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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.

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4. This chapter discussed the role of values and beliefs in forming an organizations
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

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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.

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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 managers
pressure and complying with your marketing managers directives. However,

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your most recent interchange with the project manager ended by his saying,
Im 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 Im 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 Thats 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. What is the likelihood that your antagonist will become VP of Marketing?


b. If yes, do you want to be working for this company when this happens?
c. Will your marketing manager be unable to protect you?
d. What would it take to accommodate your antagonists requests?
e. 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.

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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 others
performance could be mentioned.

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