Chapter 3 Organisation Structure Culture

Chapter 03 - Organization: Structure And Culture

Chapter 3 ORGANIZATION: STRUCTURE AND CULTURE

Chapter Outline 1. Project Management Structures A. Organizing Projects within the Functional Organization B. Organizing Projects as Dedicated Teams C. Projectized Organization D. Organizing Projects within a Matrix Arrangement E. Different Matrix Forms i. Weak matrix ii. Balanced matrix iii. Strong matrix 2. What Is the Right Project Management Structure? A. Organization Considerations B. Project Considerations 3. Organizational Culture A. What Is Organizational Culture? B. Identifying Cultural Characteristics 4. Implication of Organizational Culture for Organizing Projects 5. Summary 6. Key Terms 7. Review Questions 8. Exercises 9. Case: Moss and McAdams Accounting Firm 10. Case: ORION Systems (A) and (B) Chapter Objectives  To be able to identify different types of project management structures  To understand the strengths and weaknesses of different project management structures  To appreciate the significance that organizational culture plays in managing projects

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To be able to interpret the culture of an organization To understand the interaction between project management structure and the culture of an organization. Review Questions

1. What are the relative advantages and disadvantages of the functional, matrix, and dedicated team approaches to managing projects? The advantages of the functional approach include:  No radical alteration in basic structure of the parent organization  Maximum flexibility in use of staff within functional units  In-depth expertise can be brought to bear on specific components of the project  Normal career paths can be maintained. The advantages of the matrix approach include:  Flexible utilization of resources across projects and functional duties  Project focus is provided by having a designated project manager  Specialists maintain ties with their functional group  Balances project prerogatives with technical requirements. The advantages of the dedicated team approach include:  Does not disrupt the basic structure of the parent organization  Concentrated project focus  Projects tend to get done quickly  Strong cross-functional integration. The weaknesses of the functional approach include:  Lack of project focus  Poor cross-functional integration  Slow  Lack of project ownership. The weaknesses of the matrix approach include:  Decision making can be bogged down as agreements have to be negotiated between project managers and functional managers  Stress induced by multiple superiors. The weaknesses of the dedicated project team include:  Dilemma of what to do with people once the project is over  Technical expertise limited to the people on the team  We/they attitude emerges between project team and rest of organization which inhibits integration of project with mainstream operations

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Expensive – creation of project management role and duplication of services across projects.

2. What distinguishes a weak matrix from a strong matrix? The most distinguishing characteristic between a weak and strong matrix is the relative influence the project manager has over project participants and functional managers. In a weak matrix the project manager role is limited to coordinating project activities. The functional managers are responsible for managing their segment of the project. The project manager has little formal authority over the project. In a strong matrix, the project manager controls most aspects of the project including design trade-offs and assignment of project personnel. The functional managers are responsible for supporting project completion. A project manager in the weak matrix is not likely to be involved in performance appraisals and compensation decisions while project managers in a strong matrix would. 3. Under what conditions would it be advisable to use a strong matrix instead of a dedicated project team? Both structures can be quite effective. The strong matrix would be recommended when the organization cannot afford to have people work full-time on the project and when the culture of the organization supports the dual authority structure. Dedicated project teams are recommended when speed is essential to success and there is not enough project work to warrant a formal matrix structure. Dedicated project teams are also recommended when the prevalent culture within the organization does not support collaboration and innovation. 4. How can project offices (POs) support effective project management? POs support effective project management by:  Tracking project progress  Promulgating best practices  Providing project management training and consulting services  Integrating latest advances in field of project management  Being an organizational advocate

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It should be noted that the extent to which a PO performs the above functions will vary from one organization to the next.

5. Why is it important to assess the culture of an organization before deciding what project management structure should be used to complete a project? The culture of the organization can impact the effectiveness of different project management structures. Organizational cultures that do not encourage teamwork, collaboration, and cross-functional integration need a stronger project management structure (i.e., project team, project matrix) to be successful. Conversely, a functional matrix can be effective in an organization in which the culture of the organization is conducive to project management. 6. Other than culture what other organizational factors should be used to determine which project management structure should be used? The two major considerations are the percentage of core work that involves projects and resource availability. Organizations, whose main business evolves around projects, should consider a projectized form of structure. Organizations that have mainstream operations and projects should use a matrix structure. When resource availability is limited then a matrix structure should be used that allows sharing personnel across projects and operations. 5. What do you believe is more important for successfully completing a project – the formal project management structure or the culture of the parent organization? Both are important and an argument can be made for either structure or culture. The bias of the authors is that culture is more important than structure since it more directly impacts behavior. A positive organizational culture can compensate for the inherent weaknesses of the formal structure. For example a functional matrix can be effective if the norms and customs of the organization value teamwork and effective problem-solving. Conversely, a functional matrix is likely to be disastrous in a negative culture that encourages competition and looking out only for yourself. Alternatively, one could argue that an organization can circumvent a negative culture by creating an independent project team or a strong project matrix. In either case, the strategy is to insulate the project team from the dominant organizational culture and create a unique project subculture.

