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Project Management and Organizational Structure


Project management is based on effective structure and coordination of all stages. High value-added production processes in adaptable and flexible organizations place new demands on employees’ skills, competence, and commitment to organizational goals. The book A Guide to the Project Management underlines that the main characteristics of projects are: “performed by people, constrained by limited resources and planned, executed and controlled” (p. 4).

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Discussion Section

A matrix structure

Some projects are based on matrix structure. Matrix structure means having the resources, competences, and desire to solve problems where they occur. Work unit members thus gain a sense of control, as uncertainties about fluctuations and problems arising from the organizational context can be largely eliminated. Production problems can be addressed quickly and with greater flexibility.For example, members of a socio-technical system unit ought to be in a position to execute and make decisions about all aspects related to the accomplishment of the unit’s primary task (Badiru, 1993). In matrix structure, the supervisor, in general, does not make decisions internal to the socio-technical unit but focuses on boundary management in order to minimize disruptions to the unit’s functioning. This often involves coordination with other units whose work may influence or depend on this unit’s work. The supervisor’s responsibility, for example, is to make sure all necessary materials and documents are available, technical experts are at hand when needed, and so forth. If the technical and organizational design creates self-regulating, relatively independent organizational units, the supervisor takes on a support rather than a control function, aimed at fostering self-regulation and independence of the unit within the organizational environment. This involves managing the relationships and linkages between the unit and other parts of the organization, thus providing a buffer function. Direct supervisory interference and control of the activities of the unit’s group members becomes unnecessary. The determination of a meaningful primary task usually involves a number of interdependent work activities (Balogun and Hailey, 2004).

The project type selection is explained by the nature of work and project goals. The design of matrix structure thus leads to mostly team-oriented forms of work organization. These teams are called autonomous or self-managed work groups. Of course, no single group in any organization can be completely autonomous or independent from other organizational units; it can only be semi-autonomous. Autonomous groups are learning systems focused on a meaningful primary task usually involving a number of interrelated jobs or sets of work tasks (Burnes, 2004). As groups are able to control more and more of the variances encountered, their problem-solving capabilities increase, which can be used to enhance performance and to accommodate group members’ personal needs In order for people to work cooperatively, the primary task must be defined so the group members see it as a team project. This includes all activities involved, such as machine operating, setup, production planning, and clerical tasks. If tasks are assigned so that each team member has a specific area of responsibility for which only he or she is held accountable, the overarching common interest is missing. The notion of a team project implies that the work activities required for the completion of the overall task are perceived by the group as internally coherent (Burkun, 2005). The product or task outcome ought to be clearly identifiable both qualitatively and quantitatively. In order to succeed, a work group can hardly be held accountable for its product if task elements or errors from other groups in the organization might influence the outcome but cannot be traced to their original source in the final product. Among other things, the internal coherence of a work process is determined by the equipment layout and the design of the technical system (Brooks, 2009).

The projected structure

The projected structure is based on a sequence of steps. In many projects, the work team has to have access to all the means of information and communication necessary to accomplish the overall task. Comprehensibility is enhanced if the spatial organization of each workplace allows for spontaneous communication and if the group has its own clearly identifiable “territory.” If a work group sees its overall task as a collective activity with mutual responsibilities, the group, within the constraints of agreed upon quality and health and safety standards, takes on the responsibility for internal task allocation and with it the self-regulation of individual activities (Blanchard and Johnson, 2002). Internal coordination and control by a supervisor are replaced by outcome-oriented process supervision on the part of the group as a whole. The decision latitude for internal task distribution depends on the skill and competence level of the work group members. The range of competences has to be seen in the context of group size and the complexity of the overall task. In larger groups with more complex tasks, overlapping competences might be sufficient; in other words, not every person has to be able to do everything (Child, 2005). Competence increases as time goes on, as individuals acquire new skills and problem-solving capabilities. Multi-skiling and task rotation can vary according to individual preferences and their current level of competence, allowing group members to find suitable niches. Competence is essential to successful teamwork because if a person fails to perform competently, team members are likely to resent the person and behave negatively. In order to rely on internal flexibility to deal with personnel fluctuations due to absences or changing output requirements, adequate personnel resources and sufficient time for planning are needed in addition to a certain degree of multi-skilling of group members. Then the group will be able to balance the variances on its own. This also allows the group to plan its work activities over a longer time period. Based on the principle of self-regulation, the work group has to be able to set its own norms and rules for internal cooperation and the resolution of problems and conflicts. These norms and rules are likely to reflect the characteristics of the group’s composition (Frame, 2002). The failure pf such projects can be explained by inadequate project planning and poor control methods.

