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Balanced Matrix Form of Organizational Structure 1
Balanced Matrix Organizational Structure: Assessing the
Suitability for a Large IT Project Management for an
International Bank
Abstract
In the present day competitive business environment, emphasis is on
shifting the organizational structures that are flatter with fewer levels of
management and where cross-functional communication is of critical
importance. However, this form of structure may not find its adaptability
to a large IT project for an international bank because of the complexities
involved in the project management. Based on secondary research this
study examines the suitability of a strong matrix form of project
management structure and suggests a balanced matrix organizational
structure as a replacement for an efficient project management, for an
international multicultural long-term IT migration program on a
hypothetical case in an international banking environment. The research
also extends to the complexities and characteristics of strong and weak
matrix organizations in general and their suitability to large IT projects.
Key Words:
Information Technology (IT), Migration, Project Management, Balanced Matrix,
Organizational Culture, Organizational Structure, International Bank,
Balanced Matrix Form of Organizational Structure 2
Table of Contents
Abstract ................................................................................................................................ 1
Chapter 1 Introduction ......................................................................................................... 4
1.1 Project Management Structures – An Overview........................................................ 5
1.1.1 Functional Organization ...................................................................................... 6
1.1.2 Dedicated Teams.................................................................................................. 6
1.1.3 Matrix Structure ................................................................................................... 7
1.2 Purpose of the Study .................................................................................................. 8
1.3 Aims and Objectives .................................................................................................. 9
1.4 Research Question .................................................................................................... 10
1.5 Structure of Presentation .......................................................................................... 10
Chapter 2 Review of Related Literature ............................................................................ 11
2.1 Introduction .............................................................................................................. 11
2.2 Considerations in Deciding a Project Management Organization Structure ........... 12
2.3 Importance of an Organization Structure for Project Management ......................... 12
2.3.1 Designing an Organization Structure ................................................................. 13
2.3.2 Specialization and Coordination ........................................................................ 14
2.4 Types of Organizations Structures ........................................................................... 17
2.4.1 Analysis of Functional Organizational Structure .............................................. 18
2.4.2 Analysis of Projectized Organizational Structure ............................................. 21
2.4.3 Matrix Organization ........................................................................................... 22
2.5 Balanced Matrix Form of Organizational Structure ................................................ 25
2.6 Impact of Culture on Selection of Organizational Structure ................................... 30
2.8 Application of Balanced Matrix Structure for Major IT Projects ............................ 30
Chapter 3 Research Methodology ..................................................................................... 32
3.1 Review of Secondary Data and Analysis ................................................................. 32
3.2 Research Design and Purpose .................................................................................. 33
3.3 Sources of Secondary Data ...................................................................................... 33
3.4 Merits and Demerits of Secondary Sources ............................................................. 35
3.5 Justification of the Secondary Research for Current Study ..................................... 36
3.5 Summary .................................................................................................................. 36
Chapter 4 Findings and Analysis ....................................................................................... 38
4.1 Introduction .............................................................................................................. 38
4.2 Problems with Weak/Functional Matrix Form ........................................................ 39
Balanced Matrix Form of Organizational Structure 3
4.2.1 Misaligned Objectives ....................................................................................... 40
4.2.2 Lack of Clarity in Roles and Responsibilities ................................................... 41
4.2.3 Ambiguous Authority ........................................................................................ 42
4.2.4 Lack of Matrix Guardian ................................................................................... 43
4.2.5 Silo-Focused Employees ................................................................................... 44
4.3 Analysis .................................................................................................................... 45
4.3.1 Suitability of Balanced Matrix ........................................................................... 46
4.3.2 Steps involved in Making the Balance Matrix Organization ............................ 46
4.4 Summary .................................................................................................................. 47
Chapter 5 Conclusion and Recommendations ................................................................... 48
5.1 Conclusion ................................................................................................................ 48
52. Recommendations .................................................................................................... 49
Bibliography ...................................................................................................................... 50
Balanced Matrix Form of Organizational Structure 4
Chapter 1 Introduction
Until the mid or late 1970s, larger business corporations had preferred to operate in “silos”
representing rational divisions. In this form of organization, the divisions consisted group of
workers who would report to a line manger or functional manager. This form of organization had
its own weaknesses like duplication of skills and distinct but redundant processes around the
organization. These weaknesses necessitated the formation of matrix form of organizational
structure (Davis & Lawrence, 1977: 24). Matrix form of structures led to more efficient project-
based management. Especially with the increased necessity to manage specialized information
technology (IT) projects, matrix form of organizational structure was considered appropriate
because of the functional convenience the structure gave to the project leaders for managing
large projects efficiently. Even in the matrix, form of organizational structure there exists an
apparent stress between the project manager and the functional managers in the matter of sharing
the available human resources (Larson & Gobeli, 1987: 132). This has placed some limitation on
the use of the matrix organization for long-term IT projects where the continued involvement of
line staff is considered vitally important. This problem becomes more pronounced in the case of
organizations having operational locations in different geographical areas. This study examines
the possibility of replacing a strong matrix by a balanced matrix organization in respect of a
long-term IT project, involving international multicultural organizational structure set up for an
international bank.