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Exercises 2. You work for LL Company, which manufactures high-end optical scopes for hunting rifles. LL Company has been the market leader for the past 20 years and has decided to diversify by applying its technology to develop a top-quality binocular. What kind of project management structure would you recommend they use for this project? What information would you like to have to make this recommendation, and why? How important is project management to LL Company? LL Company appears to have a stable product line and does not engage heavily in product development. If so, then a formal matrix structure should not be recommended. What is the culture like at LL Company? Does it support informal collaboration and teamwork? Will whoever is in charge of the binocular project have trouble getting the support and cooperation of people needed to complete the project? If yes, then a dedicated project team would be recommended to reduce the project dependencies on other parts of the organization. If no, then an informal matrix could be arranged where a project manager is assigned to oversee the completion of the project. How much innovation is required to produce the binoculars? Chances are very little given the similarity between rifle scopes and binoculars. If true, then the project may essentially be a manufacturing one and could be completed within the manufacturing department with minimal input from other functional areas. 3. You work for Barbata Electronics. Your R&D people believe they have come up with an affordable technology that will double the capacity of existing MP3 players and uses audio format that is superior to MP3. The project is code named KYSO (Knock Your Socks Off). What kind of project management structure would you recommend they use for the KYSO project? What information would you like to have to make this recommendation and why? How important is project management to Barbata Electronics (BE)? Given the level of competition in the electronics industry BE is probably heavily engaged in product development. If so, then a formal matrix structure or project organization should be considered. What is the culture like at BE? Does it support informal collaboration and teamwork? Will whoever is in charge of the KYSO have trouble getting the support and cooperation of people needed to complete the project? If yes, then a dedicated project team would be recommended to reduce the project dependencies on other parts of the organization. If no, then an informal matrix could be arranged where a project manager is assigned to oversee the completion of the project. How urgent is the KYSO? How innovative is KYSO? Chances are quite a bit. If so, then a dedicated project team is warranted if resources are available. 3-5


4. This chapter discussed the role of values and beliefs in forming an organization’s culture. The topic of organization culture is big business on the Internet. Many companies use their Web pages to describe their mission, vision, and corporate values and beliefs. There also are many consulting firms that advertise how they help organizations to change their culture. The purpose of this exercise is for you to obtain information pertaining to the organizational culture for two different companies. You can go about this task by very simply searching on the key words “organizational culture” or “corporate vision and values.” This search will identify numerous companies for you to use to answer the following questions. You may want to select companies that you would like to work for in the future. a. What are the espoused values and beliefs of the companies? b. Use the worksheet on Figure 3.7 to assess the Web page. What does the web page reveal about the culture of this organization? Would this culture be conducive to effective project management? Below are corporate sites which at the time of this writing (August 2009) contained information about corporate values and culture. Intel Corporation: http://www.intel.com/intel/index.htm?iid=HPAGE+header_aboutintel& Ford Motor Company: http://www.ford.com/en/company/about/overview.htm General Electric Company: http://www.ge.com/company/culture/index.html Hewlett-Packard Development Company: http://www.hp.com/hpinfo/abouthp/index.html Google: http://www.google.com/corporate/ Nokia: http://www.nokia.com/about-nokia/company 5. Use the cultural dimensions listed in Figure 3.6 to assess the culture of your school. Instead of employees, consider students, and instead of management, use faculty. For example, member identity refers to the degree to which students 3-6


identify with the school as a whole rather than their major or option. Either as individuals or in small groups rate the culture of your school on the 10 dimensions. Below is a summary of a most recent discussion at our College. 1. Member identity Job ______________________X__________________________________Organization Students tend to identify with both the University and their major (i.e., I am an OSU management student). 2. Team emphasis Individual ______X__________________________________________________Group While the initial tendency is to focus on the number of group assignments – when students look at the total educational experience they tend to agree they spend much more time working as individuals than in groups. 3. Management focus Task __________________________X__________________________________People This may reflect our students’ focus on culture. 4. Unit integration Independent ______X__________________________________________Interdependent Students and majors operate virtually independent of each other. 5. Control Loose ________________________________X____________________________Tight Control is seen as fairly tight with assignments and exams the primary mechanisms for control. 6. Risk tolerance Low ______X________________________________________________________High The grading system appears to cultivate risk avoidance. 7. Reward criteria Performance __________X_____________________________________________Other Grades are considered the primary award and while most students agree that they are tied to performance they do see favoritism and grade inflation playing a role in allocation. 8. Conflict tolerance Low ______X________________________________________________________High Most students agree that the culture does not encourage conflict especially with professors. 9. Means-ends orientation Means ____________________________X________________________________Ends Despite educational goals most students consider teachers and themselves focusing on results (grades). 10. Open-system focus Internal ________X_________________________________________________External While the university has external focus, most students admit that they find life at a residential college in a small town as rather insular. 3-7


