Management organization

Definition : Management structure establishes the relationship between the project participants together with defining their duties, responsibilities and lines of

authority and lines of communication .

Organization Structure

Types Of Organization Structure:

Functional

Divisional

Matrix

The Diagram

Representing the connections between the various departments within an organization

Provides information about the various tasks performed within an organization and the formal lines of authority between them.

The Basic Dimensions of Organizations

Hierarchy of Authority: a configuration of the reporting relationships within

organizations (i.e., who reports to whom) Tall organizations - have many

levels in the hierarchy Flat organizations - have few levels

in the hierarchy

The Basic Dimensions of Organizations

Division of Labor : process of dividing the many tasks in an organization into specialized jobs

The more tasks are divided into separate jobs, the more those jobs are specialized

The Basic Dimensions of Organizations

Span of Control : the number of subordinates in an organization who are required to report to each manager

Wide span - many subordinates report to a manager

- typical of flat organizations

Narrow span - few subordinates report to a manager

- typical of tall organizations

The Basic Dimensions of Organizations

ChiefExecutive

Tall

hie

rarc

hy

Relatively narrowspan of control

The Basic Dimensions of Organizations

ChiefExecutive

Flat

hie

rarc

hy

Relatively widespan of control

Functional Organizational Structure Also called Traditional organization

structure. Based on the sub-division of

disciplines into separate departments together with vertical hierarchy

vertical lines of authority Objective is to emphasize technical

excellence.

Functional Departments

Functional Organization

M arke t R es .

A d v. an d P rom .

S a les A d m .

M arke tin g

D es ig n E n g .

E lec trica l E n g .

M ech . E n g .

Q u a lity E n g .

E n g in eerin g

P rod . P lan n in g

P u rch as in g

In d u s t. E n g .

Too lin g

P rod u c tion

F in an c ia l P lan n in g

B u d g ets

G en era l A cc tg .

C os t A cc tg .

F in an ce

P res id en t

Functional Organization

Functional Organization

S ta ff

S ta ff

S ta ff

F u n c tion a l M an ag er

S ta ff

S ta ff

S ta ff

F u n c tion a l M an ag er

S ta ff

S ta ff

S ta ff

F u n c tion a l M an ag er

C h ie f E xecu tive

Project Coordination

Red boxes represent staff engaged in project activities

Advantages of Functional Organization Simple Lines of communication within

department are well established Clearly defined responsibility and

authority for work within the departments

Disadvantages of Functional Organization No Single point of responsibility as project

scope moves from one department to another department leading to coordination chaos

It offers excellent facility within its own department ; but for a multi-disciplined projects which calls for interaction with other department then the system may be lacking

Disadvantages of Functional Organization

Lengthen the lines of communication and slow down the response time

Formal line of communication is through the functional managers

Competition & conflict between functional departments

Department work may take priority over project work

Suitability

The functional organization is the primary client

The project is small

Divisional Organizational Structure

Positions are grouped according to similarity of products, services, or markets. There are three types of divisional structure.

Product Structure Geographic Structure Customer Structure

Product Organizational Structure

Product structure groups employees together based upon specific products produced by the company. An example of this would be a company that produces three distinct products, "product a", "product b", and "product c". This company would have a separate division for each product.

Product structure characteristics

Similar to the functional organization structure except all the departments are dedicated to the product/project

The Project Manager has high level of authority to manage and control the project resources

Self contained unit within own technical staff and administration

4 - 21

Product Structure

Vice PresidentSales and Marketing

Vice President

Research & Developmen

t

Vice President Materials

Management

CEO

Vice President Finance

CannedSoups

Division

PDM

FrozenVegetableDivision

PDM

FrozenEntreesDivision

PDM

BakedGoods

Division

PDM

4-19

23

FinanceFinanceFinanceFinance

ProductionProductionFinanceFinance EngineeringEngineering AccountingAccountingSalesSales & &

MarketingMarketingHumanHuman

ResourcesResources

ProductionProduction EngineeringEngineering AccountingAccountingSalesSales & &

MarketingMarketingHumanHuman

ResourcesResources

Chief Executive OfficerChief Executive Officer

Product AProduct A Product BProduct B

Advantages of Product/Project structure

Relatively simple means of working on a project. Conflicting responsibilities are minimized.

Accountability is clearly placed in one person

PM has full authority over project Simplified coordination across functions High level of commitment to project

schedule, technical and cost goals

Advantages of Product/Project Structure

Strong orientation to customer requirements

Rapid reaction time due to ability to make swift decisions

accurate performance measurement

Disadvantages of a product/Project structure Lack of “big picture” companywide

orientation Duplication of effort increases

organizational costs Difficult to share individuals/expertise

across projects Tendency to retain personnel longer

than needed Uncertainty about job after the project

Suitability

Large projects Long-term projects “Crash” projects – emergency response Projects that change into permanent

functional organizations

matrix organizational

Structure

Matrix Structures

The matrix organizational structure is one in which functional and staff personnel are assigned to both a basic functional area and to product manager

The matrix form is intended to make the best use of talented people within a firm by combining the advantages of functional specialization and product-project specialization

Matrix Structures

This structure is one where there is a combination of functional and divisional structure at the same time

Two ‘chains of command’, one vertical and one horizontal

Matrix Structures A matrix is a highly flexible form that is

readily adaptable to changing circumstances.

Matrix structures rely heavily on committee and team authority.

Some companies use the matrix organization as a temporary measure to complete a specific project. The end of the project usually means the end of the matrix

Suitability

Moderate priority, moderate size projects

Projects where efficiency is paramount need

When project activities closely correlate with those inside the functional organization

Matrix Structure

Advantages decentralized

decision making strong project

coordination flexible use of human

resources efficient use of

support systems

Disadvantages Role conflict,

ambiguity potential confusion

over authority & responsibility

increased potential for interpersonal conflicts

The Matrix StructureDescription

Combines two forms of departmentalization

functional product

Breaks unit of command

Dual chain of commandStrengths

Facilitates coordination Complex and

independent activities Better communication

Strengths (cont.) More flexibility Efficient allocation of specialists Economies of scale

Weaknesses Confusion created Stress placed on workers Increased ambiguity Unclear reporting relationships Power struggles Role conflicts Unclear expectations

Choosing a structure

Size of project Strategic importance Novelty, need for innovation Need for integration (# depts. involved) Environmental complexity (# of external interfaces) Budget, time constraints Stability of resource requirements Small project focused entirely on the functional

department Large project involving many different departments.

CONCLUSION

Functional FormFunctional Formfocus is on in-depth application of a focus is on in-depth application of a technologytechnologyMost of the talent/expertise resides Most of the talent/expertise resides in one functional area in one functional area

CONCLUSION

Product FormProduct Form firm engages in a large number of similar firm engages in a large number of similar

projects (construction)projects (construction) one-time, highly specific unique tasks that is one-time, highly specific unique tasks that is

not appropriate for a single functional area not appropriate for a single functional area ( product development: marketing, design ( product development: marketing, design engineering, engineering,

manufacturing engineering, quality manufacturing engineering, quality engineering)engineering)

CONCLUSION Matrix FormMatrix Form

integration of inputs from several functional integration of inputs from several functional areasareas

involves reasonably sophisticated involves reasonably sophisticated technologytechnology

Employees effectively have two bossesEmployees effectively have two bosses Conflicts with the principle of ‘unity of Conflicts with the principle of ‘unity of

command’command’ technical specialists are not required full-technical specialists are not required full-

timetime