Balanced Matrix Form of Organizational Structure 5
1.1 Project Management Structures – An Overview
Project Management is defined as a “combination of human and nonhuman resources pulled
together in a |temporary' organization to achieve a specific purpose” (Cleland & King, 1983: p
187). The features of an organizational design for managing a project include a proper structure
consisting of groups of employees or business units and the manner in which the people or units
are coordinated to produce the desired results in the form of products or services. Based on the
structure, other elements of organizational design like the reporting relationships, power and
authority of people forming the organization, incentives and performance management systems
and empowerment of employees are described. Business process design, people and partners of
the organization, organizational structure, availability of infrastructural facilities, leadership and
governance, improved information access, possibilities of information sharing, and quality,
availability and security of information are some of the other aspects that go into the
determination of a proper organization structure (IT and Organization: 1).
Same considerations weigh with the formation of an organizational structure for managing a
project. There are certain peculiarities of the projects, which pose as challenges in organizing the
management of them. For instance, the uniqueness and shorter duration of certain projects in
comparison with the long-term ongoing organizational activities presents a challenge of
assigning specific team members to the project. Similarly, the multidisciplinary and cross-
functional nature of the projects leads to authority and responsibility dilemmas making them an
inherent issue with the project management. This issue becomes more pronounced in the case of
projects extending to different geographical locations. It is vitally important that an appropriate
Balanced Matrix Form of Organizational Structure 6
project management structure be chosen to derive the full potential of an efficient project
management. The consideration here is that the system to be considered as the best suited is to
balance the needs of the project with those of the organization. There are three main choices,
which can be viewed as the available options for forming a project management structure. They
are: (i) functional organization, (ii) dedicated project team and (iii) matrix form of organization.
1.1.1 Functional Organization
In a functional organization, different segments of the project are delegated to respective
functional units and the coordination between functions is maintained through normal
management channels. This form of structure would find its suitability when the interest of one
of the functional areas has dominance on the project. This form is also suitable when the success
of the project underlies one of the functional areas. There are some distinct advantages in the
functional organization structure in that there will be no structural changes and it is flexible. This
form can have the advantage of using the in-depth expertise of the team members. It also
facilitates the transition of the project once it is completed. Lack of focus and poor integration
characterize the functional organization and it lacks of ownership. The process is very slow in
functional organization.
1.1.2 Dedicated Teams
Dedicated teams as another form of project management structure function as independent units
controlled by the project manager as the leader of the team. Especially in an organization where
projects are, the predominant form of operations, dedicated teams forms the basic structure with
the functional departments providing support for the teams. Simplicity, speed with which the
Balanced Matrix Form of Organizational Structure 7
teams can function and cohesiveness is some of the advantages of dedicated teams. A better
cross-functional integration is also facilitated by the dedicated teams. However, this form of
structure is expensive to adopt and there is the likelihood of internal strife. Besides, there is
limitation on the technological expertise and difficulties will be experienced in the transition
after the completion of the project.
1.1.3 Matrix Structure
Matrix structure is a hybrid version of an organization structure as an extension of the normal
functional structure. Matrix structure consists two chains of command – one as functional and
the other project oriented. Project team members report at the same time to both the functional
manager and the project manager. Matrix structure enables the maximization of the use of
available resources. Under matrix structure, team members would be able to participate in
multiple projects and at the same time can perform normal duties on a functional basis. Matrix
form of structure is able to achieve a greater integration of expertise of the members and the skill
requirements of the project. There are three different forms of matrix structure; (i) weak,
functional or lightweight form, (ii) balanced or middleweight form and (iii) strong or
heavyweight form. Because of its strong focus on the project and efficiency matrix form of
structure is preferred for the projects. It is flexible and facilitates easier transition once the
project is completed. However, this form of project management structure suffers from the
disadvantage in that there is the likelihood of a dysfunctional conflict and infighting. This
structure is stressful for the project leader and the progress is slow.