Functional project structure

The projects focused on functional work organization characteristics in support of joint optimization. It reflects the structural arrangements that foster competence development processes and optimal organizational performance. For the design of individual work activities, however, additional criteria have to be considered that address the needs of the individual for physical and psychological well-being and development (Kornfeld and Rupp, 2002). Each individual is different. We all know that, and yet we tend to design jobs as if such differences didn’t exist. Different strokes for different folks what is good for one person may not be appropriate for another. In order to take people’s varying abilities, skills, and needs into account two basic principles have to be considered in the design of work activities: variable job design and developmental job design. The principle of developmental job design takes into account the potential for individual change over time. That means that options to change and move into different jobs ought to be available in the course of a person’s work life (Hayes, 2002). The job I like today may not be the job I’d like to do tomorrow. The frequently voiced statement about finding the right person for the job is based on a static perspective that different people fit in different predetermined slots. As job demands and/or individuals needs, preferences, and competences change, work assignments should be reexamined periodically together with the employee affected. Rather than seeing individual needs and motivations as barriers to job design, they should be viewed as opportunities to respond to changing demands as flexibly as possible (Fayol, 1984). The failure pf such projects can be explained by poor job design and poor budgeting.

Economic success in an integrated world economy is likely to be contingent upon the design of work activities and organizational structures that promote the development of employee competence and problem-solving skills. The result: technology is the starting point. Work activity and job design are afterthoughts. People then have to make up for the flaws in the technology by supervising, maintaining, and fixing the equipment (Evans, 1999). Thus human capacity is underutilized and undervalued, based on the assumption that the functioning of the whole system is dependent on how well the technology works. Production systems can be optimized only if both the technical and the social systems are jointly optimized. Only then can technology be viewed as the product of design choices rather as a fait accompli. Technology frequently becomes a driving force if it is developed and implemented without consideration of the social system, which is usually “adjusted” after technology has been introduced. Yet, technology does not have to be a fixed factor; it offers choices and options (Laudon and Laudon, 2006).

