Traditional (classic) organization

In this way, a general manager has all the functions necessary to deliver a product or service. The activity groups are headed by the departmental or divisional leadership. Each department can maintain a high level of technical expertise and focus.

Advantage:

Easier to budget and control costs.

Greater control of technical resources, since all are managed under the general direction of the department or divisional.

Policies and procedures are consistent across teams that rely on a common management line.

Vertical communication channels are easily defined.

Reaction times are minimal to address any issues.

Disadvantages:

No individual is responsible for the overall execution of a project.

Coordination of resources outside vertical communication channels is difficult.

Communications with clients are channeled through senior management.

Each functional group can play for power within the hierarchy.

Projects tend to be delayed due to the complexities of coordination.

Organization of pure product (projected)

In this way, the product manager maintains authority over the project. They can assign work, but also conduct reviews. With everyone reporting to a single person, communication is strong, resulting in a very quick reaction time.

Advantage:

Full authority on resources and on the project.

All work is channeled through the project manager.

Communication is strong with the unique reporting structure.

Better morale with more ownership of an individual’s work

More flexibility to make time and cost concessions.

Top management buys more time for executive decision-making rather than dealing with departmental or divisional matters.

Disadvantages:

Possibility of inefficient use of resources when multiple products are introduced due to duplication of efforts in the use of resources.

Workload balancing needs to be managed as projects are closed and started.

Limited use of advanced technology in project implementation due to lack of strong functional groups to research and implement.

There is no knowledge transfer of lessons learned between projects.

Matrix organization

This form attempts to merge the benefits of traditional and product organization structures. The project manager has full responsibility for the project, while the functional managers maintain technical excellence in their direct organizations.

Advantage:

The PM maintains complete control of the project through resource management.

Policies and procedures are established for each project so that they are meaningful to the project and not more general.

Quick response to changes and resolution.

When a project is completed, work in your own group continues as it was before the project.

Conflicts are minimized and those that arise are easily remedied by working in hierarchical management.

Disadvantages:

The flow of information moves in multiple directions.

Resources must be reported to functional management and project management.

Management objectives may differ from project objectives.

Additional time and effort is required to develop project-specific policies and procedures.

While response time can be fast, reaction time can be slow.

Strategic Business Unit (SBU)

In this way, the organization separates the business units into their own entities that are responsible for their own promotion of the organization’s core businesses. These business units are customer-centric and some resources can be shared between the business units. Accounting, training and human resources services can be provided by the general corporate structure.

Advantage:

Customer-centric at the SBU level, leaving the overall organization to focus on running the business

Each SBU can manage its own product and project managers.

Disadvantages:

With the ability to share resources between SBUs, the line of management (resource owners) is blurry and can cause confusion.

Conflict can occur at higher levels of management in the SBU, pushing your way to resources in the SBU.