Balanced Matrix Form of Organizational Structure 8
The rated effectiveness of different form of project management structures is exhibited in the
following figure.
Figure 1 Rated Effectiveness of Different form of Project Management Structures
Source: Larson, E. W., and Gobeli, D. H., “Matrix Management: Contradictions and Insights,”
California Management Review, vol. 29, no. 4 (Summer 1987), p. 137
In this context, as a hypothetical case, the this study examines the suitability of a balanced matrix
form of organizational structure in the place of a strong or heavyweight form for a long-term IT
project with the presence of multicultural background for migrating the existing IT applications
of an international bank.
1.2 Purpose of the Study
Choosing an appropriate management structure is an essential prerequisite for the success of any
project especially any IT project. There are several considerations, which go into the selection of
a specific form of organizational structure. The importance of the project for the success of the
firm is one of the main considerations. It is also necessary to consider the percentage of core
Balanced Matrix Form of Organizational Structure 9
work involved in the projects and the level of human and physical resources available to carry
out the project. The selection of an appropriate project management structure In the case of IT
projects – both short-term as well as long-term – is the first step in bringing the project into
operation. This study will enhance the existing knowledge on assessing the suitability of a
specific organizational structure for a large IT project. The study will analyze several project
considerations like size of the project and strategic importance of the project before arriving at
the particular form of organization structure for a long-term IT applications migration project in
an international banking environment. Because of the novelty in the approach, this study will
provide scope for further research in the area.
1.3 Aims and Objectives
This study has the broad aim of suggesting the suitability of balanced matrix form of
organization structure for a long-term IT applications migration project in a multicultural
international banking environment. In the process of achieving this aim this study accomplishes
the following objectives. The study will strive:
To make an analytical review of the related literature on the forms of organizational
structures on project management in general
To examine and report on the characteristics, merits and demerits of different form of
organizational structures in the context of IT project management
To conduct a secondary research to substantiate the hypothesis that the balanced matrix
form of organizational structure is best suited for any large IT projects
Balanced Matrix Form of Organizational Structure 10
To suggest possible avenues for conducting future research in the realm of project
management structures
1.4 Research Question
Through the secondary research to be undertaken, this study will render theoretical support to the
research question:
Can the balanced matrix form of project management structure be considered (in preference to
strong matrix structure) as more suitable for a large IT project with a multicultural base, in the
context of an international banking environment?
1.5 Structure of Presentation
With a view to make a cohesive presentation, this report on the study of “balanced matrix project
management structure” has been divided into different chapters. The first chapter apart from
introducing the subject matter of study also describes the aims and objectives of the study along
with the purpose of the study. Second chapter presents a detailed analytical review of the related
literature on the topic. Third chapter on research methodology presents a brief overview of the
research method adopted for conducting the current study. Findings of the research and an
extensive analysis of the findings forms the fourth and penultimate chapter. The final chapter
presents some concluding remarks as a recap of the some of the issues discussed in the text of the
report and few recommendations for further research in the field of study.
Balanced Matrix Form of Organizational Structure 11
Chapter 2 Review of Related Literature
2.1 Introduction
The purpose of a project organization structure is to facilitate the coordination and
implementation of all activities connected with the project. The major reason for the creation of
an organization structure is to create a conducive working environment in which the team
members can interact among them with a minimum amount of interruptions and overlaps. The
organization structure should also prevent any conflicts arising among the members. One of the
critical decisions of project management is the form of organizational structure that will be
followed for managing the project (PM4DEV, 2007: 3). Each project has its own peculiar
characteristics. Therefore, the design of the organizational structure should be based on the
organizational environment and the characteristics of the project. Of course, the authority level
of the project manager should able given a serious consideration in deciding the structure of the
organization for managing the project. A project structure may take various forms and each of
the form has its own merits and demerits (PM4DEV, 2007: 3). The objective of this chapter is to
present a review of the related literature on the project management structures that could be
considered for major it projects. This chapter will also elucidate the relative merits and demerits
of different kinds of organization structures which are worthy of consideration.
