Topic 3

Organization:
Structure and Culture
 Project Management Structures
• Challenges to Organizing Projects
– The uniqueness and short duration of projects relative
to ongoing longer-term organizational activities
– The multidisciplinary and cross-functional nature of
projects creates authority and responsibility dilemmas.
• Choosing an Appropriate Project Management
Structure
– The best system balances the needs of the project
with the needs of the organization.
 Project Management Structures
• Organizing Projects within the Functional organization
– Different segments of the project are delegated to respective
functional units.
– Coordination is maintained through normal management
channels.
– Used when the interest of one functional area dominates the
project or one functional area has a dominant interest in the
project’s success.
- Uses existing functional organizational hierarchy
Functional Organization
 Functional Organization of Projects
• Advantages • Disadvantages
– No Structural Change – Lack of Focus
No radical alteration in the Each functional unit has it own core
design and operation of routine work to do
the parent organization
– Poor Integration
– Flexibility Across functional units
Max flexibility in the use of – Slow
staff
Takes longer to complete projects
– In-Depth Expertise through this functional arrangement

– Easy Post-Project – Lack of Ownership

Transition Discourages strong commitment to
project related activities
 Project Management Structures (cont’d)
• Organizing Projects as Dedicated Teams
– Teams operate as separate units from the rest of the parent
organization
– A full-time project manager is designated to pull together a
core group of specialists who work full time on the project
– The project manager recruits necessary personnel from
both within and outside the parent organization. .
Dedicated Project Team
 Project Management Structures (cont’d)
• Organizing Projects as Dedicated Teams
– In an organization where projects are the dominant form of
business, functional departments are responsible for
providing support for these project teams.
– For example, the marketing department is directed at
generating new business that will lead to more projects,
while the HR department is responsible for managing a
variety of personnel issue as well as recruiting and training
new employees.
– This type of organization is referred to in the literature as a
Project Organization or Projectized Organization
Project Organizational Structures
 Project Organization: Dedicated Team
• Advantages • Disadvantages
– Simple – Expensive
The functional organization remains Creating a new management,
intact with the project team resources are assigned on a
operating independently full time basis
– Fast – Internal Strife
Project participants devote their full Projectitis: strong divisiveness
attention to the project and not (the we–they syndrome)
distracted by other obligations
– Limited Technological
– Cohesive Expertise
Participants share a common goal and Creating self-contained teams
personal responsibility toward the inhibits maximum technological
project and the team. expertise
– Difficult Post-Project Transition
– Cross-Functional Integration
 Project Management Structures (cont’d)
• Organizing Projects within a Matrix Arrangement
– Hybrid organizational structure (matrix) is overlaid on the
normal functional structure.
• Two chains of command (functional and project)
• Project participants report simultaneously to both functional and
project managers.
– Matrix structure optimizes the use of resources.
• Allows for participation on multiple projects while performing
normal functional duties.
• Achieves a greater integration of expertise and project
requirements.
Matrix Organization Structure
 Division of Project Manager and Functional
Manager Responsibilities in a Matrix Structure

Project Manager Negotiated Issues Functional Manager

What has to be done? Who will do the task? How will it be done?

When should the task be done? Where will the task be done?

How much money is available to Why will the task be done? How will the project involvement
do the task? impact normal functional activities?

How well has the total project Is the task satisfactorily How well has the functional
been done? completed? input been integrated?
 Different Matrix Forms
• Weak Matrix
– Matrices in which the authority of the functional manager
predominates and the project manager has indirect authority (the
FM is the big boss).
• Balanced Matrix
– The traditional matrix form in which the project manager sets the
overall plan and the functional manager determines how work to be
done (assigns personnel).
• Strong Matrix
– Resembles a project team in which the project manager has
broader control (decides when and what specialists do, has final
say on major decisions) and functional departments act as
subcontractors to the project.
 Project Organization: Matrix Form
• Advantages • Disadvantages
– Dysfunctional Conflict
– Efficient Tension between functional
Resources can be shared managers and project managers
across projects and
– Infighting
functional divisions
conflict and competition for scarce
– Strong Project Focus resources (equipment, resources,
Provided by having a formally and people)
designated project manager – Stressful
– Easier Post-Project Transition Project participants have at least
Specialists maintain ties with two bosses
their functional group – Slow