a. What dimensions were easy to evaluate and which ones were not? Students found control most difficult while conflict tolerance was the easiest. b. How strong is the culture of your school? When the university is considered the school, most students argued that it was not very strong and that there were fairly independent subcultures by college (i.e., Engineering versus Liberal Arts). When they considered the school to be the College of Business, they felt it was fairly strong and uniform. c. What functions does the culture serve for your school? Students tend to struggle with this question. Some of the more perceptive students argue that in addition to encouraging predictable student behavior that culture legitimizes the authority of faculty to teach as they see fit. d. Do you think the culture of your school is best suited to maximizing your learning? Why or why not? This question generates a lot of debate. Some point to low risk and conflict tolerance as undermining true learning while others argue that if you think beyond the classroom, “going to college” is a powerful learning experience. e. What kind of projects would be easy to implement in your school and what kind of projects would be difficult given the structure and culture of your school? Explain your answer. When pressed for time we often ask this question after doing the culture assessment. Students tend to identify short term, class related projects that are pretty straight forward in which individuals tasks can be divided between students. Long term and innovative projects that require multidisciplinary contributions are often mentioned as being difficult to implement. We encourage students with student government or Greek experience to talk about their experience implementing more ambitious projects. 6. You work as an analyst in the marketing department for Springfield International (SI). SI uses a weak matrix to develop new services. Management has created an extremely competitive organizational culture that places an emphasis upon achieving results above everything else. One of the project managers that you have been assigned to help has been pressuring you to make his project your number one priority. He also wants you to expand the scope of your work on his project beyond what your marketing manager believes is necessary or appropriate. The project manager is widely perceived as a rising star within SI. Up to now you have been resisting the project manager’s pressure and complying with your marketing manager’s directives. However, 3-8


your most recent interchange with the project manager ended by his saying, “I’m not happy with the level of help I am getting from you and I will remember this when I become VP of Marketing.” How would you respond and why? This mini-case focuses on corporate politics and internal competition. While students will want to talk about bigger issues, we force them to discuss how they respond at that moment in time. Responses range from “I’m sorry that you are not happy. I will try to do better in the future,” “Can you tell me in specific terms what you are unhappy about?” to “That’s a threat and I do not respond well to threats.” Once we have explored the merits of specific responses we engage in a deeper analysis by identifying key questions you should ask yourself: a. b. c. d. e.

What is the likelihood that your antagonist will become VP of Marketing? If yes, do you want to be working for this company when this happens? Will your marketing manager be unable to protect you? What would it take to accommodate your antagonist’s requests? Can you be helpful and not undermine your other work?

If the answer is yes to the first three questions, then it may be wise to problem solve around the last two, especially if your response to e. is yes.

Case Moss and McAdams Accounting Firm This case is intended to illustrate the problems that can arise in a competitive work environment in which a matrix structure is used to complete projects. 1. If you were Palmer at the end of the case, how would you respond? Students will argue that Palmer should tell his side of the story and complain about Crosby to Sands. We would argue that this would come across as “sour grapes,” that Palmer should simply accept the decision since it has already been made. He may want to take advantage of this situation to request additional support. We would recommend that once the project is over he should approach Sands and tell his side of the story so that she can anticipate this kind of problem with Crosby in the future. 2. What, if anything, could Palmer have done to avoid losing Olds? Hindsight is wonderful, and it should be pointed out that Palmer responded in a reasonable manner. Yes, he should have contacted Sands about the problem, but students should be asked to discuss why he hesitated to contact Sands. Here the norms against “ratting on a colleague” and complaining instead of solving the problem should be explored. Some students will point out that he should have renegotiated his agreement with Crosby when the situation did not improve. 3-9


Switching Olds’ schedule so that he worked for him first and then Crosby in the afternoon may have leveled the playing field. Another alternative would be to have Olds alternate days working on each project. These suggestions would all depend upon the nature of the work Olds was performing. 3. What advantages and disadvantages of a matrix type organization are apparent from this case? The case tends to highlight the disadvantages of matrix management rather than the advantages. Still, the flexibility to share critical resources across multiple projects should not be ignored. At the same time this flexibility can breed competition between managers trying to optimize contributions to their project. 4. What could the management at M&M do to more effectively manage situations like this? First, Sands should be criticized for making a decision without consulting with Palmer. Second, Sands should have been aware that such problems might occur and made it a point to check with Palmer as to how things were working out. Here the importance of MBWA should be highlighted. The culture and reward system at M&M appears to encourage the aggressive behavior exhibited by Crosby. Students should be asked if this is necessarily a bad thing. If top management at M&M wants to discourage this kind of behavior, then they could recruit less aggressive team players. They could incorporate as part of the formal review of performance input from other account managers who share resources with that person. Cooperation with other account managers could be stressed in the formal evaluation of individual managers. Here the use of 360-degree feedback in which peers evaluate each other’s performance could be mentioned.

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Chapter 3 Organisation Structure Culture

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