Balanced Matrix Form of Organizational Structure 12
2.2 Considerations in Deciding a Project Management Organization
Structure
A wide range of project considerations weighs with the selection of an appropriate project
management structure. Elements like, size of the project and strategic importance of the project
are the foremost considerations in determining the appropriate project management structure.
Novelty in the project management ideas and the need for innovation also determine the
selection. In addition, there is the need for integrating various functional areas and complexities
involved in the project and organizational environment, which also guides the project manager in
his decision on a suitable structure for managing the project. Above all, it is the budget and time
constraints that play a major role in the determination of the size of the project team and duration
of the project and the stability of resource requirements is yet another consideration the project
leader has to take into account while deciding on the project management structure.
Organizational culture is another important aspect, which goes to decide the project management
structure. Therefore, an in-depth study of the theoretical aspects of project management structure
becomes essential before a suitable structure is identified for the migration project of the IT
applications in respect of an international bank (Davis & Lawrence, 1977: 26; PM4DEV, 2007:
4).
2.3 Importance of an Organization Structure for Project Management
One of the major objectives of having a proper organization structure for project management is
to reduce the uncertainties and confusion, which are quite likely to occur at the initial stages of
any project. Since the organizational structure takes the responsibility of defining the
Balanced Matrix Form of Organizational Structure 13
interrelationships among the members of the project team as well as the boundaries of
relationship with the external stakeholders, it becomes easier to progress through the project
from the inception without any confusion. Organization chart presents a graphical illustration of
the authority and responsibility of every organizational member without ambiguity (PM4DEV,
2007: 4).
The success of any project depends on the proper designing of the organization structure. Use of
properly drawn organization charts, makes it is easier to determine the authority and
responsibility levels, working relationships among the project team members, formal supervision
levels and lines of communication between the project members.
2.3.1 Designing an Organization Structure
Designing an organization structure for managing the project is only one aspect of organizing the
project. The project manager is expected to implement and apply the organizational policies and
principles in managing the project successfully to the benefits of all stakeholders involved. To
enable this, the project manager should consider designing an effective organization structure so
that the communication is effective among the team members and authority/responsibility levels
are properly defined and informed to all the individual members. The structure should be capable
of establishing the formal relationships among the project manager, team members, and the
organization developing the project, project beneficiaries and all stakeholders associated with the
project (Weber, 2000: 1). The structure should be capable of facilitating an effective interaction
and integration among all the project participants and should be capable of promoting open and
effective communication lines between the participants.
Balanced Matrix Form of Organizational Structure 14
It is vitally important that the project manager design the structure in such a way that it caters to
all the future requirements of the project. Therefore, it becomes imperative that the project is not
designed too rigid or too lose. This is important because the purpose of creating an organization
structure is to achieve the ultimate objectives of the project with the utmost cooperation of the
project team members and within the given project constraints in terms of cost, time, quality and
other resources. The project manager must keep in view the objective of creating the
organization structure in that by designing an effective structure he should be able to influence
the team members to deliver their best in respect of the assigned tasks and responsibilities. The
structure designed by the project manager should also be able to develop an effective
collaboration among the team members while the overall cost of the project should be kept in
view. The structure should also avoid the duplication and overlap of functions to the maximum
extent possible. Overall, the design should make the structure workable to enable the project to
be completed within the cost and time allotted and with the best quality to the satisfaction of the
project beneficiaries (Weber, 2000: 1).
2.3.2 Specialization and Coordination
Apart from the major project, considerations there are two other factors, which play a dominant
role in designing the organization structure for managing a project. They are (i) the level of
specialization needed and (ii) the need for coordination. It is for the project manager to consider
these two factors at the time of designing the project structure in order to make the structure an
effective one (Fimreite & Laegreid, 2005: 1).
Balanced Matrix Form of Organizational Structure 15
Specialization
Specialization influences the structure of the project by the degree of specialty of the project in
the technical details relating to the project. Either a project may be highly specialized focusing
on any specific area of development or it may have several broad specializations in different
areas of focus. In case of large projects with more specialized applications there may be different
technical areas each having virtually different requirements in terms of resources. These project
areas might be having different goals, approaches and methodologies and all of these would be
having an influence on the organizational structure of the project. Since the goals, approaches
and methodologies will determine the ways the project has to proceed with the implementation
of the activities they have a large role to play in the selection of the design of the organization
(Fimreite & Laegreid, 2005: 1).
