1. Transforming Lives. Inventing the Future. www.iit.edu IEL L IN O I S TU IN S T I T OFTECHNOLOGY 8/31/04 Lecture 3 - Organizational Structure and Culture1 Project Management for ITM Dennis J. Hood IT 471-K01 Project Management for ITM Fall ’04 Center for Professional Development

2. 8/31/04 Lecture 3 - Organizational Structure and Culture2 ILLINOIS INSTITUTE OF TECHNOLOGY Lesson Overview  Organizational Structure and Culture  Reading: Ch. 3  Objectives –Analyze organizational structures alternatives –Discuss pros and cons relative to PM –Examine the role of organizational culture

3. 8/31/04 Lecture 3 - Organizational Structure and Culture3 ILLINOIS INSTITUTE OF TECHNOLOGY The Need for Structure  Administration –HR, budget, career development, etc.  Communication –Command and control  Authority and Responsibility –Accountability is essential  Functional Cohesion –Skill and competency development –Economies of scale

4. 8/31/04 Lecture 3 - Organizational Structure and Culture4 ILLINOIS INSTITUTE OF TECHNOLOGY Project Organization Differences  Projects are temporary –Project team is only needed for a relatively short period of time –Burst of productivity is critical  Projects are cross-functional –Membership is based primarily on value to the project (not historical ties, etc.) –Understanding of roles is critical  Projects have a small set of well-defined objectives

5. 8/31/04 Lecture 3 - Organizational Structure and Culture5 ILLINOIS INSTITUTE OF TECHNOLOGY Option 1 – Traditional Hierarchy  Surface Project from Functional Org –Organize by function, Manage by project  Pros: –Structural integrity –Maximum flexibility –Supports career paths  Cons: –Focus is not on projects –Communication is strained

6. 8/31/04 Lecture 3 - Organizational Structure and Culture6 ILLINOIS INSTITUTE OF TECHNOLOGY Option 2 – Dedicated Project Teams  Organize the staff as project teams –PMs have dedicated staff (senior managers) –Some functional presence for operations  Pros: –PM has direct authority –Team is diverse, focused and unified  Cons: –Difficult to optimize utilization (bench?) –Consistent skill development is impeded

7. 8/31/04 Lecture 3 - Organizational Structure and Culture7 ILLINOIS INSTITUTE OF TECHNOLOGY Option 3 – Matrix Organization  Hybrid of 1 and 2 –PMs “horizontal” authority overlays “vertical” functional hierarchy  Pros: –More efficient than project organization –More project-focused than traditional –Encourages PM competency development  Cons: –Everyone has two bosses

8. 8/31/04 Lecture 3 - Organizational Structure and Culture8 ILLINOIS INSTITUTE OF TECHNOLOGY Option 3 – Matrix Org. (cont.)  Variations of Matrix Organizations –Functional PM role is largely administrative Functional manager (FM) role calls the shots –Balanced: PM responsible for the what FM responsible for the how –Project: PM largely calls the shots FM consulted as needed

9. 8/31/04 Lecture 3 - Organizational Structure and Culture9 ILLINOIS INSTITUTE OF TECHNOLOGY Virtual Organizations  Born out of downsizing / rightsizing  “Specialists” ally to execute projects  Typically a core organization owns the project and contracts out for functions outside of its core competencies  Pros: –Cost effectiveness, expertise and flexibility  Cons: –Ownership, command and control

10. 8/31/04 Lecture 3 - Organizational Structure and Culture10 ILLINOIS INSTITUTE OF TECHNOLOGY Culture  Every organization has its own culture  Culture is largely set at the top and difficult to change  Culture must support structure and vice versa  If not, projects will fail

11. 8/31/04 Lecture 3 - Organizational Structure and Culture11 ILLINOIS INSTITUTE OF TECHNOLOGY Culture Characteristics  Member Identity  Team Emphasis  Management Focus  Unit Integration  Control  Risk Tolerance  Reward Criteria  Conflict Tolerance  Means vs. End Orientation  Open-Systems Focus

12. 8/31/04 Lecture 3 - Organizational Structure and Culture12 ILLINOIS INSTITUTE OF TECHNOLOGY Culture Management  Identify Current Culture –Physical Environment –Documented Evidence –Observed Behavior –Folklore  Modification –Clearly define desired modifications –Change at the top and push down –Turnover staff as necessary