kerala university mba 2014 scheme full time uim

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Unit II: Project Organisation and Conflict Management - Formal Organization Structure –
Organisation Design – Types of project organizations. Conflict Origin & Consequences.
Managing conflict – Team methods for resolving conflict
Project Organization Structures
Organizations are systems of human and physical elements interacting to achieve goals. As with
all types of systems, organizations are partly described by their structure-the form of
relationships that bond their elements.
Projects are performed by people and managed through people, so it is essential to develop an
organisation structure which reflects the needs of the project (task), the needs of the project team
and just as importantly the needs of the individual.
Organisation Structures:
Organizational structure consists of activities such as task allocation, coordination and
supervision, which are directed towards the achievement of organizational aims. It can also be
considered as the viewing glass or perspective through which individuals see their organization
and its environment. An organization can be structured in many different ways, depending on
their objectives. The structure of an organization will determine the modes in which it operates
and performs. Organizational structure allows the expressed allocation of responsibilities for
different functions and processes to different entities. Organizational structure affects
organizational action in two big ways. First, it provides the foundation on which standard
operating procedures and routines rest. Second, it determines which individuals get to participate
in which decision-making processes, and thus to what extent their views shape the organization’s
actions.
In all organizations two kinds of structures coexist.
One is the Formal structure that describes normative superior-subordinate relationships, chains
of command, and subdivisions and grouping of elements.
The other is the Informal Structure, the unpublished one that describes relationships that evolve
through the interactions of people. Whereas the formal organization prescribes how people are
supposed to relate, the informal organization is how they want to relate.
FORMAL ORGANIZATION STRUCTURE
Concepts of organizational structure apply to all kinds of organizations—companies, institutions,
agencies—as well as to their subunits—divisions, departments, projects, and teams.
Includes:
1. The range of activities in which the organization is involved and the major subdivisions of the
organization
2. The management hierarchy and reporting
3. The type of work and responsibility of each subdivision
4. The official lines of authority and communication

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It does not show informal lines of communication and personal contacts, nor does it indicate
places of status and power that develop at lower levels.
ORGANIZATIONAL DESIGN BY DIFFERENTIATION AND INTEGRATION
There is no ―best‖ kind of organization structure. The most appropriate structure depends on the
organization’s goals, type of work, and environment. Organization structures typically develop
through a combination of planned and evolutionary responses to ongoing problems.
Organizations create specialized roles and units, each with suitable expertise and resources
needed to deal with certain classes of situations and problems efficiently. As organizations grow
or the environment changes, additional subdivisions and new groupings are implemented to
better handle new situations and emerging problems. For example, as a company increases its
product lines, it may subdivide its manufacturing area into product-oriented divisions to better
address problems specific to each of the lines. As a company expands its sales territory, it may
subdivide its marketing force geographically to better handle problems of regional origin. This
subdivision into specialized areas is called differentiation .
Obviously, subunits of an organization do not act as independent entities but must interact and
support each other. The degree to which they interact, coordinate, and mutually adjust their
actions to fulfill organizational goals is called integration .
Traditional Forms of Organization
How an organization is subdivided is referred to as the basis for differentiation. The six bases for
differentiation are functional, geographic, product, customer, process, and project.
The main types of project organisation structure
• Functional
• Matrix
- Co-ordinating matrix
- Overlay matrix
- Secondment matrix
• Pure project
Functional Organisation Structure
Employees within the functional divisions of an organization tend to perform a specialized set of
tasks. This leads to operational efficiencies within that group. However it could also lead to a
lack of communication between the functional groups within an organization, making the
organization slow and inflexible. As a whole, a functional organization is best suited as a
producer of standardized goods and services at large volume and low cost. However, once
management decides to implement a project, the different segments of the projects are delegated
to the respective functional units with each unit responsible for completing its segment of the
project. Coordination is maintained through normal management channels. The functional
organization is also commonly used when, given the nature of project, one functional area plays

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a dominant role in completing the project or has a dominant interest in the success of the project.
Under these circumstances, a high ranking manager in that area is given the responsibility of
coordinating the project. The following figure shows how project is managed within the
functional organization.
 based on the subdivision of product lines or disciplines into separate departments,
together with a vertical hierarchy
 Also called wedding-cake corporate structure.
Advantages
• No change in the design and operation of parent organization.
• In-depth expertise of the functional department can be used for projects
• Post-project transition is easy.
• Functional departments provide a home for technical expertise which offers technical support
and continuing development.
• Functional departments provide good support as the work is usually carried out in the
department.
• Functional departments can achieve a high degree of flexibility, because people in the
department can be assigned to the project, then immediately reassigned to other work. Switching
back and forth between projects is easily achieved.
• Functional departments provide the normal career path for advancement and promotion.
• Functional department's work is simpler to estimate and manage as the scope of work is usually
restricted to its own field and the functional data base should contain information from previous
projects (closeout reports).
• Lines of communication within the department are short and well established.
• There is quick reaction time to problems within the department.
• Functional departments offer clearly defined responsibility and authority for work within the
department.

