Sunday, October 12, 2008

Structuring Organizations for Better Project Management

If you change the molecular structure of an organism, you change the way that organism functions. Every element of change brings about a subsequent change of function. Like an organism, your organization can and should be structured to enable you to better respond to project requirements.

Changing the structure of an organization is a relatively new phenomenon. Historically, an organization was structured along a pyramid model. This traditional form of organizational structure, called a "functional" structure, leaves the authority and decision-making in the hands of a select few. However, as the pyramid widens and the number of people increases, the effectiveness of those in authority decreases.

Most businesses now tend to focus on individual projects. If your company focuses on projects but uses a functional structure, your projects will be forced to wait in line for decisions that need to be made.
  • Functional structures reduce project efficiencies because:
  • decisions take too much time to go through the hierarchy
  • decisions are made by people not familiar with the project
those involved in the project become frustrated by those assuming all of the responsibility.
Fortunately, organizational structures have changed to meet the new challenges of business. Two different structures that have evolved are the matrix and projectized structures.
  • Matrix structures - Matrix structures are divided into two categories: weak and strong. The weak matrix structure provides relatively little authority for the project manager, while the strong matrix provides almost complete authority for the project manager.

    A weak matrix structure allows a project to exist apart from the main organization. It retains its own structure but still relies on the organization for some of the decision making.

    A strong matrix has its own structure apart from the main organization. The decision-making ability is quite strong within this structure, but it is still answerable to the larger organization.
  • Projectized structures - The projectized structure is similar to the strong matrix structure. While the strong matrix allows very strong decision-making abilities for the project manager, the projectized structure allows for complete decision making on the part of those involved in the project. For both of these structures, the organization plays an auxiliary role to the project. This change in project authority and responsibility allows for projects to run more smoothly. This in turn, brings a faster turnaround time.
How do you decide which structure is right for your project? Complexity, duration, and outside influence on your project are the three factors which determine the type of structure your project should have.

You need a strong matrix or projectized structure if your project:
  • is extremely complex
  • is long in duration
  • involves many different organizations.
The effectiveness of these structures is dependent on senior management. Matrix and projectized structures can only succeed if the larger organization lets go of control. Authority and independence are needed for these new structures to have validity. The benefits of these structures must be clear to the larger organization for them to relinquish power over individual projects.

Changing from functional structures to new structures calls for a change in both the main organization and the project team. Senior management must learn to give up control, just as the project team needs to learn to take it on. All of this change requires new competencies within the project team. Each team must be able to handle all of the functions usually accomplished by the larger company.

A project team must learn to equip itself before it gains independence. To function, the team must ensure that it is able to:
  • communicate
  • sell ideas
  • negotiate
  • problem solve
  • resolve conflicts across functional boundaries.
Requiring these competencies of a project team is a huge departure from the past. More is expected from individual members of a team, and more responsibility is placed upon them. This creates dynamic and skilled people. It also creates some new challenges for the project team.
Human beings are incredibly adept at adjusting to new situations and new demands. This adjustment does, however, take time. The same is true of new organizational structures and the new processes they create. The new challenges faced by project teams require an adjustment period and a clear understanding of how the roles have changed.

The four areas that provide the most challenge within the project team are ownership, commitment, authority, and process orientation. Some of these challenges for the project team are due to the limitations of the larger organization, while others rest within the project team itself.

Responsibility for a project calls for ownership of that project. When companies move toward a new structure, they must make the transition of assigning a process owner. They need a manager with responsibility over the process from beginning to end.

The challenge of commitment is found within the project team itself. This is particularly an issue if the project involves contract workers. The project manager must ensure that employees realize their unique role in the success of a project.

Formal statements from the project champion or customer are necessary. These state who has the authority and responsibility for the project and should be distributed to stakeholders, resource managers, and especially the contracted team members.

New structures require new processes. Turning from functional to process-oriented structures requires new work habits, skill sets, meeting formats, reporting structures, problem resolution methods, and other tools to make a project truly effective.

The changing face of business has required dramatic changes in how organizations structure themselves. These changes have brought about a greater sense of responsibility within project teams and the acquisition of competencies formerly only found within the larger organization. Acquiring new competency requirements also presents new challenges for organizations. Meeting these challenges, however, enables a company to be more efficient, to save time, and to gain expertise.

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