BUS402 Study Guide

Unit 3: Organizational Design

3a. Define organizational structure

  • Define organizational structure.
  • Name four common elements of organizational structure.
  • Name the six most common organizational structures.

When they are first created, most organizations are structured to accomplish their goals efficiently and effectively. Organizational structure is built around these four elements:

  1. Common purpose – everyone understands the organization's mission, strategy, and vision.
  2. Coordinated effort – individual efforts are coordinated to meet the organization's goals.
  3. Division of labor – individuals perform different parts of a task for greater efficiency.
  4. Hierarchy of authority – a control mechanism makes decisions quickly and ensures the appropriate people are assigned to accomplish what they need to do at the right time.

Some of the most common organizational structures are:

  • Divisional – each division has the resources and functions it needs to support a product line or geographical location. For example, the women's clothing line conducts its own communications infrastructure, finance, and marketing functions, while the men's clothing line conducts its own processes.
  • Functional – each division is based on functions such as information technologies, finance, and marketing.
  • Matrix – each division is complex and versatile. Individuals are grouped by two different operational perspectives, such as function and product or region and product.
  • Modular – the organization is divided into small, flexible, tightly-knit, sub-business units that do not rely on other business units to accomplish their goals.
  • Network – the organization has a decentralized structure that relies on internal and external relationships.
  • Team-based – groups of workers with complementary skills work toward a common goal.

To review, read Organizational Structure.


3b. Define organizational design

  • How is organizational design different from organizational structure?
  • Describe some factors to consider when designing an organization.
  • How can organizational design influence project functions?

In learning outcome 3a, we discussed some common elements of organizational structure. Sometimes the organizational leadership does not choose a particular structure: the structure evolves based on their client base, available resources, geographic location, or how their managers run the organization.

For example, a business with an owner and two employees is simple: the owner tells the employees what to do and how to get things done. As the company grows, the owner may hire supervisors to help with decision-making or lead divisions based on function or product. The business leaders have not made a conscious decision about organizational structure – they just settle into a system that works.

Organizational design, on the other hand, means the owners and managers choose to structure their organization in a particular way. Let's look at how that works.

You should consider a variety of factors when designing an organization to help it accomplish its goals efficiently. Internal factors may include the organization's size, complexity, and diversity of operations. Many organizations are constrained by their dependence on specific resources, such as raw materials, and the kind of technology they require.

Every organization should consider external factors, such as competition, the economy, and legal or regulatory constraints. Industries that require flexibility, such as those in the technology field, should consider organizational structures that are highly flexible and adaptable. Industries that need to show more stability should consider a more hierarchical structure.

In this course, we are focused on project management, so think about how organizational structure can influence your project's design and structure. For example, each organizational structure we discussed in learning outcome 3a requires a process for hiring, procurement, and reporting.

Project managers who work in a highly complex and inflexible organizational structure may need to assign a project liaison to work with each organizational department to smooth the way for the resources they need for their project. On the other hand, it may be easier to work directly with people in the organization who can help facilitate project completion if you work in a more flexible and adaptable organizational structure.

To review, read Organizational Structure and Project Organization.


3c. Describe effective communication tactics and tools for project teams

  • What makes for an effective leader in terms of communication?
  • What are some common types of communication?
  • What communication technologies might a project manager need to be effective?

As we discussed in Unit 2, communication is a critical component of project success. Effective communication begins with the project manager, who needs to communicate with various individuals, such as team members, clients, stakeholders, and vendors. Project managers with a high emotional intelligence quotient (EQ) are often good communicators because they can put themselves in the shoes of those they communicate with and understand their needs.

The project manager's leadership style influences their ability to communicate. Leaders with a democratic or participative style may obtain more buy-in from team members, clients, and stakeholders than those who are more dictatorial and authoritative. While an authoritative style may work well in some situations, such as when time is critical and decisions must be made, leaders who encourage open communication tend to bring about faster problem-solving and more efficient work processes. 

The project manager should choose the most appropriate communication method given the nature of the message and the needs of those who are part of the conversation. They should use technologies that save money and time and avoid mistakes.

For example, managers often use synchronous communication when content is critical: decisions need to be made, the information is complex and requires a lengthy explanation, and participants require immediate responses to their questions. During synchronous communication, everyone converses simultaneously, such as during face-to-face or video conversations, telephone conference calls, or instant messaging.

Project managers tend to use asynchronous communication, such as email, mail and package delivery, or a project blog, when content is not time-sensitive, participants work at different times, or they work in different time zones.

The project manager and project team should be knowledgeable about various communication technologies. Since the communication tool they use may depend on their personal expertise, organizations should support those who require further training to use more appropriate communication tools as needed.