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Disadvantages
1. Lack of focus on the part of functional departments as they have their own routine work.
2. Integration across functional units is very difficult.
3. Projects may take longer time due to slow response by functional departments.
4. Motivation level among the people assigned to the project is very weak as they lack
ownership.
i. A primary disadvantage of this arrangement is that the client is not the focus of activity and
concern. The functional unit has its own work to do, which usually takes precedence over the
work of the project, and hence over the interests of the client.
ii. The functional division tends to be oriented toward the activities particular to its function. It is
not usually problem oriented in the sense that a project should be to be successful.
5. Occasionally in functionally organized projects, no individual is given full responsibility for
the project. This failure to pinpoint responsibility usually means that the PM is made accountable
for some parts of the project, but another person is made accountable for one or more other parts.
Little imagination is required to forecast the lack of coordination and chaos that results.
6. The same reasons that lead to lack of coordinated effort tend to make response to client needs
slow and arduous. There are often several layers of management between the project and the
client.
7. There is a tendency to sub optimize the project. Project issues that are directly within the
interest area of the functional home may be dealt with carefully, but those outside normal interest
areas may be given short shrift, if not totally ignored.
8. The motivation of people assigned to the project tends to be weak. The project is not in the
mainstream of activity and interest, and some project team members may view service on the
project as a professional detour.
9. Such an organizational arrangement does not facilitate a holistic approach to the project.
Matrix Organisation Structures
The topology of the matrix structure has the same format as a mathematical matrix, the vertical
lines represent the functional department's responsibility and authority, while the horizontal lines
represent the project's responsibility and authority, thus giving the matrix structure its unique
appearance and name.
Matrix management is a hybrid organizational form in which a horizontal project management
structure is overlaid on the normal functional hierarchy. In matrix system, there are two chains of
command, one along functional lines and the other along project lines. Instead of delegating
segments of a project to different units or creating an autonomous team, project participants
report simultaneously to both functional and project managers. Matrix structure is designed to
optimally utilize resources by having individuals work on multiple projects as well as being
capable of performing normal functional duties. At the same time, the matrix approach attempts
to achieve greater integration by creating and legitimizing the authority of a project manager.
The following figure shows how projects are managed in matrix structure.

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There are different forms of matrix systems depending on the relative authority of the project and
functional manager.
Functional, lightweight or weak matrix is titles given to matrices in which the balance of
authority strongly favors the functional manager. Balanced or middleweight matrix is used to
describe the traditional matrix arrangement. Project, heavy weight, or strong matrix is used to
describe a matrix in which the balance of authority is strongly on the side of the project manager.
 Weak/Functional Matrix/ Co-ordination matrix
A project manager with only limited authority is assigned to oversee the cross- functional
aspects of the project. The functional managers maintain control over their resources and project
areas.
 Balanced /Overlay matrix
A project manager is assigned to oversee the project. Power is shared equally between the
project manager and the functional managers. It brings the best aspects of functional and
projective organizations. However, this is the most difficult system to maintain as the sharing
power is delicate proposition.
 Strong/Project Matrix /Secondment matrix
A project manager is primarily responsible for the project. Functional managers provide
technical expertise and assign resources as needed.
Among these matrixes, there is no best format; implementation success always depends
on organization’s purpose and function.
Advantages of matrix:
 Efficient allocation of resources to multiple projects is possible
 Strong project focus can be ensured.
 Post project transition is relatively easier.
 Flexibility in utilization of resources and expertise is possible.
Disadvantages of matrix:
 Dysfunctional conflict may arise between function managers and project managers.

