Organisational Structures

Group 1

Vipul Bali Ranadip Pal Dhruv Samel

Makarand Takale

Why Have a Structure?

All businesses have to organise what they do

A clear structure makes it easier to see which part of the business does what

There are many ways to structure a business

Functional (Classical) Organization

ORGANIZATION STRUCTURES

The way an organization or department is

structured often constrains the availability of

resources and determines what level of

authority a project manager has on a project

This presentation reviews the three basic

organizational structures and how each

structure effects the role of a Functional

Manager and Project Manager.

Projectized Organization

Matrix Organization

Functional Organization

A hierarchy where each employee has one clear superior is

called a Functional Organization.

Staff members are grouped by function, specialty, or

expertise.

The project scope of these organizations are usually limited

to the boundaries of the function it is organized by. Each

function is managed independently and has a limited span of

control.

FUNCTIONAL(CLASSICAL) / TRADITIONAL ORGANIZATION

Functional Organization In a Functional Organization a Project Manager has little to no authority

over resources availability and acts more as a project coordinator.

Projects in a Functional Organization are undertaken by two

approaches:

Divided: Where a department will work on their portion of the project and

hand it off to the next department to complete its part, and so on.

Cross Functional: Where members of different departments work together

at the same time on various aspects of the project.

Project Team Members will more than likely remain loyal to their

Functional Managers.

Functional Managers control

the budget to a project.

The Functional Manager is

responsible for resources

performance reviews, and

their career opportunities lie

within the functional

department- not within the

project team.

The availability of resources is

determined by the Functional

Manager allowing little to no

influence from Project

Managers.

Competition for resources is

fierce.

The Project Manager has little

or no authority in a functional

organization due to the

following:

1. Staff members report

directly to Functional

Managers

2. A strict chain of

command exists

3. Corporate culture

dictates that you follow

the functional hierarchy

Project

Managers

Authority 1 Resource Availability 2

Control of

Budget 3

Functional Organization

Projectized Organization In a Projectized Organization most of the organizational

resources are involved in project work rather than operations.

Projectized organizations often have organizational units called departments, and these groups either report directly to the project manager or provide support services to projects.

Teams consist of staff members from a variety of disciplines and specialties. These teams are formed and often collocated; physically working in the same place.

PROJECTIZED ORGANIZATION

Projectized Organization

In a Functional Organization Project Managers are

responsible for making project decisions and acquiring and assigning resources.

Project teams have the potential of dissolving upon

completing of a specific project.

Project Managers have ultimate authority over the project in this structure and report directly to an executive level.

Project Managers control the

budget to a project.

The availability of resources is

determined by the Project

Manager allowing little to no

influence from Functional

Managers.

Resources who are only

needed at specific times

within a project may find

themselves idle other times.

The Project Manager has

ultimate authority due to the

following:

1. The focus of the

organization is the

project

2. All resources are focused

on projects

3. Loyalties are formed to

the project not functional

manager

Project

Managers

Authority 1 Resource Availability 2

Control of

Budget 3

Projectized Organization

Matrix Organization

There are three types of

Matrix Organizations:

Weak Matrix

Balanced Matrix

Strong Matrix

Click on the tabs to the right

to learn about each one.

Weak Matrix

Balanced Matrix

Strong Matrix

Weak Matrix Organization

Weak Matrix Organizations share many of the same characteristics of a Functional Organization where the Project Manager has limited authority and is more of a coordinator or expediter than that of a manager.

Balanced Matrix Organization The Balanced Matrix

Organization recognizes the need for a Project Manager. While it does not provide the Project Manager with full authority over the project and project funding.

There is a balance of power between the Project and Functional Managers.

Strong Matrix Organization

Strong Matrix Organizations share many of the same characteristics of a Projectized Organization where the Project Manager has considerable independence and authority compared to the Functional Manager.

Functional Weak Matrix

Balanced Matrix

Strong Matrix

Projectized

The closer an organization aligns itself to either a Functional or Projectized Organization Structure determines which manager type has more authority.

Pros and Cons of Different Structures

This depends on the business type, size and structure used

Lets look at a functional structure:

Production Marketing Accounts Personnel IT

Board of Directors

Chief Executive

Functional Structure

Advantages

Specialisation each department focuses on its own work

Accountability someone is responsible for the section

Clarity know your and others roles

Disadvantages

Closed communication could lead to lack of focus

Departments can become resistant to change

Coordination may take too long

Gap between top and bottom

An Example of Organisation by Product/Activity

Imaging and Printing Group

Personal Systems Group

Enterprise Systems Group

HP Services HP Financial

Services

Hewlett Packard

Organisation by Product/Activity

Advantages

Clear focus on market segment helps meet customers needs

Positive competition between divisions

Better control as each division can act as separate profit centre

Disadvantages

Duplication of functions (e.g. different sales force for each division)

Negative effects of competition

Lack of central control over each separate division

Matrix Structure

Advantages Individuals can be chosen

according to the needs of the project.

The use of a project team that is dynamic and able to view problems in a different way as specialists have been brought together in a new environment.

Project managers are directly responsible for completing the project within a specific deadline and budget.

Disadvantages A conflict of loyalty between

line managers and project managers over the allocation of resources.

Projects can be difficult to monitor if teams have a lot of independence.

Costs can be increased if more managers (i.e. project managers) are created through the use of project teams.

Summary

Organizational Structure

Functional Organization

Divisional/Product structure

Matrix structure

Application Area Best suited as a producer of standardized

goods and services at large volume and low cost.

An automobile company with a divisional structure might have one division for SUVs, another division for subcompact cars, and another division for sedans.

When typical bureaucracy: top-heavy and hierarchical with multiple levels of command exist . All this makes co. apprehensive to market changes leading to its incapacity to grow and develop further. The failure of this structure became the main reason for the company restructuring into a matrix.

THANK YOU