If business is organised primarily for efficiency purposes, evaluate the relationship between organisational structure and organisational effectiveness from your readings this week. Cite and reference widely in support of your answer

The structure within organisations is determined and constrained by their environment, the needs of the organisation and the demands of the marketplace. Traditionally, organisations were hierarchical, oriented around geographic or process boundaries

The availability of resource within a traditionally structured organisation can pose significant challenges to projects within the organisation. To address this, geographic locations may need to replicate functional units such as Marketing or Manufacturing many times across the globe in order to provide expertise within individual divisions or markets. Replication of functional units can provide benefits in customising for the market, for example, a Chinese branch would be staffed with individuals sensitive to Chinese culture or a Medical division will have links with the medical industry. The benefits this can bring for the delivery of products to the individual market must be balanced with the increased expense and inefficiency of replicating divisions. These concerns may be mitigated by implementing virtual teams that collaborate across geographic locations using distributed collaborative tools. Additionally, the separation of the project across geographically, culturally, process or divisionally-separated colleagues results in work packages being decomposed which may have dependencies on work packages from other areas in the business and demands identification and close management (Canonico & Söderlund, 2010).

Despite these disadvantages, global companies continue to succeed in the delivery of projects. Stanford cites a number of successful case studies of global companies such as Royal Philips, Danone and Chevron/Texaco that are able to successfully structure huge businesses to successfully deliver projects (Stanford, 2007, pp. 51-56). As identified in the case of Comau, a significantly beneficial factor to delivery of successful projects within a geographically (or divisionally)-separated organisation is the role of the Project Management Office (Kerzner, 2010, p. 123).

In order to improve the alignment of the project to the individual, organisations not constrained by geographic or similar requirements have developed and evolved into more suitable structures. Whilst the business must continue to embrace the value of the project and allocate resources to projects, it must also meet the often competing demands of conducting day-to-day business. This creates a competition of resource that may be acutely felt within the business.

Organisations that are driven by the customer and the project, such as software development or building developers, become Project-based organisations. Smaller, leaner companies often start with an extreme approach such as The Lean Startup (Ries, n.d.).

Most businesses cannot restructure so extensively so develop or evolve into resource-oriented Matrix Organisations. The Matrix Organisation reduces the gap between the project and the team member by spanning business functions, breaking down the invisible barriers between departments. The Matrix Organisation offers a hybrid approach which can only deliver project value whilst performing day-to-day business if behavioural requirements are met. Reaching across an organisation is a more awkward manoeuvre than reaching down (from senior management) when a department’s resource is required for a project which may or may not be regarded as a departmental priority. This demands support from both senior and functional management to allow the sharing of resources, regardless of organisational politics and opinions towards projects; once the project is sanctioned as part of the portfolio or programme, the Matrix Organisation particularly demands all levels of management to support the project.

As we have identified, the structure adopted by the organisation is often constrained by geography or other factors and driven by the need for project efficiency and conducting day-to-day business. The adopted structure does not preclude the likely success or otherwise of projects, it merely configures the organisation and its employees in an optimised form for collaboration and cross-functional operation. A perceived “project-optimised” structure such as the Matrix Organisation does not guarantee success, as discovered by Stare (2011) who found that regardless of the organisational structure, it remains the competence of the Project Manager that is the more significant contributing factor to project success.

References

Canonico, P. & Söderlund, J., (2010). Getting control of multi-project organizations: Combining contingent control mechanisms. International Journal of Project Management,28(8), p. 796 – 806.

Kerzner, H., (2010). Project Management Best Practices.2 ed. New Jersey: John Wiley & Sons..

Ries, E., (n.d.). The Lean Startup.[Online] 

Available at: http://theleanstartup.com/principles

[Accessed 1 2 2014].

Stanford, N., (2007). Guide to organisation design: creating high-performing and adaptable enterprises.s.l.:University of Liverpool Online Library.

Stare, A., (2011). THE IMPACT OF THE ORGANISATIONAL STRUCTURE AND PROJECT ORGANISATIONAL CULTURE ON PROJECT PERFORMANCE IN SLOVENIAN ENTERPRISES. Management: Journal of Contemporary Management Issues, 16(2), pp. 1-22.