PM1 – Week 2 – Organizational Structures

Organizations are consisted of groups of people playing different roles in the organization to achieve organizations’ goals. For each organization, there is an organizational chart, sometimes it’s not on the paper but it does exist. This chart shows how an organization is structured in order to function efficiently and effectively. As we have learned from Module 2 of Project Management, there are a number of organizational structures existing nowadays to be adopted by different organizations. They include major organizational structures such as functional organizational structure, project organizational structure, matrix organizational structure and other structures such as divisional organizational structure and network/virtual organizational structure.

Complexity, formalization and centralization are important part of organizational structure which focus one control and coordination. Organizations differ in size, strategy, technology, environment and etc. All of these determine the complexity, formalization and centralization of an organization. Thus the level and degree of control and coordination vary from one organization to another. So different organizations have need different organizational structures to support its strategy and to achieve its goal. That’s the reason why there are so many different types of organizational structures. For example, a product manufacturer has very different strategy, technology, environment from a university does. It will not work perfectly well for both if you have share the same organizational structure. Besides the obvious differences, each of them needs its own level of complexity, formalization and centralization. A matrix organizational structure may be suitable for a manufacturer because it uses human and physical resources more efficiently and increases technical quality and product integrity simultaneously, while a functional organizational structure is a good fit for a university because it allows task specialization and expertise to develop and it doesn't have redundancy of functions across groups.

As we know organizational structures are about control and coordination which are consisted of various degrees of rules, policies, direct supervisions. They are designed to drive and enhance an organization’s performance. But it is possible that sometimes it works oppositely. For example, under the functional structure, a project manager has little or none authority, while functional manager has the project budget control. In fact, the project manager has the first hand knowledge of the progress of the project and its budgeting. The functional manager’s control may impede the progress of the project. For example, in my previous job, when we process accounts payable, we matched every invoice with purchase order and actual receipt, this process involving verifying invoice, purchase order and actual. After the matching, our controller would review it, and then documents are sent to the president to authorize. Actually the president did no more than providing signature. Due to that he was so busy. The payment often missed the deadline.

I would prefer work in a matrix organizational structure. A functional structure and a project structure are two extremes. However, a matrix is in between the two extremes and it is adjustable as weak matrix, balanced matrix and strong matrix. The project manager’s authority and functional manager’s control are more or less balanced. Working in such a structure will be most rewarding due to its flexibility and functionality.

Reference:

Information Technology Project Management by Kathy Schwalbe

CGA/SAIT lesson notes

http://www.uri.edu/research/lrc/scholl/Notes/Organizational_Structure.htm

http://www.sbea.mtu.edu/smgoltz/ba3700/OrgStructure.html