Composite organizational structure

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In the below post you will find some very useful information about a very common but yet quite confusing organizational structure. The composite organizational structure is on of the 4 principal structures that we encounter in a typical PMP exam (functional, matrix, projectized, composite). Enjoy reading!


Traditional organisational structures were triangular, with the president or CEO at the top. As you descended the organizational chart, the numbers of managers and employees increased, each reporting to their immediate superior. This type of organization is efficient for operations but less suitable for monitoring and controlling functions, which require direct access to the lower levels of the Organization where work is done. A composite organization chart provides such direct access by providing multiple paths of responsibility and reporting.

Composite Organization Charts

A particular employee in a company organized according to a composite organization chart typically has several superiors to whom he reports, depending on the area of activity. The disciplinary, contractual and operational facets may still be shown in the traditional manner, with the employee’s supervisor in these matters located in a box one level up the chart. Specific other functions that do not strictly relate to these aspects of the employee’s work may be shown as an additional chart, superimposed on the main one, and entering the individual boxes from the side. Dotted lines are often used to detail the organizational structure that governs these additional functions.

Financial Controls

Financial controls evaluate to what extent the company’s operations are meeting the goals of its financial plans. Reliable cost information is only available at the lowest levels of a typical company, where the actual costs are generated and captured. Filtering this information back up though the traditional organizational structure generally results in loss of detail. Since the information is designed to evaluate the performance of the operational unit, running it back up through the unit itself is usually not effective. Good financial controls access lower level financial information directly through a second functional path available only in companies that have a composite organizational structure.

Quality Assurance

Another example of functionality that requires a composite organizational structure is quality assurance. The rules for implementing quality assurance programs specify that the quality assurance manager must report directly to upper management. To perform his quality assurance evaluations and implement quality control functions, the quality assurance manager must also have direct access to operating units and customer service. A composite organizational structure allows this direct access to the highest and lowest organizational levels of the company at the same time.

Data Security

More recently, data security has become a priority for many companies, and most are choosing to implement increased data security through a functional addition to their composite organizational structure. Data security specialists, either in-house or external experts, are given direct access to departments to ensure that sensitive financial and personal information is not accessible from outside the company. Such direct access bypasses traditional organizational bottlenecks such as budget and manpower concerns and ensures the execution of the particular function as planned by top management.

Source: http://smallbusiness.chron.com/

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