Describe each of the three major types of organizational structure.

A functional organizational structure is the hierarchy most people think of when picturing an organizational chart. Functional managers or vice presidents in specialties such as engineering, manufacturing, information technology (IT), and human resources (HR) report to the chief executive officer (CEO). Their staffs have specialized skills in their respective disciplines. For example, most colleges and universities have very strong functional organizations. Only faculty in the Business department teach business courses; faculty in the History department teach history; faculty in the Art department teach art, and so on.

A project organizational structure also has a hierarchical structure, but instead of functional managers or vice presidents reporting to the CEO, program managers report to the CEO. Their staffs have a variety of skills needed to complete the projects within their programs. An organization that uses this structure earns their revenue primarily from performing projects for other groups under contract. For example, many defense, architectural, engineering, and consulting companies use a project organizational structure. These companies often hire people specifically to work on particular projects.

A matrix organizational structure represents the middle ground between functional and project structures. Personnel often report to both a functional manager and one or more project managers. For example, information technology personnel at many companies often split their time between two or more projects, but they report to their manager in the Information Technology department. Project managers in matrix organizations have staff from various functional areas working on their projects. Matrix organizational structures can be strong, weak, or balanced, based on the amount of control exerted by the project managers.