The important point about a project that has two phases –for instance – reconstruction and
education – there is the need for managing the individual components differently and this will
entail entirely different approach in the project management. The project management in that
case would depend on the degree of specialization in each case. For example in dealing with the
education component, the structure needs to be more open and informal. Here the time limit is
longer and the focus is on sharing and generation of new and innovative ideas exhibiting more
creativity. On the other hand, in the reconstruction component, the module has certain specific
goals to be achieved, that too within the stipulated time allotted for completion of the project.
There is only less opportunities for sharing of ideas. Achieving this kind of a project goal
requires the design of a rigid and hierarchical structure to get the project team members deliver
Balanced Matrix Form of Organizational Structure 16
their best. It is to be understood that though, with specialization it is possible to achieve
maximum productivity in reaching the individual component;’ goals, there are bound to be some
dissimilarities which will lead to conflicts among the members of the different project
components. If there is more dissimilarity, it becomes more difficult for the project manager to
achieve the desired progress (Fimreite & Laegreid, 2005: 1; PM4DEV, 2007: 5).
Coordination
Coordination is an essential process in the project management the purpose of which is to bring
unity to all the different elements involved in a project. The project work is usually broken down
into Work Breakdown Structures (WBS), which form the foundation on which the project work
is planned. WBS divides the entire project goals into specific goals for each of the components
or area of the project. In order to achieve a uniform progress of the project it is important that all
the components move in the same direction with the same intensity and speed towards the
completion stage. Therefore, it is for the project manager to design a structure that enables an
integration of the various components in such a way that the combined efforts contribute to the
achievement of the project goals. Integration here implies the degree of collaboration and the
level of mutual understanding required among the several project components that go to make
the project as a whole (Fimreite & Laegreid, 2005: 1).
A majority of the products have a division of labor and task interdependencies that make the
components unique in nature requiring different approaches to integrate them for moving
towards completion. The need for integration would be felt greater in those projects where there
are a number of project components with individual specializations. The purpose of designing a
Balanced Matrix Form of Organizational Structure 17
proper management structure therefore is to achieve harmony of the efforts of the individual
project components towards achieving the group goals. “The project manager’s principal
responsibility is to develop integrating strategies to ensure that a particular component or activity
is organized in a way that all the components, parts, subsystems and organizational units fit
together as a functioning, integrated whole according to the project master plan” (PM4DEV,
2007: 5).
In fact these concepts of specialization and coordination are the theoretical base on which this
study is based fro proving that a mixed matrix organization would be a better fit for a large IT
project in an international banking environment, where the project aims to migrate to a common
platform from an existing different working platforms.
2.4 Types of Organizations Structures
Out of the several considerations in choosing the design of the organization structure, especially
within an existing organization, the complexities of the project and the extent of authority and
responsibility top management has decided to delegate to the project leader and other project
executives. In order to achieve the project goals the top management of the organization should
design a project management structure that lends complete support to the progress of the project.
The structure can be defined and shaped based on the emphasis on the nature and complexities of
the project and by adapting to the ways the roles and responsibilities need to be assigned to
individual members of the project team.
As a first step towards defining the structure of the project organization, the role, functions, job
description, degree of authority and autonomy and the relationships of the project manager to the
Balanced Matrix Form of Organizational Structure 18
parent organization and other projects running concurrently need to be evolved with precision. It
is also necessary for the top management to devise an effective communication channel and the
manner in which the conflicts between the project and the rest of the organization could be
resolved.
Though different forms of organizational structures have been evolved during the recent times, it
is observed that the structures lack many of the essential qualities of the traditional forms of
organizational structures (Russell, 2007: 1). The ultimate objective of the project manager is to
arrive at a structure that will facilitate teamwork among the project team members by
maximizing the productivity resulting in an improved quality and efficiency. Three main
traditional organizational structures can be engaged for effectively managing a project. These
three are (i) Functional organization, (ii) project organization (or dedicated teams) and (iii)
matrix organization.
2.4.1 Analysis of Functional Organizational Structure
Functional organization is the oldest organizational structure, yet the most successful one so far.
This method is found suitable when used for projects involving some routine types of works.
Similarly, when it is necessary that the project should stand up to certain specified quality or
work standards the project manager will decide on this design. In the functional organization,
structure projects can be assigned in two different ways. One way is to make a functional
manager in-charge of the project and the project manager then undertakes the responsibility of
coordinating with other departments for the completion of the project. The other way is that the
Balanced Matrix Form of Organizational Structure 19
project is shuffled from one department to another where it becomes the responsibility of each
departmental manager to complete their part of the project work.
