Organization: Structure and Culture

Chapter Three

3–1

Where We Are Now

Learning Objectives

1. Identify different project management structures and

understand their strengths and weaknesses

2. Distinguish three different types of matrix structures

and understand their strengths and weaknesses

3. Understand organizational and project considerations

that should be considered in choosing an appropriate

project management structure

4. Appreciate the significant role that organizational

culture plays in managing projects

5. Interpret the culture of an organization

6. Understand the interaction between project

management structure and the culture of an

organization 3–3

Chapter Outline

3.1 Project Management Structures

3.2 What Is the Right Project Management

Structure?

3.3 Organizational Culture

3.4 Implications of Organizational Culture for

Organizing Projects

3–4

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

– A good system balances

the needs of the project

with the needs of the

organization.

Project Management Structures (cont’d)

• Organizing Projects: Functional Organization

– Different segments of the project are delegated

to respective functional units.

– Coordination is maintained through normal

management channels.

– It is used when the interest of one functional area

dominates the project or one functional area has

a dominant interest in the project’s success.

Functional Organizations

FIGURE 3.1

Functional Organization

• Advantages

1. No structural

change

2. Flexibility

3. In-depth expertise

4. Easy post-project

transition

• Disadvantages

1. Lack of focus

2. Poor integration

3. Slow

4. Lack of ownership

Project Management Structures (cont’d)

• Organizing Projects: Dedicated Project Teams

– Teams operate as separate units under the

leadership of a full-time project manager.

– In a projectized organization where projects are the

dominant form of business, functional departments

are responsible for providing support for its teams.

Dedicated Project Team

FIGURE 3.2

Project Organization: Dedicated Team

• Advantages

1. Simple

2. Fast

3. Cohesive

4. Cross-functional

integration

• Disadvantages

1. Expensive

2. Internal strife

3. Limited technological

expertise

4. Difficult post-project

transition

Projectized Organization Structure

FIGURE 3.3

Project Management Structures (cont’d)

• Organizing Projects: Matrix Structure

– 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

FIGURE 3.4

Division of Project Manager and Functional

Manager Responsibilities in a Matrix Structure

TABLE 3.1

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 Why will the task be done? How will the project involvement

to 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 Form

– The authority of the functional manager predominates

and the project manager has indirect authority.

• Balanced Form

– The project manager sets the overall plan and the

functional manager determines how work to be done.

• Strong Form

– The project manager has broader control and

functional departments act as subcontractors

to the project.

Project Organization: Matrix Structure

• Advantages

1. Efficient

2. Strong project focus

3. Easier post-project

transition

4. Flexible

• Disadvantages

1. Dysfunctional conflict

2. Infighting

3. Stressful

4. Slow

What Is the Right Project

Management Structure?

• Organization Considerations

– How important is the project to the firm’s success?

– What percentage of core work involves projects?

– What level of resources (human and physical)

are available?

What Is the Right Project

Management Structure? (cont’d)

• Project Considerations

– 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

Organizational Culture

• Organizational Culture Defined

– A system of shared norms, beliefs, values, and

assumptions which binds people together, thereby

creating shared meanings.

– The “personality” of the organization that sets it

apart from other organizations.

• Provides a sense of identity to its members

• Helps legitimize the management system of the organization

• Clarifies and reinforces standards of behavior

• Helps create social order

Key Dimensions Defining an Organization’s Culture

FIGURE 3.5

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

FIGURE 3.6

Power Corp.

I. Physical Characteristics:

Architecture, office layout, décor, attire

Corporate HQ is 20 Story modern building—president on top floor. Offices are bigger in the top floors

than lower floors. Formal business attire (white shirts, ties, power suits, . . . ) Power appears to

increase the higher up you are.

II. Public Documents:

Annual reports, internal newsletters, vision statements

At the heart of the Power Corp. Way is our vision . . . to be the global energy company most admired

for its people, partnership and performance. Integrity. We are honest with others and ourselves. We

meet the highest ethical standards in all business dealings. We do what we say we will do.

III. Behavior:

Pace, language, meetings, issues discussed, decision-making style, communication patterns, rituals

Hierarchical decision-making, pace brisk but orderly, meetings start on time and end on time,

subordinates choose their words very carefully when talking to superiors, people rarely work past 6:00

P.M., president takes top performing unit on a boat cruise each year . . .

IV. Folklore:

Stories, anecdotes, heroines, heroes, villains

Young project manager was fired after going over his boss’s head to ask for additional funds.

Stephanie C. considered a hero for taking complete responsibility for a technical error.

Jack S. was labeled a traitor for joining chief competitor after working for Power Corp. for 15 years.

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

FIGURE 3.7

Key Terms

Balanced matrix

Dedicated project team

Matrix

Organizational culture

Projectized organization

Project Office (PO)

Strong matrix

Weak matrix