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 Infighting may occur among project managers who are primarily interested in what is
best for their project.
 As the management principle unity of command is violated, project participants have two
bosses at the least and hence it will create stressful situations.
 In case of balanced matrix form, the projects get slow down.
Pure Project Organisation Structure
The pure project organisation structure is similar in shape to the functional organizational
structure except now all the departments are dedicated to the project. The project is separated
from the rest of the parent system. It has autonomy from the rest of the company, as a self-
contained unit with its own technical staff and administration. This type of structure is typical of
large projects. The project manager has a high level of authority to manage and control the
project's resources and constraints.
President
Program manager V.P. marketing V.P manufacturing V.P .R&D
Marketing
Manufacturing
Manager, Project A R&D
Finance
Personnel
Marketing
Manager, Project B Manufacturing
R&D
Finance
Personnel
Fig: Pure project organization.
Advantages:
• The project manager has full line authority over the project.
• Team members have increased project commitment and loyalty.
• It promotes more effective communication between the project manager and the team
members.
• All members of the workforce report directly to the project manager. There are no functional
department heads whose permission must be sought.
• The lines of communication are shorter than the multi-disciplined functional route.

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• If there are a series of similar projects, the team of skilled experts can be kept together.
• Because the project team tends to have a strong separate identity, this encourages a high level
of communication between members. Inspiration and motivation is high and task orientated.
• With centralized authority, decisions are made quickly.
• With the one boss situation the lines of communication, responsibility and authority are clear
and undisputed.
• A pure project presents a simple structure which is easy to understand, implement and operate.
• There is a holistic approach to the project.
Disadvantages:
• If the parent company has a number of projects running concurrently, with pure project
structures this could lead to duplication of effort in many areas and an inefficient use of company
resources.
• To ensure access to technical know-how and skills there may be a propensity to stockpile
equipment and personnel. This may lead to resources staying on the project longer than required.
• Project team members work themselves out of a job at the end of the project.
• If the project divorces itself from the functional departments and other projects, this could sever
the cross flow of ideas and information within the company.
• As the project cannot offer continuity of employment, this may encourage the company to use
sub-contractors. If a detailed closeout report is not generated by the sub-contractors the company
would lose valuable experience and information.
ORIGINS OF CONFLICT
In all organizations, differences in objectives, opinions, and values lead to friction
and conflict. Conflict arises between users and contractors, project staff and functional groups,
and different functional departments. It occurs between people on the same team, people in
different teams, and groups in different organizations. Some conflict is natural; too much is
destructive.
Between User and Contractor
Seeds of conflict between the user and the contractor are sown during early contract negotiations.
People representing the two parties are usually less concerned with developing trust and
teamwork than with driving a hard bargain for their own best interests.
The user wants to minimize cost; the contractor to maximize profit, One's gain is the other's loss.
In the extreme, each side strives for an agreement which provides an "out" in case it cannot keep
its part of the bargain; each makes the other side responsible in case of failure, and each gives
itself final rights to all project benefits
After negotiations are completed the contract itself becomes a source of conflict. In cost-plus
agreements in which profit is a percentage of costs and there is little incentive for the contractor
to control expenses, the user must closely supervise and question everything. Such scrutiny is a
constant irritant to the contractor. In fixed price contracts, costs may have to be periodically
renegotiated and revised upward. This is also a source of friction. Any contract that is vaguely

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worded or poorly specified in terms of cost, schedule, or performance is likely to have multiple
interpretations and lead to disagreement and conflict.
Within the Project Organization
Functionalism is based upon and promotes differences in ideas and objectives. This
is good for functional departments because it makes them better at what they do, but bad for
projects because the functional areas are somewhat self-serving. High-level interdependency
between functional areas in projects increases the level of contact between them and, at the same
time, the chances of conflict. Different functional areas have different ideas, goals, and solutions
for similar problems—differences that frequently must be resolved without the benefit of a
common superior.
In addition, the needs of functional areas are often incompatible with the needs of the
project. Functional areas often request changes to the project plan that the project manager must
evaluate and sometimes refuse. The project manager might have to compromise the high
scientific and technical standards of the research and engineering departments with time and cost
considerations of the project. Even when project managers defer to the technical judgment of
specialists, often they disagree over the means of implementation.
Work priorities, schedules, and resource allocations are also sources of conflict. Functional areas
working in multiple projects might set priorities that conflict with priorities of project managers.
Although cost estimates and schedules are originally set by functional areas, they are revised by
project managers; often the final schedules of projects conflict, and the resources allocated to a
project is insufficient.
In matrix organizations, functional managers sometimes see project managers as
impinging on their territory, and they resent having to share planning and control with them.
They might refuse to release certain personnel to projects or try to retain authority over the
personnel they do release. Workers with dual reporting relationships are often confused about
priorities and loyalties.
CONSEQUENCES OF CONFLICT
Conflict is inevitable in human systems and is not always detrimental. Properly managed, a
certain amount of conflict is beneficial. Conflict helps to:
1. Produce better ideas.
2. Force people to search for new approaches.
3. Cause persistent problems to surface and be dealt with.
4. Force people to clarify their views.
5. Cause tension, which stimulates interest and creativity.
6. Give people the opportunity to test their capacities.
In fact, it is unhealthy when there is no conflict. Called groupthink , lack of conflict is a sign of
over-conformity. It causes dullness and sameness and results in poor or mediocre judgment. In
contrast, conflict over differences in opinion or perspective stimulates discussion and can
enhance problem solving and innovation. In project groups charged with exploring new ideas or
solving complex problems, some conflict is essential.