Thus, in the functional organization, the authority rests with the functional heads and the
structure is divided by departmental groups. The project Staff members belong to different
functional groups like financial, planning, public relations, engineering, and legal. Such
functional staff is drawn into the project depending on the requirement of the specialized
knowledge. Some of these major functional groups can be further subdivided into smaller
functional groups.
The main advantage of functional form of organizational structure is that since each functional
group has a total control over its part of the project, it is possible to enforce application of
standards in the performance of various modules of the projects.
However, there are some disadvantages associated with the functional organization. The main
among them is that the project cannot command speed, flexibility and effective communication
especially when cross–functional modules are involved in the project. Since there is a complete
division of roles and responsibilities in a functional organization, answering a query or acceding
to a request must will face considerable delays as such information or request has to be passed
through the department heads for approval. In addition, since different functional managers share
the responsibility for managing the project, there will be complete lack of accountability for the
completion of the project.
A simple form of functional organization is depicted in the following diagram.
Balanced Matrix Form of Organizational Structure 20
Figure: Functional Organization Structure
Source: http://www.publicprocurementguides.treasury.gov.cy/OHS-
EN/HTML/index.html?7_2_3_organizational_structure.htm p1
This design is not found in favor with large and complex projects as there will not be effective
coordination to meet the project objectives. One of the major criticisms against this structure is
that there is no built-in employee recognition. The work of the project members cannot be
measured individually to consider rewarding the project performance. Accountability about the
progress or completion of the project modules in this kind of organizational structure is also
poor. Therefore, this kind of organizational structure is considered as least effective for
implementing or managing the projects.
Balanced Matrix Form of Organizational Structure 21
2.4.2 Analysis of Projectized Organizational Structure
This kind of organization structure is designed to execute specialized projects. “It is specifically
tailored to meet the demands of complex projects by isolating unique work and maintaining a
strong focus on completing the project” (Russell, 2007: 1). After completion of the project, this
structure is disbanded. The effectiveness of the design can be seen in maintaining the dedicated
resources throughout the duration of the project.
The projectized organization structure as shown in the figure is a design where the structure is
focused on teams having cross-functional expertise. Almost the entire resources of the
organization are deployed to achieve the project objectives and the team’s mission is only the
completion of the project with no diversion of focus to any other functions. There is a clear line
of authority set with one project manager leading the organization and all other members report
to the project manager for guidance and directions.
The major advantage of this kind of organizational structure is the speed and flexibility with
which the project objectives can be achieved. With the availability of all the professionals with
the required expertise within the organization and are fully committed for the completion of the
project it becomes easier for the project manager to reach swiftly to the changing circumstances
and complete the project on time. He can also ensure the quality of the project to the maximum
satisfaction of the key stakeholders. The responsibility for the cost, progress, quality and success
of the project is clearly identified and lies on the Project Manager.
Balanced Matrix Form of Organizational Structure 22
Figure: Projectized Organizational Structure
Source: http://www.publicprocurementguides.treasury.gov.cy/OHS-
EN/HTML/index.html?7_2_3_organizational_structure.htm p1
One of the main disadvantages of the projectized form of organizational structure is the high
resource costs involved in managing the project. This is so because the organization often has to
hire specialized staff with professional expertise in the respective fields in order to initiate and
implement different projects at the same time. In addition, there is the additional cost burden on
the administrative side as there may be occasions that the project teams remain idle.
2.4.3 Matrix Organization
By combining the features of both functional and projectized structures, the matrix form of
organizational structure is evolved. As shown in the figure, the project team members are drawn
Balanced Matrix Form of Organizational Structure 23
from one of more of the functional departments depending on the requirements of technical
expertise by the project. The project manager is made responsible for the completion of the
project within the time and of the required quality. The project team members, though belonging
to different functional departments, report to the project manager for the project related activities
(Larson & Gobeli, 1987: 129). For regular business issues other than the project issues the team
members report to the respective functional managers and take their guidance and instructions.
