ORGANIZATIONAL STRUCTURE AND ITS CLASSIFICATION

Organizational structure depends on the product to be developed. Wheelwright and Clark define a
continuum of organizational structures between two extremes, functional organizations and project
organizations. Functional organizations are organized according to technological disciplines. Senior
functional managers are respnsible for allocating resources. The responsibility for the total product is not
allocated to a single person. Coordination occurs through rules and procedures, detailed specifications,
shared traditions among engineers and meetings (ad hoc and structured). Products that need a high level
of specialized knowledge require a functionally organized structure.
A light-weighted matrix organization remains functional and the level of specialization is comparable to
that found in the functional mode. What is different, is the addition of a product manager who coordinates
the product creation activities through liaison representatives from each function. Their main tasks are: to
collect information, to solve conflicts and to facilitate achievement of overall project objectives. Their
status and influence are less as compared to functional managers, because they have no direct access to
working-level people.
A heavy-weighted matrix organization exists of a matrix with dominant the project structure and
underlying the functional departments. The product manager has a broader responsibility. Manufacturing,
marketing and concept development are included. The status and influence of the product manager, who
is usually a senior, is the same or higher as compared to the functional manager. compared to functional
managers, because they have no direct access to working-level people.
A project organization exists of product oriented flows: project and teams. The project members leave
their functional department and devote all their time to the project. They share the same location. The
professionals are less specialized and have brioader tasks, skills and responsibilities. The functional
manager is responsible for the personnel development and the more detailed technology research in the
functional groups.
Companies can be classified to their organizational structures. Another variable companies can be
classified to is the nature of the projects undertaken. We characterize projects by the number of
employees needed to perform the tasks, or workload, and the number of tasks that are fundamentally
different in nature. An example of the latter aspect is PCB development and structural design.
Another way to classify organization structure is by one of the following four categories:
I. The product to be developed is comprehensible for one person. One person is likely to have all the
knowledge needed to develop Manufacturing and Assembly. The development department in companies
that undertake these kinds of projects are usually very small. If a company consists of more than one
department, it is usually structured as a functional organization.
II. The product to be developed has a fairly low complexity, but total work is high. These kind of products
are likely to be developed within one functional department. A research department may also be an
example of a department in which type II projects are undertaken. Are more departments involved, then
the light weighted matrix structure is preferable. Employees are involved on a full-time basis. Tasks may
be performed concurrently. The sequence can be determined using the Design Structure Matrix.
III. The product to be developed consists of a lot of different elements, such as software, PCB, power
supply and mechanical structure. The product is however in the engineering phase, i.e. it is clear what
needs to be done to get the product into production. Various disciplines perform their own tasks. These
tasks have mostly a low workload. Employees cannot work full-timee on one project. This creates a
complex situation, that may be compared to a job shop situation in production logistics. Though the
comparison between manufacturing and product development is not accepted by all product development
managers, it may yield good results. Studying each step in the Product Development Process and
fluctuations in workloads reveals ways to reduce variation and eliminate bottlenecks. It is necessary to
view the Product Development Process as a process and not as a list of projects. Three important
findings regarding this are:
1. Projects get done faster if the organization takes on fewer at a time.
2. Investments to relieve bottlenecks yield disproportionately large time-to-market benefits.
 3. Eliminating unnecessary variation in workloads and work processes eliminates
distractions and delays, thereby freeing up the organization to focus on the creative parts
of the task.
Creating cross-functional concurrent engineering teams is the right way to develop products. However,
the pitfall is too many project at the same time, so that key people from engineering, marketing and
manufacturing work at five or more projects at once. This results in congestion. Striving to work at 100%
of the product development capacity legthens product development lead times enormously. A more
realistic percentage is 80%. Attention must be focused on bottlenecks, these days most commonly found
at the software development side of the project.
IV. The product is complex. Total work is high. Employees can thus participate on a full-time basis. A
project organization is the most appropriate organizational structure for these kind's of products.
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Structure
Organizations can be regarded as people management systems. They range from simple hierachies along traditional
lines to complex networks dependent on computer systems and telecommunications. (...) Human resource managers
can encourage organizations to adopt strategies (for their structures) which foster both cost-effectveness and
employee commitment. (...) Organizational structures can be classified into a number of types, including functional,
divisional, matrix, federations and networks.
Implications of structure on organizational advance and change.
Functional structures
Early organizational design divided enterprises into relatively simple parts, splitting them into defined activities such
as production, marketing or personnel. (...) functional organizations have the advantage of being simple to
understand with clear lines of command, specified tasks and responsibilities. Staff can specialize in a particular
business area such as production or marketing and follow well-defined career paths. This is equally true of human
resource specialists who can develop expertise in specific areas such as employee relations or reward management.
There are also major disadvantages to functional structures. People managers have to tread carefully because this
form of organization is prone to interdepartmental conflict, often degenerating into 'them and us' tribal warfare.
Coherence and good communication are particularly hard to achieve between virtually independent functions.
Pages 184-187 (pages 104-107 in the first edition) of Human Resource Management in a Business Context includes
more discussion, a table of typical HR roles in a functional organization and another table rating HRM in such
organizations against the '10 C' checklist of HRM. There is also a case study to illustrate the consequences of
'delayering' on such an organization.
Divisional organizations
Split into self-contained units, able to react to environmental changes as quickly as small companies, they are also
described as multidivisional or 'M-form' organizations. (...) Divisions encourage team spirit and identification with a
product or region. Managers can develop broad skills as they have control of all basic functions. (...) Each division is
likely to have a devolved human resource function. But there is a risk of duplicating activities between head office and
divisional human resource departments and of conflict between staff in successful and unsuccessful divisions. (...)
The divisional function may play a coordinating role, reconciling decisions taken at the corporate and business unit
levels. This results in a complex picture of people management.
Page 188 (page 108 in the first edition) of Human Resource Management in a Business Context includes a table to
illustrate this complexity using the the '10 C' checklist of HRM. Page 189 (page 109 in the first edition) lists a number
of ways in which HRM can be organized in divisional organizations.
Federations
One variant of the divisional form which has a particular relevance because of its human resource implications is the
'federation', a loosely connected arrangement of businesses with a single holding company or separate firms in
alliance. (...) This form of organization has attracted criticism from stock market analysts who find difficulty in
comprehending its subtle informality.
Matrix organizations
Matrix forms of management can be regarded (arguably) as an early form of 'network' structure. They focus on
project teams, bringing skilled individuals together from different parts of the organization. Individuals were made
responsible both to their line manager and the project manager involved. Before the advent of network technology,
many matrix organizations were dogged by duplication and confusion: the 'matrix muddle'.
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