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Chapter 3
ORGANIZATION: STRUCTURE AND CULTURE
Chapter Outline
1. Project Management Structures
First we need to go back and understand that Projects are unique, one-time efforts
with a distinct beginning and ending. Most functional organizations are designed
to efficiently manage ongoing day to day activities. We will explore the potential
outcomes when the two are integrated.
A. Organizing projects within the Functional Organization
This approach is to simply manage projects within the existing functional
hierarchy of the organization, where coordination is maintained through
normal management channels. This can have advantages and disadvantages.
Advantages:
1) No Change: Projects are completed within the basic functional structure
of the parent organization. Nothing changes.
2) Flexibility: There is maximum flexibility with the use of staff and
resources.
3) Easy Post-Project Transition: Normal career paths are maintained.
Individuals are able to easily transition back to what they typically do.
Disadvantages:
1) Lack of Focus: Sometimes the Project’s responsibilities get pushed aside
to meet primary/everyday activities.
2) Poor Integration: Certain team members may only be concerned with
their portion of the project and not what is best for the overall project.
3) Slow: Because project information and decision making have to be
circulated through normal management channels, there is a slower
response time.
4) Lack of Ownership: Because team members are only working on one
segment of the project, they feel that they are not really linked to the
overall project.
B. Organizing Projects as Dedicated Teams
Here, dedicated teams are created and operate as separate units from the rest
of the parent organization. The Project Manager pulls together a team whos
sole focus is on that particular project.
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Advantages:
1) Simple: The functional organization remains intact to perform its daily
duties, while the Project Team operates independently.
2) Fast: No hierarchy required for decision making and team members are
able to devote their full attention to the project without being distracted by
other duties.
3) Cohesive: Participants share a common goal and personal responsibility
toward the project and the team.
Disadvantages:
1) Expensive: New management position created and all resources are
assigned on a full time basis.
2) Internal Strife: Sometimes project teams take on an entity of their own.
Here, a sense of separation from the parent company emerges.
3) Limited Technological Expertise: Creating self-contained teams limits
maximizing the talent available to the rest of the organization.
4) Difficult Post-Project Transition: It can be difficult re-integrating
personnel back into the typical functional organization of the parent
company. Because of their long absence, there might not be a project to
put personnel into and the catch up process might be too difficult.
C. Projectized Organization:
This is basically where the traditional departments such as human
resources and marketing are not only responsible for their standard duties
but also work part-time on several projects.
D. Organizing projects within a Matrix Arrangement
Matrix management is a hybrid organizational form in which a horizontal
project management structure is “overlaid” on the normal functional
hierarchy. Basically, the project participants report simultaneously to both
the functional manager and the project manager.
Project Manager: What has to be done?
Functional Manager: How will it be done?
E. Different Matrix Forms
1. Weak matrix:
The project manager has indirect authority to expedite and monitor a
project. Functional managers call most of the shots and decide who
does what and when.
2. Balanced matrix:
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The project manager is responsible for defining what needs to be
accomplished. The functional manager is concerned with how it will
be accomplished.
3. Strong matrix:
The project manager controls when and what is to be accomplished
and has final say on major project decisions. The functional manager
has title over their people and is consulted on an as needed basis.
Advantages of Matrix Organization:
1) Efficient: Resources can be shared across multiple projects as well as
within functional divisions.
2) Strong Project Focus: A stronger project focus is provided by having a
formally designated project manager who is responsible for coordinating
and integrating resources.
3) Easier Post Project Transitions: Team members maintain ties with their
functional group, so they have a homeport to return to once the project is
completed.
4) Flexible: There is flexible utilization of resources and expertise within the
firm.
Disadvantages of Matrix Organization:
1) Dysfunctional Conflict: There can be tension between the project
manager and the function manager during the course of the project.
2) Infighting: Because resources, equipment, and people are being shared
between projects and functional activities, conflict can arise.
3) Stressful: Because projects have two bosses – one boss may require you
to do something that the other disapproves of.
4) Slow: Decisions can get bogged down because of disagreements between
the managers.
2. What is the right Project Management Structure?
A. Organizational considerations:
1) How important is project management to the success of the firm?
2) What resources are available?
3) Has the organization assessed its current practices?
4) What changes are needed to more effectively manage projects?
B. Project considerations:
1) Size of the project.
2) Strategic importance.
3) Novelty and need for innovation.
4) Need for integration.
5) External Complexity
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6) Budget and time constraints.
7) Stability of resource requirements.
3. Organization Culture:
“It will never work at my old company, but here at this company, we are able to
pull it off”
A. What is Organization Culture?
Organizational culture refers to a system of shared norms, beliefs, values, and
assumptions which binds people together. This system is manifested by
customs and habits that exemplify the values and beliefs of the organization.
*10 primary characteristics of an organization’s culture:
1) Member Identity – the degree to which employees identify with the
organization as a whole rather than their field of expertise.
2) Team Emphasis – the degree to which work activities are organized
around groups rather than individuals.
3) Management Focus – the degree to which management decisions take
into account the effect on people within the organization.
4) Unit Integration – the degree to which units within the organization
are encouraged to operate in a coordinated manner.
5) Control – the degree to which rules, policies, and direct supervision
are used to oversee and control employee behavior.
6) Risk Tolerance – the degree to which employees are encouraged to be
aggressive, innovative, and risk seeking.
7) Reward Criteria – the degree to which promotions and salary
increases are based on performance rather than seniority or favoritism.
8) Conflict Tolerance – the degree to which employees are encouraged
to air conflicts and criticisms openly.
9) Means versus end orientation – the degree to which management
focuses on outcomes rather than techniques to achieve results.
10) Open-systems focus – the degree to which the organization monitors
and responds to changes in the external environment.
*Importance of Culture in Organizations:
1) It provides a sense of identity for its members.
2) It Generates commitment to the organization.
3) Members tend to devote more energy and loyalty to the organization.
4) It helps clarify authority relationships.
5) It clarifies and reinforces standards of behavior.
6) It helps create social order within the organization.
7) It provides stability and predictability in behavior.
B. Identifying Cultural Characteristics:
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Deciphering and organization’s culture is a highly interpretive, subjective
process that requires assessment of both the current and past history. The
student of culture cannot simply rely on what people report about their
culture. The physical environment in which people work, as well as how
people act and respond to different events that occur, must be examined.
1)
2)
3)
4)
Study the physical characteristics of the organization.
Read about the organization.
Observe how people interact within the organization.
Interpret stories and folklore surrounding the organization.
4. Implications of Organization Culture for Organizing Projects:
Project managers have to be able to operate in several, potentially diverse,
organizational cultures. They have to be able to read and speak the culture they
are working in to develop strategies, plans, and responses that are likely to be
understood and accepted.
1) First, they have to interact with the culture of their parent organization as well
as subcultures of various departments.
2) Second, they have to interact with the project’s client or customer
organization.
3) Finally, they have to interact with a host of other organizations connected to
the project, which are likely to have very different cultures.
5. Summary
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