Organizational Structures
3.3 DEVELOPING WORK INTEGRATION POSITIONS
U.S. business and have been described countless times in reports, audits, articles and speeches. Our symptoms took such form as:
● Executives did not have adequate financial information and control of their operations.
Marketing managers, for example, did not know how much it cost to produce a prod- uct. Prices and margins were set by division managers.
● Cumbersome communications channels existed between key functions, especially manufacturing and marketing.
● In the face of stiffening competition, the corporation remained too internalized in its thinking and organizational structure. It was insufficiently oriented to the outside world.
● Lack of communications between divisions not only created the antithesis of a corpo- rate team effort but also was wasteful of a precious resource—people.
● Long-range corporate planning was sporadic and superficial; this was leading to over- staffing, duplicated effort and inefficiency.
Another means of reducing conflicts and minimizing the need for communication was detailed planning. Functional representation would be present at all planning, scheduling, and budget meetings. This method worked best for nonrepetitive tasks and projects.
In the traditional organization, one of the most important responsibilities of upper- level management was the resolution of conflicts through “hierarchical referral.” The con- tinuous conflicts and struggle for power between the functional units consistently required that upper-level personnel resolve those problems resulting from situations that were either nonroutine or unpredictable and for which no policies or procedures existed.
The fourth method is direct contact and interactions by the functional managers. The rules and procedures, as well as the planning process method, were designed to minimize ongoing communications between functional groups. The quantity of conflicts that execu- tives had to resolve forced key personnel to spend a great percentage of their time as arbi- trators, rather than as managers. To alleviate problems of hierarchical referral, upper-level management requested that all conflicts be resolved at the lowest possible levels. This re- quired that functional managers meet face-to-face to resolve conflicts.
In many organizations, these new methods proved ineffective, primarily because there still existed a need for a focal point for the project to ensure that all activities would be properly integrated.
When the need for project managers was acknowledged, the next logical question was where in the organization to place them. Executives preferred to keep project managers low in the organization. After all, if they reported to someone high up, they would have to be paid more and would pose a continuous threat to management.
The first attempt to resolve this problem was to develop project leaders or coordina- tors within each functional department, as shown in Figure 3–2. Section-level personnel were temporarily assigned as project leaders and would return to their former positions at project termination. This is why the term “project leader” is used rather than “project man- ager,” as the word “manager” implies a permanent relationship. This arrangement proved effective for coordinating and integrating work within one department, provided that the correct project leader was selected. Some employees considered this position an increase in power and status, and conflicts occurred about whether assignments should be based on experience, seniority, or capability. Furthermore, the project leaders had almost no author- ity, and section-level managers refused to take directions from them, fearing that the project leaders might be next in line for the department manager’s position.
When the activities required efforts that crossed more than one functional boundary, con- flicts arose. The project leader in one department did not have the authority to coordinate ac- tivities in any other department. Furthermore, the creation of this new position caused internal conflicts within each department. As a result, many employees refused to become dedicated to project management and were anxious to return to their “secure” jobs. Quite often, especially when cross-functional integration was required, the division manager was forced to act as the project manager. If the employee enjoyed the assignment of project leader, he would try to
“stretch out” the project as long as possible.
Even though we have criticized this organizational form, it does not mean that it can- not work. Any organizational form will work if the employees want it to work. As an ex- ample, a computer manufacturer has a midwestern division with three departments, as in Figure 3–2, and approximately fourteen people per department. When a project comes in,
Developing Work Integration Positions 95
the division manager determines which department will handle most of the work. Let us say that the work load is 60 percent department X, 30 percent department Y, and 10 per- cent department Z. Since most of the effort is in department X, the project leader is se- lected from that department. When the project leader goes into the other two departments to get resources, he will almost always get the resources he wants. This organizational form works in this case because:
● The other department managers know that they may have to supply the project leader on the next activity.
● There are only three functional boundaries or departments involved (i.e., a small organization).
The next step in the evolution of project management was the task force concept. The rationale behind the task force concept was that integration could be achieved if each func- tional unit placed a representative on the task force. The group could then jointly solve problems as they occurred, provided that budget limitations were still adhered to.
Theoretically, decisions could now be made at the lowest possible levels, thus expediting information and reducing, or even eliminating, delay time.
The task force was composed of both part-time and full-time personnel from each de- partment involved. Daily meetings were held to review activities and discuss potential prob- lems. Functional managers soon found that their task force employees were spending more
96 ORGANIZATIONAL STRUCTURES
DIVISION MANAGER
DEPARTMENT X DEPARTMENT Y DEPARTMENT Z
PROJECT LEADERS PROJECT LEADERS PROJECT LEADERS
SECTION LEVEL SECTION LEVEL SECTION LEVEL
FIGURE 3–2. Departmental project management.
time in unproductive meetings than in performing functional activities. In addition, the na- ture of the task force position caused many individuals to shift membership within the in- formal organization. Many functional managers then placed nonqualified and inexperienced individuals on task forces. The result was that the group soon became ineffective because they either did not have the information necessary to make the decisions, or lacked the au- thority (delegated by the functional managers) to allocate resources and assign work.
Development of the task force concept was a giant step toward conflict resolution:
Work was being accomplished on time, schedules were being maintained, and costs were usually within budget. But integration and coordination were still problems because there were no specified authority relationships or individuals to oversee the entire project through completion. Attempts were made to overcome this by placing various people in charge of the task force: Functional managers, division heads, and even upper-level man- agement had opportunities to direct task forces. However, without formal project author- ity relationships, task force members remained loyal to their functional organizations, and when conflicts came about between the project and functional organization, the project al- ways suffered.
Although the task force concept was a step in the right direction, the disadvantages strongly outweighed the advantages. A strength of the approach was that it could be es- tablished very rapidly and with very little paperwork. Integration, however, was compli- cated; work flow was difficult to control; and functional support was difficult to obtain be- cause it was almost always strictly controlled by the functional manager. In addition, task forces were found to be grossly ineffective on long-range projects.
The next step in the evolution of work integration was the establishment of liaison de- partments, particularly in engineering divisions that perform multiple projects involving a high level of technology (see Figure 3–3). The purpose of the liaison department was to
Developing Work Integration Positions 97
ENGINEERING DIVISION
LIAISON DEPT ELECTRONICS THERMODYNAMICS STRUCTURES R&D
LEGEND
FORMAL AUTHORITY FLOW INFORMAL/REPORTING AUTHORITY FLOW
FIGURE 3–3. Engineering division with liaison department (The Expeditor).
handle transactions between functional units within the (engineering) division. The liaison personnel received their authority through the division head. The liaison department did not actually resolve conflicts. Their prime function was to assure that all departments worked toward the same requirements and goals. Liaison departments are still in existence in many large companies and typically handle engineering changes and design problems.
Unfortunately, the liaison department is simply a scaleup of the project coordinator within the department. The authority given to the liaison department extends only to the outer boundaries of the division. If a conflict arose between the manufacturing and engi- neering divisions, for example, it would still be referred to upper management for resolu- tion. Today, liaison departments are synonymous with project engineering and systems en- gineering departments, and the individuals in these departments have the authority to span the entire organization.
3.4 LINE–STAFF ORGANIZATION