The project team members so drawn from the functional departments are returned to their
original functional departments on the completion of the project or the completion of their part of
the work. In the case of matrix, form of organization it is not necessary that the project manager
assigned with the responsibility of the completion of the project is a functional departmental
manager. The project manager can be drawn from the available human resources possessing the
requisite qualification, experience and background within the company. During the
implementation, process of the project the project manager interacts with the different functional
managers for planning the necessary resources and utilization of the resources for the project
purposes. He can take the guidance and advise of the functional managers for making the
necessary revision or changes in the project course (Might & Fischer, 1985: 73).
The distinct advantage of matrix organizational structure is that it combines and retains the
advantages of both the functional and projectized structures.
Balanced Matrix Form of Organizational Structure 24
Figure: Matrix Form of Organization Structure
Source: http://www.publicprocurementguides.treasury.gov.cy/OHS-
EN/HTML/index.html?7_2_3_organizational_structure.htm p1
This makes the matrix organization the most effective form of structure for implementing and
managing the projects. Because of the resultant advantages, this structure is being used for
managing most of the present day projects. This structure enables an effective allocation of
resources to different projects. There are four distinct advantages, which make the matrix form
most preferred form of organization. They are: (i) it allows companies to focus on multiple
business goals, (ii) it facilitates the management of information, (iii) it enables companies to
establish economies of scale and (iv) it speeds responses to environmental demands (Burns &
Whorely, 1993: 110; Galbriath, 2000: 32); Kilmann, 1985: 155; Knight, 1977: 16).
Balanced Matrix Form of Organizational Structure 25
The matrix form of organization has a major disadvantage in that it is the source for potential
conflicts between the project manager and the functional managers regarding the allocation of
resources since the functional manager has to make the allocation of available resources to
different projects running concurrently using the resources from his department.
Another problem associated with matrix organizational structures is that since individual
employees associated with the project report at the same time to two different managers it often
leads to ambiguity and conflicts. However, this problem can be mitigated by employing an
effective communication and solid leadership between the mangers involved in the project.
2.5 Balanced Matrix Form of Organizational Structure
The matrix form of organization structure can be considered in three different forms depending
on the delegation of authority to the project manager and other criteria. They are weak or
functional matrix form, balanced and strong or project matrix form (Burns, 1989: 359;
Galbraith, 1971: 33; Larson & Gobeli, 1987: 129). This section details the characteristics of the
three forms of structures to provide the base for the selection of an appropriate structure.
A weak matrix form of structure more or less resembles the functional organizational structure in
which the functional manager holds the responsibility for the completion of the project created
within his areas of expertise. This form of structure is resorted to when the focus is on quality
and technical expertise needed for the execution of the project. This kind of structure undermines
the authority and decision-making capability of the project manager. This would make the
success of the project difficult. However, the weak matrix structure is comfortable for the people
since they are used to work with the kind of structure. Especially in the case of a project
Balanced Matrix Form of Organizational Structure 26
involving IT and IS (Information System) since the project manager is fully empowered to
complete isolated project the project managers are keen in getting into this kind of structures.
From the logistical point of view since the staff work locations are centralized around the
functional departments, information sharing among the team members is highly facilitated. This
form of organizational structure has serious drawbacks in that communications and decision-
making process is slow since they exist outside the program structure. This gives rise work
scheduling and budget issues. Accountability also rests outside the program, which seriously
hampers the progress of the project.
The figure indicates the structure of a weak matrix form.
Figure: Weak Matrix Form of Organization
As against the weak form of matrix structure, is the strong matrix in which the project manager
holds almost the total authority for the execution of the project. This form of structure is the most
sought after structure because of the autonomy it provides to the project manager. From the
standpoint of the project management, this method has several advantages in terms of cost and
Balanced Matrix Form of Organizational Structure 27
quality. The main advantages are (i) since the structure focuses on the complete authority for
decisions affecting a project or programs within a project the decision-making process is highly
simplified, (ii) it is possible to make program budgets and staffing decisions within the programs
without relying on other functional departmental resources, (iii) staff members have to report to
one single manager which improves motivation, interpersonal relations and productivity (iv)
resources are accountable to specific programs for deliverables and performance and (v) there
are clear communication channels that aid the progress of the project.
However, the strong matrix form also got some disadvantages. In case there is no availability of
enough resources in key technical and business areas, there may be difficulties in creating
dedicated project or program teams. It may take several weeks or months to recruit and train
people with required skills. There may be the other problem of existing staff located in different
geographical locations making their relocation difficult, which is sure to affect the progress of
the project. Moreover, this structure may prove uneconomical as there is the necessity to appoint
specialized people to work in the project.