Real life Examples

In independent projects, consensus decision-making process is aimed at the efforts of both parties (union and management) to negotiate the “best” solution. This process allows any of the parties to block a potential decision. However, the party opposing the decision must search for alternatives. This decision-making process is used at all organizational levels (Owens and Wilson, 1996). At the core of the production process is the self-directed work unit that understands and can accomplish the tasks within its area of responsibility without direction. Team leadership is rotating. The unit makes its own work assignments, resolves its own conflicts, plans its work, designs its jobs, controls its own scrap and its materials and inventory, performs equipment maintenance, organizes communication within and outside the group, keeps its own records, selects new members for the unit, seeks continuous improvement, does its own budgeting, and schedules vacations, absences, and so forth. The decentralized organization also led to considerable variation among teams; in some, workers are more likely to cling to established methods and work patterns, and in others highly qualified workers take iniative and continuously strive to develop new methods and improvements. In 1990 differences among teams were considerable: some had no problem achieving the productivity and quality standards, while others lagged far behind. In response, the company tried to create an economic incentive for the weaker teams through a bonus system at the work group level. The union’s response was reluctance, pointing out the danger that certain group members might be pushed out of the group. The differences in the production design concepts and forms of work organization illustrated by these examples are the result of a variety of factors, among them labor market conditions, the economic positions of the companies involved, the market niche served, the system of labor-management relations in a given nation, as well as management philosophies and values (Madanmohan, 2004). It has been argued that the stringent Japanese management system requires a certain social context for it to function. It is not surprising that Japanese transplants in the United States and Europe (mostly Great Britain) were typically located in areas with high unemployment, allowing for a very selective recruitment of a workforce with few alternative choices. Where possible, they also tried to avoid unionization of transplants or negotiated labor contracts with weak union influence over job classifications, work assignments, overtime requests, and so forth. In countries such as Germany, the application of Japanese management principles has run into considerable difficulties (Pugh and Hickson, 2003). The permanent violation of worker codetermination rights has led to a number of court disputes. Management requests that employees work great amounts of overtime or not us all their legally granted vacation days were a frequent source of conflict In terms of the degree to which these production concepts provide opportunities for competence development and collective decision-making latitude at the work group and individual level, the three plants can be viewed on a continuum. While production at all three plants is based on work groups, the range of responsibilities and the scope of activities performed by the individual and the group vary greatly (Stacey, 2005). At one end is Mazda, where the work units as they are currently operating seem to provide very little opportunity for individual and group competence development or multiskilling at all levels. Uddevalla, at the other end of the continuum, offers the greatest task variety, with long work cycles and broad responsibilities assigned to the work teams. It is thus not the purpose of this comparison simply to point to one of these concepts as the best one. Each developed in a particular context, and all have their advantages and their limitations. Particularly in the case of Uddevalla and Saturn, the jury is still out; it is too early to tell if the currently implemented forms of work organization will and can be maintained. Some skeptics argue that the Uddevalla concept might be workable in the production of expensive luxury cars built to customer specifications, but that it cannot become a model for the production of large numbers of smaller, less expensive cars for which there is a greater demand. Joint optimization means more than merely adapting the technical system to the social system or vice versa; it involves the design of the socio-technical system as a whole. This does not mean that joint optimization has to focus on the organization as a whole or even encompass a department. System design or redesign can start in smaller units that perform a relatively independent task. Such units, however, always encompass more than a single job on an assembly line, for example, because each such job is dependent on preceding and subsequent tasks (Sheldrake, 2003). This leads to the search for “natural work groups” or groups of jobs that, together, make up a self-contained part of the total production process or primary task. At the core of each sociotechnical system unit is its primary task. Each unit’s task is derived from the primary task of the organization as a whole and the primary tasks of other higher level system units. The primary task is the transformation process of a given (sub)system. In an automotive engine plant, for example, the primary task of a sociotechnical unit might be to produce pistons (Tiwana, 2005). This task is derived from the plant’s task of producing engines, which in turn contributes to the organization’s primary purpose, producing cars. Independence refers to the identification of the smallest organizational units (work groups or teams, for example), which are assigned a primary task that can be executed relatively independently. The design of such units sometimes requires a technical solution first (Frame, 2002).

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The analysis shows that the production process may have to be reorganized into relatively self-contained, indirectly linked processes that are connected to each other in a modular design with built-in production flow buffers for each unit. If work is designed from a purely technical perspective, people often end up with a job that in itself has no meaning. The project should have input in the selection of its members. Group norms and values, however, have to be consistent with overarching values, principles, and guidelines of the total organization or, in the case of unionized firms, with both the employer’s and the union’s beliefs and values. This will prevent the emergence of narrow group self-interest and will help preserve equities among the entire workforce. Thus a balance must be maintained between decentralization of rules and unit functional autonomy and consistency of certain principles and practices across units. Otherwise, autonomous units will tend to develop animosity and competitive relations with other units. A coordinator might be elected by the group to handle external communication. To avoid the development of hierarchies or unintended supervisory roles and conflicts of interest, the role of the coordinator should be rotated. Regardless of the particular system adopted (e.g., if the group decides to work without a coordinator), communication rules with external units have to be specified to clarify responsibilities and communication flow.


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