BUSINESS FORMS & ORGANIZATIONAL STRUCTURES FOR PROJECTS II
After incorporating a company, the next question is what structure? The word structure is a common word. All it means is: framework, collection, arrangement or configuration.
Here it would be used in the context of hierarchy in an organization, a cascade of one to many relationships. It shows how tasks are formally divided, grouped and coordinated. It is an organization chart that shows who reports to whom. At its heart are two things: roles and accountability.
Basically, there are two structures: Process and Product. A combination of both is called Matrix. The latest development is network which is a sort of a joint-venture but linked with internet which itself is a network of networks.
Also called Functional Structure, it is most common model used in the business world. First, decide what is to be done. Second, break it into functions. Third, raise departments based on the functions. Obviously, a manufacturing company would have purchase, production and sales functions. So there would be functional heads. Lo and hold, a structure has been designed!!!
One might asked that there are other auxiliary functions like accounts, administration and R&D. Of course, there are but these are support functions and categorized as “Staff Departments”. This is opposed to “Line Departments” which contribute directly toward objectives of an organization.
Process structure is based on a mechanistic model. It has (i) high specialization, (ii) rigid departmentalization, (iii) clear chain of command, (iv) narrow span of control, (v) centralization and high formalization.
Most firms starts with a functional structure. As these get large, they may become unmanageable, slow and inflexible. The only salvation is in redistributing the functions on the basis of products or units. Same is true of Regions (North & South) or even clients as in hospitals (eye-ward, cardiology, orthopedics etc.) The purpose is give “one-window effect” for an individual user.
As would be observed from the sketch, there are three autonomous units each looking for its own product. Each is independent as it has its own people to look after purchase, production and sales. Unlike Functional Structure, there are no water-tight compartments and people work as a team. The management tries to make them multi-functional so that they freely move from one function to another.
Product Structure follows an organic model. It develops (i) multi-functional and multi-disciplinary jobs, (ii) cross functional teams, (iii) lateral communication, (iv) free flow of information,(v) wide span of control, (vi) decentralization and (vii) low formalization.
This is a blend of process and product. Described in another way, it is a product structure super-imposed over process structure. It is two-dimensional, top line represent functions headed by functional managers or Line Managers; the side-line represents Product Divisions headed by Project Managers.
Think of a large hardware store which has purchase, store and repair sections each supervised by a manager. There would a number of plumbers, electricians, masons and carpenters sitting before the shop. The owner receives a call say for replacement of a bathtub and calls a plumber to do the job. The plumber in turn can demand the requisite product, necessary fitting and helpers. The plumber would finish the job and submit all details and would remain accountable for anything wrong.
A matrix works in the same way. The planning department works out a budget for making 100,000 writing pads, calls it a project and passes it on to a project manager. The manager in turn would approach functional manager for procurement of paper, staples, ink, machine-time and work-force within the budget and would carry out the job. Once done, all workers would go back and would wait for next assignment.
A GLOBAL NETWORK ORGANIZATION
A joint venture of companies for sharing skill or core competencies to manufacture a product or provide a service. The companies rely on relationships between people across structural, temporal and geographic boundaries.
It is more than outsourcing and has flexibility as in a network structure there is a continuous change in partners and the arrangements are goal oriented and loose. All efforts are made to bring about new products and services. The process changes more quickly for innovative products.
Garden.com can be reached on-line. It is a good source for obtaining garden supplies like flowers, bushes, patio furniture, décor, fountains, statues, lighting, tractors, arbors and sheds. Any garden professional or even a home gardener can contact their online garden center. It has an advisory role as well informing you of what organic plants would suit your country and even your area. After you have made the selection, you would be prompted to pay through credit card. Within weeks a courier would deliver at your door-step which you have ordered for. Though virtual, the company can be approached anytime for dispute settlement or even refund.
NET WORK STRUCTURE
FOUR BASIC STRUCTURES
ORGANIZING PROJECT WITHIN VARIOUS STRUCTURES.
Having written about types of structures, we now would move to suitability of a structure for a specific project. Each and every structure would be evaluated from the point of view of its capability to handle a project.
The project would be broken into various segments and pass on to functional heads for completing their parts. Since there would be no change in the existing setup, it would be inexpensive. But coordination would be the main problem as nobody would be exclusively responsible.
In product structure, all units work independently. So another unit can be created to take care of the project. It would be simple and fast and would bring together specialist from different areas. But, at the same time, it would be expensive. It may also result in internal strife as employees would be working as a team in the absence of any command & control.
HOW TO DEFINE A MATRIX STRUCTURE
Matrix is a mix of functional and product structure. There are two chains of command, one along functional lines and the other along project lines. In this case, the project staff would report simultaneously to functional and project managers. While this would be efficient, flexible and with a strong focus on project, there are many drawbacks. There may be dysfunctional conflicts, infighting, stress and slow progress.
A network is a temporarily alliance for a specific job. While it would reduce cost, bring high level of expertise and flexibility, it may result into conflicts and coordination breakdowns.
ROLE OF CULTURE
While selecting a suitable structure, role of culture cannot be ignored. A project may be successful under functional structure as everyone gives a helping hand. At the same time, it may flop when carried out under free domain of product structure as culture was not conducive.
WHAT IS CULTURE?
Culture refers to beliefs, values and behaviors. If one has to assess a corporate culture, one can start with a check list containing factors like professional growth, turnover rate, dress, cleanliness and upkeep in the plant or office, late sitting and reputation of the Heads of Departments.
Packages Ltd is a model company in Pakistan from cultural point of view. Every employee has equal opportunity for development and growth, recruitments are on merit and so are promotions. Working environments are relaxed, no name tags, open door policies and leadership practicing MBWA, “Management By Walking Around”.
There are other examples where late sitting is the norm. Benefits like a company maintained car or annual bonus would go to those who are ‘blue eyed’ or hover around the boss or have strong political backing.
CULTURE & ORGANIZATION
CULTURE & STRUCTURE
In certain organization, culture encourages the implementation of the projects. In some other situations internal competition is stressed and everyone works for own benefit overlooking the project. The prevailing norms, customs and attitude play a vital role in project progress. So in good culture, any structure would be suitable for project execution.
There is no such thing as an ideal organizational structure. Each has advantages and dis-advantages. Management should match the structure with the objectives by (i) picking up a process structure and (ii) modifying as needed. Usually for mass production, process structure has proved suitable. But if the products have short life or are customized, product structure would suit the organization.
TRAINING FOR MULTI-FUNCTIONAL ASSISTANT
The new trends favor flat structure with leaner staff. By employing a multi-skill and muti-functional work force, an organization can do wonder with small number of employees. Option of outsourcing is always there if in a particular period, the existing staff cannot cope with the rush of work.