Organizational Systems

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Software Project Management (CS615)

LECTURE # 27

5. ORGANIZATION

5.1

Basic Definition

Basically, an organization is a group of people intentionally organized to

accomplish an overall, common goal or set of goals. Business organizations can

range in size from two people to tens of thousands.

How you interpret each of the above major parts of an organization depends very

much on your values and your nature. People can view organizations as machines,

organisms, families, groups, etc.

People are managed through an organizational structure. This hierarchical

structure is based on the four cornerstones of management:

Delegation

Authority

Responsibility

Supervision.

Delegation bestows authority, and authority produces (and requires)

responsibility. Both authority and responsibility require supervision, and effective

supervision requires a suitable organizational structure:

Most projects are organized as teams, with each team assigned specific functions

within the project.

Different types of project require different types of team structure, as for example

a team of junior programmers requires a technical team leader while a team of

experts may require only an administrative team leader.

It is the project manager's responsibility to select the structure best suited for the

project.

Basically an organization is a group of people intentionally organized to

accomplish an overall, common goal or set of goals. Business organizations can

range in size from two people to tens of thousands.

How you interpret each of the above major parts of an organization depends very

much on your values and your nature. People can view organizations as machines,

organisms, families, groups, etc.

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5.2

Organization as a System

It helps to think of organizations are systems.

Simply put, a system is an organized collection of parts that are highly integrated

in order to accomplish an overall goal.

The system has various inputs which are processed to produce certain outputs,

which together, accomplish the overall goal desired by the organization.

There is ongoing feedback among these various parts to ensure they remain

aligned to accomplish the overall goal of the organization. There are several

classes of systems, ranging from very simple frameworks all the way to social

systems, which are the most complex. Organizations are, of course, social

systems.

Systems have inputs, processes, outputs and outcomes. To explain, inputs to the

system include resources such as raw materials, money, technologies and people.

These inputs go through a process where they're aligned, moved along and

carefully coordinated, ultimately to achieve the goals set for the system. Outputs

are tangible results produced by processes in the system, such as products or

services for consumers.

Another kind of result is outcomes, or benefits for consumers, e.g., jobs for

workers, enhanced quality of life for customers, etc. Systems can be the entire

organization, or its departments, groups, processes, etc.

Feedback comes from, e.g., employees who carry out processes in the

organization, customers/clients using the products and services, etc.

Feedback also comes from the larger environment of the organization, e.g.,

influences from government, society, economics, and technologies.

Each organization has numerous subsystems, as well. Each subsystem has its own

boundaries of sorts, and includes various inputs, processes, outputs and outcomes

geared to accomplish an overall goal for the subsystem.

Common examples of subsystems are departments, programs, projects, teams and

processes to produce products or services, etc.

Organizations are made up of people - who are also systems of systems of

systems - and on it goes. Subsystems are organized in a hierarchy needed to

accomplish the overall goal of the overall system.

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The organizational system is defined by, e.g., its legal documents (articles of

incorporation, by laws, roles of officers, etc.), mission, goals and strategies,

policies and procedures, operating manuals, etc.

The organization is depicted by its organizational charts, job descriptions,

marketing materials, etc.

The organizational system is also maintained or controlled by policies and

procedures, budgets, information management systems, quality management

systems, performance review systems, etc.

5.3

Structural Dimensions

The organization's structure, or design, is the overall arrangement of the

organization's various roles, processes and their relationships in the organization.

The design of an organization is a means to accomplishing the organization's

overall goal - the structure is not an end in itself.

In systems theory terms, the design ensures that the appropriate inputs go through

the necessary processes to produce the required outputs to produce the intended

outcomes.

Centralization -the extent to which functions are dispersed in the

organization, either in terms of integration with other functions or

geographically

Formalization - regarding the extent of policies and procedures in the

organization

Hierarchy - regarding the extent and configuration of levels in the

structure

Routinization - regarding the extent that organizational processes are

standardized

Specialization - regarding the extent to which activities are refined

Training - regarding the extent of activities to equip organization

members with knowledge and skills to carry out their roles.

5.4

Organizational Systems

Project-based organizations are those whose operations consist primarily of

projects. These organizations fall into two categories:

Organizations that derive their revenue primarily from performing projects for

others--architectural firms, engineering firms, consultants, construction con-

tractors, government contractors, nongovernmental organizations, etc

Organizations that have adopted management by projects, these organizations

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tend to have management systems in place to facilitate project management.

For example, their financial systems are often specifically designed for

accounting, tracking, and reporting on multiple simultaneous projects.

Non project-based organizations often lack management systems designed to

support project needs efficiently and effectively.

The absence of project-oriented systems usually makes project management more

difficult.

In some cases, non project-based organizations will have departments or other

subunits that operate as project-based organizations with systems to match.

The project management team should be acutely aware of how the organization's

systems affect the project.

For example, if the organization rewards its functional managers for charging

staff time to projects, then the project management team may need to implement

controls to ensure that assigned staff members are being used effectively on the

project.

5.5

Organizational Cultures and Styles

Most organizations have developed unique and describable cultures. These

cultures are reflected in their:

Shared values,

Norms,

Beliefs

Expectations

Policies and

Procedures

View of authority relationships and numerous other factors

Organizational cultures often have a direct influence on the project.

A team proposing an unusual or high-risk approach is more likely to secure

approval in an aggressive or entrepreneurial organization.

A project manager with a highly participative style is apt to encounter

problems in a rigidly hierarchical organization, while a project manager with

an authoritarian style will be equally challenged in a participative

organization.

