management organization definition : management structure establishes the relationship between the...
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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 .
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 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
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
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
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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 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