Chapter 3

Organization: Structure and Culture

Organizational Culture – reflects the “personality of an organization

Each organization has a unique culture

Project Management System – provides a framework for launching and

implementing project activities within a parent organization

A good system appropriately balances the needs of both the parent

organization and the project

PROJECT MANAGEMENT STRUCTURES

 Functional Organization
- Commonly used when on functional area plays a dominant role in
completing the project or has a dominant interest in the success of
the project.
- A high-ranking manager in that area is given the responsibility of
coordinating the project
Advantages
1. No change. There is no radical alteration in the design and
operation of the parent organization.
2. Flexibility. Appropriate specialists in different functional units can
temporarily be assigned to work on the project and then return to
their normal work.
3. In-depth Expertise. In-depth expertise can be brought to bear on
the most crucial aspects of the project.
4. Easy Post-Project Transition. Normal career paths within a
functional division are maintained.
Disadvantages
1. Lack of Focus. Sometimes project responsibilities get pushed aside
to meet primary obligations.
2. Poor Integration. Functional specialists tend to be concerned only
with their segment of the project and not with what is best for the
total project.
3. Slow. It generally takes longer to complete projects through this
functional arrangement; Slow response time.
 4. Lack of Ownership. The motivation of people assigned to project
can be weak. The project may be seen as an additional burden that is
not directly linked to their professional development or
advancement.

 Dedicated Project Team

- Operates as separate units to pull together a core group of specialists
- Project Manager – recruits necessary personnel from both within
and outside the parent company
- Subsequent Team – physically separated from the parent
organization and given marching orders to complete the project
- Project Team Approach – optimum approach for completing a
project
o Projectized Organization
- Instead of one or two special projects, the organization
consists of sets of quasi-independent teams working on
specific projects
- Assisted and supported by the functional departments
Strengths
1. Simple. The functional organization remains intact with the project
team operating independently.
2. Fast. Projects are done more quickly. Participants devote their full
attention to the project and are not distracted by other obligations
and duties; Response time tends to be quicker; Most decisions are
made within the team and are not deferred up to the hierarchy
3. Cohesive. Participants share a common goal and personal
responsibility towards the project and the team.
4. Cross-Functional Integration. Specialists from different areas
work closely together.
Weaknesses
1. Expensive. A new management position is created (project
manager); Resources are assigned on a full-time basis → Result to
duplication of efforts across projects and a loss of economies of
scale
2. Internal Strife. Project teams become an entity in their own right
→ As a result, conflict emerges between the team and the remainder
of the organization
3. Limited Technological Expertise. Technical expertise is limited to
the talents and expertise of the specialists assigned to the project
 4. Difficult Post-Project Transition. Dilemma of what to do with
personnel after the project is completed

 Matrix Management
- Hybrid organizational form
- A horizontal project management structure is overlaid on the
normal functional hierarchy
- Two chains of command:
o Along functional lines
o Along project lines
- Instead of delegating segments to autonomous units or teams,
project participants report simultaneously to both functional and
project managers
- Varies in every company
- Designed: to optimally utilize resources
o by having individuals work on multiple projects as well as
being capable of performing normal functional duties
- Attempts: to achieve greater integration
o by creating and legitimizing the authority of a project

Strengths
1. Efficient. Individuals can divide their energy across multiple
projects on an as-needed basis
2. Strong Project Focus. There is formally designated project
manager who is responsible for coordinating and integrating the
contributions of different units; Helps sustain a holistic approach to
problem solving that is often missing in the functional organization
3. Easier Post-Project Transition. Specialists maintain ties with their
functional group, so they have a homeport to return to once the
project is completed
4. Flexible. In some cases, functional units may provide individuals
who are managed by the project manager; In other cases, the
contributions are monitored by the functional manager
Weaknesses
1. Dysfunctional Conflict. Opening Pandora’s box; Tension between
the two managers, though necessary, can spill over to a more
personal level resulting from conflicting agendas and
accountabilities
2. Infighting. Can occur among project managers, who are primarily
interested in what is best for their project
3. Stressful. Violates the management principle of unity of command;
Two bosses: functional and project manager
 4. Slow. Decision making can get bogged down as agreements have to
be forged across multiple functional groups