The structure of the performing organization often constrains the availability of or

terms under which resources become available to the project.

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Organizational structures can be characterized as spanning a spectrum from

functional to projectized, with a variety of matrix structures in between.

The following table shows key project related characteristics of the major types of

enterprise organizational structures:

Table: Organizational Structure Influences on Projects

Project

Organization

Functional

Matrix

Projectized

Characteristics

Structure

Weak

Balanced

Strong

Little or non

Limited

Low to

Moderate

High to

Project Manager's Authority

Moderate

to High

almost Total

Virtually

Percent of Performing

None

0-25%

15-60%

50-95%

85-100%

Organization's Personnel assigned

Full time to Project work

Part-time

Part time

Full-time

Project Manager's Role

Project

Common Titles for Project

Manager/

Manager/Pr

Coordinato

Coordinator/

Manager's Role

Program

oject

r/ Project

Project

Manager

Officer

Leader

Part-time

Part time

Part-time

Full-time

Project Management

Administrative Staff

5.6

Traditional Structures of Business Organization

Functional Structure

Most business organizations start out with a functional structure, or a small

variation of this structure. This is the basic "building block" for other structures.

In this structure, there is a central office which oversees various departments or

major functions, e.g., human resources, finances, sales, marketing, engineering,

etc.

Think of a picture that has a box at the top labeled "Central Office". Think of a

row of boxes underneath the top box. Each box is labeled, e.g., sales, engineering,

human resources, etc.

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Connect the boxes with lines coming down from the top box to each of the boxes

below. Use functional structures when the organization is small, geographically

centralized, and provides few goods and services.

When the organization experiences bottlenecks in decision making and

difficulties in coordination, it has outgrown its functional structure.

The classic functional organization is a hierarchy where each employee has one

clear superior. Staff members are grouped by specialty, such as production,

marketing, engineering, and accounting at the top level, with engineering further

subdivided into functional organizations that support the business of the larger

organization (e.g., mechanical and electrical).

Functional organizations still have projects, but the perceived scope of the project

is limited to the boundaries of the function: the engineering department in a

functional organization will do its work independent of the manufacturing or

marketing departments.

For example, when a new product development is undertaken in a purely

functional organization, the design phase is often called a design project and

includes only engineering department staff. If questions about manufacturing

arise, they are passed up the hierarchy to the department head, who consults with

the head of the manufacturing department. The engineering department head then

passes the answer back down the hierarchy to the engineering project manager.

ii.

Projectized Structure

In this structure, there is a centralized corporate office and under it, are various

divisions each of which is dedicated to producing and / or selling a certain type of

business or product, e.g., product 1, product 2, etc.

Each division that is dedicated to a certain business or product is, in turn, is

organized as its own functional structure.

So, for example, the division dedicated to making product 1 has its own sales

department, human resources, etc. Basically, project structure is a bunch of

functional structures each of which reports to one central office.

Use a divisional structure when the organization is relatively large, geographically

dispersed, and/or produces wide range of goods/services.

In a projectized organization, team members are often collocated. Most of the

organization's resources are involved in project work, and project managers have

a great deal of independence and authority.

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Projectized organizations often have organizational units called departments, but

these groups either report directly to the project manager or provide support

services to the various projects.

iii.

Matrix Structure

Think of the functional structure. Imagine if you took someone from each of the

major functions in the functional structure (the boxes along the bottom of the

organization chart), e.g., people from sales, engineering, etc., and organized them

into a separate group intended to produce and sell one certain kind of product or

service.

Members of this group stay together until that product is produced or they

continue to sell and service it. This overall structure (made up of a functional

structure that also has groups assigned to products) is a matrix structure.

This structure is useful because it focuses highly skilled people from across the

organization to work on a complex product or service.

It can be difficult, though, because each person essentially reports to two

supervisors: the supervisor of the functional area (e.g., engineering) and the

product manager, as well.

When the organization needs constant coordination of its functional activities,

then lateral relations do not provide sufficient integration. Consider the matrix

structure.

To adopt the matrix structure effectively, the organization should modify many

traditional management practices.

Matrix organizations are a blend of functional and projectized characteristics.

Weak matrices maintain many of the characteristics of a functional organization,

and the project manager role is more that of a coordinator or expediter than that of

a manager.

In similar fashion, strong matrices have many of the characteristics of the

projectized organization--full-time project managers with considerable authority

and full-time project administrative staff.

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Chief

Executive

Functional

Manager

Staff

Project

Coordinatio

Figure 1: Weak Matrix Organization

Chief

Executive

Functional

Manager

Staff

Project

Manager

Staff

Project

Coordinatio

Figure 2: Balanced Matrix Organization

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Chief

Executive

Functional

Manager of

Manager

Project Managers

Project

Staff

Manager

Project

Staff

Manager

Staff

Project

Manager

Project

Coordinatio

Figure 3: Strong Matrix Organization

(Black boxes represent staff engaged in project activites)

iv.

Project Office

There is a range of uses for what constitutes a project office. A project office may

operate on a continuum from providing support functions to project managers in

the form of training, software, templates, etc. to actually being responsible for the

results of the project.

Most modern organizations involve all these structures at various levels. For

example, even a fundamentally functional organization may create a special

project team to handle a critical project.

Such a team may have many of the characteristics of a project in a projectized

organization.

The team may include full-time staff from different functional departments, it

may develop its own set of operating procedures, and it may operate outside the

standard, formalized reporting structure.

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