To review, see Working with Individuals.


3d. Describe how to identify proper resources for a project

  • Where can you find the identified resources needed for a project?
  • What are the resources that need to be considered when initiating a project?
  • Should all resources be identified before beginning a project?

All projects require resources to complete the project. These resources may include financing, hardware, people, raw materials, software, or tools. The project manager should consider whether the resources they need to complete the project are available internally within the organization or need to be sourced externally. It may be less time-consuming to contract an outside agency to obtain resources that are in short supply. The manager should conduct a cost-benefit analysis to see which option is most cost-effective.

Necessary resources are typically mentioned in the scope of work document and covered in more detail in a work breakdown structure document, which defines how the project team will complete the work, organize the tasks among participants, allocate resources, and monitor progress. While the project manager should include the necessary resources in these documents, changes may occur during the implementation or execution phases and require the project to acquire additional resources. The manager should monitor any changes in resources to avoid project scope creep.

To review, see Project Representation and Identifying the Need for Resources Outside the Organization.


3e. Describe how to build productive project teams

  • What is the primary function of a team?
  • Why is trust important in building a team, and how can a project leader foster trust?
  • Why is diversity important in team building?

Many people dread working on teams or group projects. Those who have a high degree of personal responsibility often dislike teamwork, although they realize it is an important part of life, business, and project management.

It is important to understand the project's goals and the expectations for how team members should work together. While team members may disagree or even dislike each other personally, the team must accomplish the task they have been hired to perform.

Project managers should assign the most appropriate people to serve on the team and create an atmosphere built on trust. This means team members should have the knowledge and skills needed to complete the job.

Managers foster trust by exemplifying trustworthiness themselves, encouraging positive energy, and sharing information when issues arise. They should address conflicts before they become negative or dysfunctional.

Creating a diverse team means ensuring the group represents a variety of perspectives, where members feel comfortable expressing their ideas, generating a variety of alternatives, and choosing the best solution to the challenges that arise.

To review, see Effective Teamwork and Collaboration.


3f. Define conflict management

  • Define conflict management.
  • How can a responsibility matrix help alleviate conflict management?
  • What are some strategies for solving common disagreements?

Disagreements frequently arise among team members, regardless of how careful the project manager was in building a productive team (see learning outcome 3e). A conflict describes a state of discord between two or more people. Conflict management describes how teams, team leaders, and project managers respond to these conflicts. The first step is recognizing that conflict will occur between most people.

These conflicts (functional conflict) can be productive when they lead to new ideas and new understandings among team members. However, negative or dysfunctional conflict can affect the trust and effectiveness of the team. Preparing for these situations can mitigate any damage.

For example, dysfunctional conflict can arise when team members are unclear about their roles and responsibilities for the project and those of other team members. Managers can avoid these misunderstandings by creating a responsibility matrix, which clearly defines each team member's responsibilities.

Managers should plan the procedure they will follow when conflict arises and respond to disagreements as quickly as possible to avoid derailing the entire team's progress. Sometimes it may be necessary to enlist the help of an outside party to mediate a conflict the team cannot resolve internally.

Here are some strategies for solving common disagreements:

  • Accommodating: Allowing everyone to express their point of view and synthesizing an agreement.
  • Avoiding: Ignoring the conflict and hoping that it will go away (not recommended).
  • Confronting: Meeting the disagreement head-on.
  • Compromising: This is a give-and-take. No one wins outright, but each side wins something they can tolerate and loses something they may have preferred. They compromise for the good of the team.
  • Dominating or forcing: Establishing your opinion over others without concern for their input.

To review, see Dealing with Problems, Managing Conflict, and Conflict Resolution to Project Success.


Unit 3 Vocabulary

  • accommodating
  • asynchronous communication 
  • authoritative style
  • avoiding
  • buy-in 
  • common purpose
  • competition
  • compromising
  • conflict management
  • conflict
  • confronting
  • coordinated effort
  • cost-benefit analysis 
  • democratic
  • dictatorial
  • diverse
  • division of labor
  • divisional
  • dominating or forcing
  • dysfunctional conflict 
  • emotional intelligence quotient (EQ)
  • external factors
  • functional conflict 
  • hierarchical
  • hierarchy of authority
  • internal factors
  • leadership style
  • matrix
  • modular
  • network
  • organizational structure
  • participative style
  • productive team
  • project liaison  
  • project scope creep 
  • organizational design
  • resources 
  • responsibility matrix
  • scope of work document
  • synchronous communication
  • team-based
  • trust
  • work breakdown structure document