Management organization

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 Chief Executive Tall hierarchy Relatively narrow span of control

The Basic Dimensions of Organizations Chief Executive Flat hierarchy Relatively wide span 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

Functional Organization 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

ProductOrganizationalStructure 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

CEO Vice President Sales and Marketing Vice President Research & Development Vice President Materials Management Vice President Finance PDM PDM PDM PDM Canned Soups Division Frozen Vegetable Division Frozen Entrees Division Baked Goods Division Product Structure 4 - 21 4-19

Chief Executive Officer Product A Product B Sales & Marketing Human Resources Production Engineering Accounting Finance Sales & Marketing Human Resources Finance Production Engineering Accounting 23

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

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 Matrix Structure

Description Combines two forms of departmentalization functional product Breaks unit of command Dual chain of command Strengths 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 The Matrix Structure

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 Form • focus is on in-depth application of a technology • Most of the talent/expertise resides in one functional area

CONCLUSION • Product Form • firm engages in a large number of similar projects (construction) • one-time, highly specific unique tasks that is not appropriate for a single functional area ( product development: marketing, design engineering, • manufacturing engineering, quality engineering)

CONCLUSION • Matrix Form • integration of inputs from several functional areas • involves reasonably sophisticated technology • Employees effectively have two bosses • Conflicts with the principle of ‘unity of command’ • technical specialists are not required full-time

Management organization