project. And it allows training to remain flexible based on the changes within the organization. 6. Because team members of the project are reporting to the project manager as well and this gives respective authority to the project manager. Loss bearing divisions can be shut down completely while more investments can be made in profit earning divisions. Advantages of Divisional Structure Accountability. For example, the person heading the IT department will have the education and skill necessary to shoulder this responsibility and successfully run his team. In case of a lack of technical knowledge, the resources can consult to their senior colleagues or managers within the same functional domain. List of the Advantages of the Matrix Organizational Structure. For instance, software developers belong to the IT department or sales specialists belong to the sales department. 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. This dedication automatically increases the focus and motivation of team members for the success of … Advantages of Formal Organization. Matrix organizations need extensive policies and procedures. Without structure, there’s next to no clearness and center; no one knows whom to answer to and duties are passed around like a hot potato. 3. Advantages & Disadvantages. Project teams work in the same location, even in the same room in projectized organizations. It helps the company to use resources wisely in the pursuit of company goals as opposed to doubling efforts or experimenting with options perhaps not in the company's best interests. 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. Organizational structure also allows employees to clearly understand the divisions between lower, middle and senior management. 3. 2. List of the Advantages of a Hierarchical Organizational Structure 1. Learn How. 9. So even if they are released from projects, they turn back to their department and start doing departmental work. Organizational structures help businesses save money in many ways. Did you take a look at our Certification Courses? This increases the effective and efficient communication among the project team. The advantages of Functional Organization: The team is managed by an experienced person with a high ability and skills who can adequately understand and review the entire work. 4. Because the staff belongs to a department specialized in an area. There Is Proper Authority and Control Over Employees In a hierarchical structure, functional … Matrix organizations enable better coordination, better horizontal and vertical dissemination of information. Matrix organizations keep the power and influence of functional and project managers in balance. 2. Functional managers may have different priorities than project managers and this causes higher potential for conflict. In a top-down structure, decision-making occurs at the senior management level and is then clearly communicated to the rank-and-file to implement. When organizational structure regulates the flow of information, then changes in information are easier to monitor and update in a company-wide training program. Following are the important advantages of functional organizational structure: 1. Fast response to change. Sampson Quain is an experienced content writer with a wide range of expertise in small business, digital marketing, SEO marketing, SEM marketing, and social media outreach. Matrix organization enables maximum utilization of scarce resources. { Diverse interestsare consolidated to the above problems. The last advantage of this type of organizational structure is that team members maintain a home. Structure is the motivation behind why we allude to organizations as “associations.” It helps managers manage the human resources issues. In functional organizations, Project manager’s role, resource availability, control of the project manager on the project are lowest. It also helps employees understand what are their positions, who are … If you want to learn more about these three types of organizational structures a detailed article can be found here. Let’s consider that a project needs a testing tool to complete its quality assurance activities in a project. By organizing employees according to business functions, departments can reduce the chance for multiple departments to complete similar work. Although they are assigned to a project, they take the directions of their functional managers more seriously compared to a project manager’s direction. This reduces the conflicts or contradictions of reporting to both project and functional manager. This helps to prevent duplication of work. Every person is crystal clear to whom he is answerable and who are accountable to him. A sound company structure can benefit your organization in several ways, including making it easier to delegate responsibility and affecting change throughout the workplace. The organizational structure, as the name suggests, affetcts the whole organization’s structure. This structure makes it easier to share resources in different divisions. Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical functional structure . This will require management and coordination of different functional managers. 5. 1. The roles and responsibilities are specified. Efficient use of support systems. And improving skills, knowledge, and competence in that specialization can be proposed as a career path for the resource. "@type":"Product", Do you want to earn money just by sharing this article? Matrix organization for a small and large business: An outline, advantages, disadvantages, conclusion. Salary-related expenses are reduced, enabling the company to save money as well as provide better pay for its workers.2. A strong organizational structure is better able to prepare qualified employees for management. Master of Project Academy The functional manager wouldn’t want to assign a resource to the project since he wants to complete the departmental work first. Strategic decision-making is also faster because there are fewer people it has to go through to approve. This causes the organization to lose its professionalism in disciplines. Organizational Structures | What are the Advantages and the Disadvantages of Different Organizational Structures? Because resources specialized in one area, report to the same manager who knows the domain or area as well. This structure strengthens the dissemination of information and better coordination of the staff. It can easily be seen which department is successful in making profits while which are bearing losses. It Is Cost Efficient As mentioned, in this organizational structure, there are fewer (or no) manager layers between the executive and the staff. When multiple departments are involved in a single endeavor, a unified marketing message can be essential to project success. First and the most important advantage of this organizational structure type is the efficient project organization. 2. 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. Which organizational structure gives the most authority to the project managers? Members of the project team are more loyal in projectized organizations. Project Management Professional Certification Training, Certified Ethical Hacker Certification Training. Which organizational structure works the best for the company’s overall sustainability. This works best for managers who have a command and control style of managing. In other words, an organizational structure is a framework that helps your employees achieve their goals and do their jobs in the most efficient and productive way. What needs to be achieved to complete a project successfully is clearly defined and understandable for the project team. This structure creates a system by which you can delegate decisions, identify roles and responsibilities and define the chain-of-command. Employees and department managers are skilled because they are experienced in the same field of business. The reporting hierarchy is well defined and employees don’t have to report to multiple manag… Instead of the C-Suite needing their middle managers to collect information assets from the front-line staff and then reporting it to them, they can obtain the information directly. 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