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Conflict between groups that are in competition is beneficial because it increases each
group’s cohesion, spirit, loyalty, and the intensity of competition. However, groups in
competition do not need to cooperate, and conflict between teams that should be cooperating
with each other can be devastating. Each group develops an ―us versus them‖ attitude and
selfishly strives to achieve its own objectives and block the objectives of other teams. Left
uncontrolled and unresolved, destructive conflict spirals upward and creates hostility and
conflict. Within a project, such conflict fosters lack of respect and trust, and destroys
communication between groups and individuals. Ideas, opinions, or suggestions of others are
rejected or discredited. Project spirit breaks down and the project organization splinters apart.
MANAGING CONFLICT
How do project managers deal with these conflicts? In general there are five ways:
1. Withdraw or retreat from the disagreement.
2. Smooth over or de-emphasize the importance of the disagreement (pretend it does not exist).
3. Force the issue by exerting power.
4. Compromise or bargain to bring at least some degree of satisfaction to all parties.
5. Confront the conflict directly; work through the disagreement with problem solving.
All of these are at times appropriate. In a heated argument it may be best to withdraw until
emotions have calmed down, or to de-emphasize the disagreement before it gets distorted out of
proportion. But neither of these resolves the problem, which will likely arise again. The project
manager might force the issue by using authority; this gets the action done but risks creating
hostility.
To use bargaining or compromising, both sides must be willing to give up something to get
something. Ultimately, both sides may feel they lost more than they gained, and the result is not
necessarily good for the project. Of the five approaches, the only one that works at resolving the
underlying issues is confrontation.
Confrontation
Confrontation involves identifying potential or existing problems, then facing up to them. At the
organization level this happens by all areas involved in the project agreeing on project
objectives, administrative plans, labor requirements, and priorities.
It requires careful monitoring of schedules, quick reallocation of resources to problem areas,
close contact between project groups, and prompt resolution of technical problems. At the
individual level, project managers confront conflicts by raising questions and challenges such as:
 How do you know that this redesign is likely to solve the problem? Prove it to me.
 What have you done to correct the malfunctions that showed up on the test we agreed to?
 How do you expect to catch up on lost time when you haven’t scheduled overtime or
additional staffing?
Questions like these demonstrate that the project manager is vitally interested and alert, and that
everything is subject to question. It is a crucial part of effective project management.

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Successful confrontation assumes a lot about the individuals and groups involved. It assumes that
they are willing to reveal why they favor a given course of action, and that they are open to and
not hostile toward differing opinions. It assumes that they are all working toward a common
goal, and that they are willing to abandon one position in favor of another.
Expectation Theory of Conflict
When two people do not get along it is common to say they have a ―personality conflict. ‖ The
presumption is that features of their attitudes, values, and experiences are so different that they
cannot possibly get along. Groups also develop personality conflicts when their values, tasks, or
objectives differ.
Dyer suggests a more constructive approach is to look at conflict as a violation of expectations.
Whenever a person or group violates the expectations of another, there is a negative reaction.
Between groups and managers working on a project, some may feel that others are favored, have
better facilities, or get more credit. When they expect more equitable treatment and do not get it,
they react using verbal attacks, placing blame, or minimizing contact. Negative responses violate
the expectations of others, who reciprocate further with more negative reactions.
TEAM METHODS FOR RESOLVING CONFLICT
Confrontation assumes that parties can discuss issues frankly and level with one another. One
way the project manager can make confrontation work is with team building. Team building
helps members develop attitudes more accepting of differences and leads to greater openness and
trust. It attacks conflict directly by getting to the source and engaging members in problem
solving. The following team building methods focus on conflict stemming from work roles and
group interaction.
Role Clarification Technique
Conflict in projects often arises because people have mixed expectations about work plans, roles,
and responsibilities. In particular, disagreements arise because of the following:
• The project is new and people are not clear about what they are supposed to do and what others
expect of them.
• Changes in projects and work reassignments have made it unclear how individuals in the team
should interact.
• People get requests they do not understand, or hear about things in the grapevine that they think
they should already know.
• Everyone thinks someone else is handling a situation that, really, no one is.
• People do not understand what their group or other groups are doing.
The role clarification technique ( RCT ) is a systematic procedure to help resolve
these sources of conflict. The title ―role clarification‖ suggests its goals: that everyone should
understand their major responsibilities and duties, that others also understand everyone’s position
and duties, and that everyone knows what others expect of them.
RCT is similar to team building. It includes data collection, a meeting that lasts for 1 or 2 days,
and a consultant who serves as facilitator. When incorporated as part of team building for a new