– Flexible the disadvantages depend on the

organizations culture
Flexible utilization of resources
and expertise
 Choosing the Appropriate Project
Management Structure
• Organization Considerations
– How important is project management to the success of the
firm? That is, what percentage of core work involves projects?
– If over 75 percent of work involves projects, then an
organization should consider a fully projectized organization.
– If an organization has both standard products and projects, then
a matrix arrangement would appear to be appropriate
– If an organization has very few projects, then a less formal
arrangement is probably all that is required. Dedicated teams
could be created on an as-needed basis and the organization
could outsource project work.
 Choosing the Appropriate Project
Management Structure

• Organization Considerations
– A second key question involves resource availability: What
level of resources (human and physical) are available?
– For organizations that cannot afford to tie up critical
personnel on individual projects, a matrix system would
appear to be appropriate.
– An alternative would be to create a dedicated team but
outsource project work when resources are not available
internally.
 Project Management Structures
• Project Considerations
– At the project level, the question is how much autonomy the project needs in
order to be successfully completed?
– Hobbs and Ménard (1993) identify seven factors that should influence the
choice of project management structure:
– Size of project
– Strategic importance
– Novelty and need for innovation
– Need for integration (number of departments involved)
– Environmental complexity (number of external interfaces)
– Budget and time constraints
– Stability of resource requirements
– the higher these factors, the more control (autonomy & authority ) the PM
needs to be successful.
• Use dedicated teams or strong matrix with projects that are large complex, need
input from many depts, frequent assessment from customers, high innovation,
and high strategic value.
 Organizational Culture
• Organizational Culture Defined
– A system of shared norms, beliefs, values, and assumptions
which bind people together, thereby creating shared
meanings.
– The “personality” of the organization that sets it apart from
other organizations.
– like an individual’s personality, can enable us to predict
attitudes and behaviors of organizational members
 Key Dimensions Defining an Organization’s Culture

Research suggests that there are 10 primary characteristics that, in

aggregate, capture the essence of an organization’s culture:
1. Member identity—the degree to which employees identify with
the organization as a whole rather than with their type of job or
field of professional 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 of outcomes on people within
the organization.
4. Unit integration—the degree to which units within the
organization are encouraged to operate in a coordinated or
interdependent manner.
5. Control—the degree to which rules, policies, and direct
supervision are used to oversee and control employee behavior.
 Key Dimensions Defining an Organization’s Culture

6. Risk tolerance—the degree to which employees are encouraged

to be aggressive, innovative, and risk seeking.
7. Reward criteria—the degree to which rewards such as
promotion and salary increases are allocated according to employee
performance rather than seniority, favoritism, or other
nonperformance factors.
8. Conflict tolerance—the degree to which employees are
encouraged to air conflicts and criticisms openly.
9. Means versus ends orientation—the degree to which
management focuses on outcomes rather than on techniques and
processes used to achieve those results.
10. Open-systems focus—the degree to which the organization
monitors and responds to changes in the external environment
Key Dimensions Defining an Organization’s Culture
 Functions of Organization’s Culture

 It provides a sense of identity for its members. The more clearly an

organization’s shared perceptions and values are stated, the more
strongly people can identify with their organization and feel a vital
part of it. Identity generates commitment to the organization and
reasons for members to devote energy and loyalty to the
organization.

 It helps legitimize the management system of the organization.

Culture helps clarify authority relationships. It provides reasons
why people are in a position of authority and why their authority
should be respected

 It clarifies and reinforces standards of behavior. Culture helps

define what is permissible and inappropriate behavior
 Identifying Cultural Characteristics
• Study the physical characteristics of an
organization.
• Read about the organization.
• Observe how people interact within the
organization.
• Interpret stories and folklore surrounding the
organization.
Organizational Culture Diagnosis Worksheet

Have a look at
FIGURE 3.6 in the
book
 Implications of Organizational Culture
for Organizing Projects

• Challenges for Project Managers in Navigating

Organizational Cultures
– Interacting with the culture and subcultures of the parent
organization
– Interacting with the project’s clients or customer
organizations
– Interacting with other organizations connected to the
project
Cultural Dimensions of an Organization Supportive
of Project Management