Different Matrix Forms

a. Weak Matrix
- Similar to functional approach, except that there is a formally
designated project manager responsible for coordinating project
activities
o Functional Manager
→ responsible for coordinating project activities;
→ decide what and when the work is completed
o Project Manager
→ acts as a staff assistant; draws the schedule and checklists,
collects information on status of work, and facilitates completion;
→ has indirect authority to expedite and monitor the project;

b. Balanced Matrix
- The classic matrix
- The merger of “what and how” → requires both parties to work
closely together and jointly approve technical and operational
decisions
o Project Manager
→ responsible for defining what needs to be accomplished
→ establishes the overall plan for completing the project, integrates
the contribution of the different disciplines, sets schedules, and
monitor progress
o Functional Manager
→ concerned with how needs will be accomplished
→ responsible for assigning personnel and executing their segment
according to the standards and schedules set by the project
manager

c. Strong Matrix
- Attempts to create the “feel” of a project team within a matrix
environment
o Project Manager
→ control most aspects of the project, including scope trade-offs
and assignment of functional personnel
→ controls when and what specialists do and has final say on major
project decisions
o Functional Manager
 → has title over her people and is consulted on a need basis
→ serve as a “subcontractor” – they have more control over
specialized work
- Once specifications have been determined, final design and
production of certain components may be assigned to respective
functional groups to complete
WHAT IS THE RIGHT PROJECT MANAGEMENT STRUCTURE
Organization Considerations
 Organization Level
1. How important is project management to the success of the firm
1.1 What percentage of core work involves projects
- If >75%, organization should consider a fully projectized
organization
- Few projects = less formal arrangement
- Dedicated teams could be created on an as-needed basis
2. Resource Availability
- Matrix System – for organizations that cannot afford to tie up
critical personnel on individuals
- Alternative: Create a dedicated team but outsource project work
when resources are not available internally
Project Considerations
 Project Level (7 Factors by Hobbs and Menard)
1. Size of project
2. Strategic performance
3. Novelty and need for innovation
4. Need for integration (number of departments involved)
5. Environmental complexity (number of external interfaces)
6. Budget and time constraints
7. Stability of resource requirements
o The higher the level, the more autonomy and authority the
project manager and project team need to be successful
o Using either a dedicated project team or a project matrix
structure
o Dedicated project teams – used for urgent projects which the
nature of the work requires people working steadily from
beginning to end
Many firms that are heavily involved in project management have created a
flexible management system that organizes projects according to project
requirements.
 Advance development projects (Dedicated Project Teams). High risk
endeavors involving the creation of a breakthrough product or process
 Platform projects (Strong Matrix). Medium-risk projects involving
system upgrades that yield new products and processes
 Incremental projects (Weak Matrix). Low-risk, short-term projects
that involve minor adjustments in existing products and processes
ORGANIZATIONAL CULTURE
Organizational Culture - refers to a system of shared norms, beliefs,
values, and assumptions which binds people together, thereby creating
shared meanings
o Manifested by customs and habits that exemplify the values and
beliefs of the organizations
o Reflects the personality of the organization and, can enable us to
predict attitudes and behaviors of organizational members
o One of the defining aspects of an organization that sets it apart from
other organizations even in the same industry
10 Defining Aspects of an Organization
- provides a composite picture of the organization’s culture
- becomes the basis for feelings of shared understanding that the
members have about the organization, how things are done, and the way
members are supposed to behave

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.
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 End 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.

IMPORTANT FUNCTIONS OF CULTURE

1. Provides a sense of identity to its members
- Identity generates commitment to the organization and reasons for
members to devote energy and loyalty to the organization
2. Helps legitimize the management system of the organization
- Helps clarify authority relationships
3. Clarifies and reinforces standards of behavior
- Helps define what is permissible and inappropriate behavior
4. Helps create social order
- Provide the stability and predictability in behavior that is essential
for an effective organization

 Strong/Thick → a culture in which the organization’s core values and

customers are widely shared
 Weak/Thin → not widely shared
 Countercultures → emerge within organizations that embody a
different set of values, beliefs, and customs