Organizational structures and their impact on stakeholder management

Organizational structures can be broadly classified into;

  • Functional organization
  • Matrix organization
    • Strong matrix
    • Weak matrix
    • Balanced matrix
  • Projectized organization
  • Composite organization

Functional organization

Most of the manufacturing / service organizations are divided functionally. Each function will have a head, who in turn reports to the CEO. For example an automobile manufacturer will have functions  like;

  • Manufacturing
  • Sales & Marketing
  • Research and development
  • Procurement
  • Finance
  • Human resources etc..

Each of these functions are headed by a senior manager (functional managers), who in turn report to the CEO.

Matrix Organization 

In matrix organizations, the team members report to more than one boss. Team members may report to the project manager for the project related activities, and to the functional manager for specific function related activities. For example, a technical architect in a project may report to the project manager for project related activities and at the same time report to the Chief Technology officer (CTO) for technology related stuff. Most of the product companies, which calls for multi-disciplinary skills to develop the product of the project falls into this category.  Matrix organizations are further subdivided into;

  • Strong matrix (Project managers have more authority than the functional managers)
  • Weak matrix (Functional managers have more authority than the project managers)
  • Balanced matrix (Both the functional manager and the project manager have the same authority levels.

Projectized organizations

In projectized organizations, whatever they do is a project. For example; I.T projects companies, Civil projects companies etc. They perform projects after projects. Project manager and the teams are the breadwinners of the organization. Project managers have maximum authority levels in projectized organizations. In projectized organizations, all other functions play the support role to the project.

Composite organizations 

Composite organizations have a combination of functional, matrix and projectized structure.

A through understanding of the stakeholder’s (customers, suppliers and your own organization) organizational structures will help in accurate mapping of the stakeholders into;

  • High power – high interest
  • High power – low interest
  • Low power –  high interest
  • Low power – low interest

Examples

  • Project managers in functional organizations have very low authority levels
  • Functional managers have more authority than the project managers in functional organizations
  • Project managers have maximum authority in projectized organizations
  • In matrix organizations, the power of the project manager and the functional manager varies based on whether it is a ;
    • Strong matrix
    • Weak matrix
    • Balanced matrix

This knowledge will help us to go beyond what is drafted in the contractual documents and manage key stakeholders very effectively.

The following videos explains this further

Why proper stakeholder identification is a critical success factor for your project?

Anybody who is affected positively or negatively, by doing a project or by delaying a project is a stakeholder. Identifying the key stakeholders upfront helps to capture and manage their expectations proactively. For any given project the direct stakeholders are;

  • Sponsor (customer) of the project
  • Project manager
  • Delivery head
  • Team
  • End users of the product of the project
  • Business analysts
  • Product owner

The indirect stakeholders list can be very vast, and at the same time identifying and managing the indirect stakeholders is key to the project’s success.  It is very difficult to come out with a universal list of indirect stakeholders. Here is a sample;

  • Families of team members (If they are unhappy, most probably the team member may resign her job soon)
  • Competitors (They can recruit some of your key team members)
  • End users of competitors products (Customer complaints, especially against your competitor’s products is very useful)
  • Intellectual property bodies (do not violate them knowingly or unknowingly)
  • Government agencies (must manage well)
  • Trade unions (be careful, if your product is going to disrupt an existing market. Online taxi operators like Uber, Ola  Vs traditional taxi operators, Amazon Vs traditional shops)
  • Product review groups (social media) (Most of them are paid reviewers. Do not forget to budget for them)
  • Any other groups (Even the name of your project / product should not harm anyone’s culture, religion etc…)
  • Any citizen (farmers, drivers, pedestrians, vehicle owners…anyone) who is affected negatively during or after the project.

It is worth spending time to identify the key stakeholders and their impact on your project / product individually and collectively, at the beginning of the project and throughout the project.

Once the stakeholder list is prepared, the next logical step is to group them into;

  • High power, high interest group
  • High power, low interest group
  • Low power, high interest group
  • Low power, low interest group

and develop strategies to maintain a high degree of stakeholder interest in your project / product (stakeholder engagement). If all the key stakeholders are happy during and after the project, your project is a success story.

Reference stakeholder mapping