These two approaches to organizational design for structure are described in Table 1 below. Table 1

Principles of Universalistic and Contingency Approaches to Organizational Design and Resulting Structures

Organizational Structure Type

Description

Universalistic Design (Bureaucratic structure)

A. A clear division of labor, with each job well defined, understood and routine

B. A formal hierarchy that clearly defines the management/supervisory relationship between managers and subordinates

C. Specific rules, policies and procedures which are used to guide behavior for all employees

D. Impersonal application of all rules, policies, discipline and rewards

E. Hiring of employees based on rigid and equitable selection criteria

Universalistic Design (classical structure)

A. Work should be divided and subdivided to the greatest degree possible

B. Jobs/tasks should be grouped together on the basis of function or process -- specialization

C. Centralization of authority with top management

D. Authority should be distributed according to the job responsibility

E. Each employee should have one and only one supervisor

Contingency Approach

The choices of organizational design ranges on a continuum from what has been labeled the mechanistic form (e.g., anchored by a classical bureaucratic hierarchical structural form) to the other end of the continuum that is labeled the organic form (e.g., anchored by the neoclassical matrix structural form). Based on the circumstances presented by the external environment, its technology, and its strategic choices, which include its strategic goals, a structural form should be designed that provides the maximum support to the organization in achieving its goals

Source: Bissell & Zamora, 1999, p. 24

While some companies may enjoy a high level of success using the universalistic approach to organizational design for structure, companies that compete in a dynamic and highly competitive environment may require the flexibility afforded by the contingency approach. Whichever organizational design approach is used, though, it is the responsibility of the organization's management to make these determinations and decisions. In this regard, organizational design to identify the best organizational structure to guide the enterprise in achieving its goals is one of the more important responsibilities of a company's top leadership. The organizational design function is comprised of three basic management functions as follows:

1. Planning. This involves defining organizational objectives and developing the methods and resources by which they will be accomplished.

2. Controlling. This penultimate function is the process of developing, implementing and using feedback systems that provide continuous information on the success of all system elements that have been put in place in order to achieve the organizational goals.

3. Organizing. Finally, this management function consists of designing and deciding upon the most appropriate organizational structure for achieving the organization's goals (Bissell & Zamora, 1999, p. 24).

While the organizational structure designed and selected by a given enterprise may fit one of these categories in most ways, there are some other ways in which an organization can be structured that contain elements of both the bureaucratic and classical structures, particularly as these issues relate to project management initiatives. As noted in the introductory chapter, although they may be referred to by different terms in different organizations, the organizational structures typically used by companies for project management purposes can be categorized as being functional, project or matrix structures. A description of these three organizational structures and their respective strengths and weaknesses is provided in Table 2 below.

Table 2

Organizational Structure Types: Description, Strengths and Weaknesses

Organizational Structure

Description

Strengths

Weaknesses

Functional

In the classic organizational structure, there is a hierarchy in which people are grouped into functional divisions. Everyone has one clear superior. The scope of projects is typically limited to the boundaries of the functional division. Each division has its own project managers who report to the head of the division; these project managers operate independently from project managers in other divisions.

Projects can be completed more accurately. Because project managers and team members have expertise in the functional area, project requirements can be defined and challenged intelligently. This means fewer changes will be made during the life of the project and that a more practical end product can result. In addition, project personnel are accountable for their work and must accept success or failure. Because they must live with the end result of the project, they are committed to it. Since personnel...

Problem situations can be identified and corrected quickly.
The focus on the needs of the functional division might make it difficult to see and respond to the needs of the organization as a whole. Enterprise policies and practices might not be enforced uniformly across divisions. Project control and status reporting to upper management is not standardized across the organization, making it difficult for senior executives to manage the various projects with this organization. Project costs tend to have little or no accounting. Many aspects of a project are handled as ongoing functional work of the division making it difficult to identify and account for the true cost of a project.

Project

In a project organization, projects are centralized in a separate division of skilled project managers that serves the project management needs of all divisions of the company. This is typically referred to as a "project office" and is becoming increasingly popular in organizations. In this structure, a central group is responsible for planning, controlling, managing and reporting the progress of all projects in the organization.

A formal project management system is adopted and applied uniformly throughout the organization. This common understanding and application of project management practices typically creates high efficiency in the organization. Projects are often completed on time, within budget, and in accordance with project scope. In addition, common standards of planning, controlling, and reporting exist throughout the life of each project and are applied across all projects. These common standards facilitate communication and provide efficiency. Moreover, highly skilled project managers can be available for the benefit of all. Costs can be reduced by using common tools such as project management software to manage all projects. Centralized data from all projects can be analyzed and applied to future projects to improve the accuracy of estimates and practices. A centralized organizational structure makes it easier to identify productivity trends and take steps to improve project processes. Finally, all projects of the organization can be managed as a whole.

Standards and documentation can become excessive, and without careful vigilance, this centralization of project managers and practices can become self-serving. Rather than serving the needs of the project office, careful focus must be given to the needs of the project and the people it benefits. If processes become excessive, the total cost to manage a project can be higher than other structures. Constant assessment the value being provided must be conducted to ensure value exceeds costs. Qualified technical leaders may be scarce. Project managers might not have the technical background needed for a project, and might have little access to people with the appropriate knowledge and skills. Project managers might seem unresponsive to the needs of the people who request their time and skills. Because project managers are located in a separate project office, they might become out of touch with the needs and practices of individual departments.

Matrix

As the term suggests, this organizational structure is a blend of functional and project organizations. A weak matrix organization possesses many of the characteristics of a functional organization, and the project manager is more of a coordinator or expediter with limited authority. By contrast, a strong matrix organization has many of the characteristics of a project organization, with a full-time project manager who has significant authority and an administrative staff. In this organizational structure, the project team has a dual reporting role to a project manager, coordinator, or expeditor (who provides management skills) and a functional manager (who provides technical and functional skills). This type of organizational structure has characteristics of both project and functional organizations, and project personnel report to a project manager who is responsible for refining tasks for assignments, planning and budgets, and project scheduling. In strong matrix organizations, the project manager has more power than the functional manager, in weak matrix organizations, the power distribution is generally reversed.

A matrix organization capitalizes on the advantage of both a project structure and a functional structure. Personnel and skills are less redundant, and when expertise is scarce, it can be applied more flexibly and efficiently to different projects. The focus of teamwork easily accommodates changes in personnel requirements. Conflicts between project requirements and functional organization policies are perceived and resolved more readily. The expertise of both project and functional management is available to assist the project and both can be applied to handle complex issues and coordinate various tasks, resulting in the completion of projects in less time and at lower costs.

Dual management lines make communication more difficult to manage. When team members receive conflicting instructions from project and…