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team, it allows the project manager and team to negotiate team member roles. It is especially
useful in participative management cases where responsibilities are somewhat ambiguous.
Clarifying Roles for Members of a Team
Role clarification for an existing team begins with each person answering a questionnaire prior to
a meeting:
1. What does the organization expect of you in your job?
2. What do you actually do in your job?
3. What should others know about your job that would help them?
4. What do you need to know about others’s jobs that would help you?
5. What difficulties do you experience with others?
6. What changes in the organization, assignments, or activities would improve the work of the
group?
For a new team the questions would be modified to reflect job expectations and anticipated
problems.
At the start of the group meeting, ground rules are announced that people be candid, give honest
responses, express their concerns, and that everyone agrees to decisions. The meeting begins
with each person reading the answers to the first three questions. As each person reads, others are
given the chance to respond. It is important that each person hears how others see her job and
what they expect of her. Each person then reads the answer to Question 4 and hears responses
from the people she identified. Issues in Question 5 that have not already been resolved are
addressed next. Throughout the process, emphasis is placed on solving problems and not placing
blame. The group then discusses Question 6 and tries to reach consensus about needed changes.
Clarifying the Role of One Person
A similar process is followed for clarifying the role of just one person. It begins with the ―focal
person‖ identifying people relevant to her role—anyone who interacts with her and expects
certain behavior from her to meet work obligations (boss, subordinates, members of other
departments relating to the focal person). The purpose is for these people to meet together so
they can clarify their expectations to the focal person.
At the meeting the focal person discusses her job responsibilities, covering topics such as those
in the first five questions listed above. The other people in the meeting then state their
expectations of the focal person. Special attention is given to ambiguities, inconsistencies, or
incompatibilities between their expectations. When consensus is reached, the focal person writes
a description of her role and gives a copy to everyone. The description is reviewed to ensure that
it is clear, specific, and as internally consistent as possible.
RCT is useful in matrix situations where role ambiguity can lead to power struggles between
managers and to role conflict for the workers who report to them. In projects where relationships
and job descriptions are in perpetual change, a less formal procedure can be used to help redefine
and clarify roles on a frequent basis.

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Intergroup Conflict Resolution
When two or more groups are in conflict because of mixed expectations, a procedure similar to
IGPS can be used. The procedure begins by each group preparing a list of what they would like
the other groups to start doing, stop doing, and continue doing in order to improve their relations.
As a variation, the groups might also guess what others think about them and want from them.
Guesses are often accurate and facilitate reaching an agreement. The groups share their lists and
negotiate an agreement stating what each will do in return for equitable changes on the part of
the other. The focus is on finding solutions, not fault. A consultant may facilitate the negotiation.
To increase the group’s commitment, the agreements are put in writing.
Another approach is to have Team A select a subgroup of members to represent it. Names
in the subgroup are given to Team B, which selects three or four members from the Team A list.
Team B also prepares a list of names and gives it to Team A. This creates a mixed team of
representatives that both sides agree to. The mixed team tries to resolve problems between the
teams. It can interview people in other teams, invite a facilitator, and so on. The mixed team
prepares a list of actions, people to be responsible, a time frame, and ways to prevent problems
from recurring. This approach is easy to implement without a consultant and requires less
involvement from members than the first method, but it also tends to have less impact.
There are several preconditions for team building to be effective in resolving conflict.
The conflicting parties must agree that they have problems, that the problems should be solved,
that they both have a responsibility to work on them, and that they need to come together to
solve them. Often it is easier to get people to deal with conflict if they realize that the goal of
team building and confrontation is not to get them to like each other but to understand and be
able to work with each other.