The classification depended on the source of decision of authority in the matrix. In the balanced
matrix, the authority is split between purely functional level and purely project level. “The
project manager directs and sets control for the project with some shared authority over the
functional personnel. Functional management retains control over much of the team and is
responsible for carrying out the plans and controls established by the project manager” (Kerzner
1984: 21; Larson & Gobeli, 1987: 132; Might & Fischer, 1985: 73)
The figure shown below exhibits the strong matrix form of organizational structure.
Balanced Matrix Form of Organizational Structure 28
Figure: Strong Matrix Form of Organization
A more project-friendly typology of matrix forms was developed by Sayles (1976: 4). However,
the work of Galbraith (1971: 34) which created an organizational structure that lie between pure
functional (weak) and pure product (strong) form of organization. This structure was further
refined by Larson and Gobeli (1987: 132) and they arrived at the balanced matrix organizational
structure (see figure).
The balanced form of matrix organization structure ideally fits to an organization or project
having multiple products or project objectives, where there is the need to respond to
environmental and technological changes.
Balanced Matrix Form of Organizational Structure 29
Figure: Strong Matrix Form of Organization
Table: Project Characteristics of Different Organizational Structures
Organization
Structure
Project
Characteristics
Functional
Matrix
Projectized Weak Matrix Balanced Matrix Strong Matrix
Authority of the
Project Manager Little or
None Limited Low to Moderate
Moderate to
High
High to
Almost
Total
Resource
Availability Little or
None Limited Low to Moderate
Moderate to
High
High to
Almost
Total
Who Controls the
Project Budget
Functional
Manager
Functional
Manager Mixed
Project
Manager
Project
Manager
Role of the
Project Manager Part-time Part-time Full-time Full-time Full-time
Project
Management
Administrative
Staff
Part-time Part-time Part-time Full-time Full-time
Source: http://www.tensteppb.com/2.3OrganizationalInfluences.htm p1
Balanced Matrix Form of Organizational Structure 30
The characteristics of the different forms of project management organizational structures are
presented in the above table for easy comparison.
2.6 Impact of Culture on Selection of Organizational Structure
The cultural characteristics of an organization play a vital role in the choice of a suitable
organization structure for the management of any project. The comfort level of the employees
with the kind of structure of the organization needs to be assessed before arriving at a decision
on the structure. There are different metrics identified for measuring the culture of an
organization including conflict tolerance, system focus and risk tolerance (Clifford & Larson,
2003: 14). In circumstances where people within the project identify their jobs, more than with
the organization which makes the integration difficult and if the emphasis is more on the
individuals than groups then the introduction of purely functional structure may prove to be
counterproductive. Functional or weak matrix will make the functional manager responsible for
the completion of the project but at the same time, the project members would like to give
priority to their original role and give only secondary focus to the project related activities. On
the other hand, if the organizational culture were one of receptive in nature a balanced matrix
organization would prove to be successful.
2.8 Application of Balanced Matrix Structure for Major IT Projects
Generally, IT projects face the same management problems as other projects. There are four
fundamental reasons, which make any IT project a failure. They are (i) poor investment
Balanced Matrix Form of Organizational Structure 31
decisions, (ii) management sponsorship and stakeholder involvement, (iii) application of
immature and inappropriate technologies and (iv) use of project management methodology.
“Technology projects that implement a project management methodology are effectively
planned; have appropriate change control processes in place; and, deliver the right product or
service, on time, and within budget”. This brings us to the discussion on the selection of an
appropriate management methodology for an IT project whether large or small. The application
of balanced matrix structure as a viable method will be discussed at more length in the chapter 4
on findings of the study.
Balanced Matrix Form of Organizational Structure 32
Chapter 3 Research Methodology
The methodology process of this study entails the collection, organization and integration of the
collected data. Data collection will be the most important step in the success of this paper since it
will lead to viable and credible findings. This study will be based on the research on several
issues relating to adaptability of a balanced matrix organizational structure for a large IT project
in international banking environment. The study will also draw information and data from
previous research conducted in the field of project management through matrix form of
organization structure as this is one of main objectives of the study. Though the primary data
through sponsored study by contacting various subjects through personal interviews and
questionnaires will be ideal for the sake of hands on or firsthand experience, due to paucity of
time and limited scope of this opportunity, the secondary data alone will been relied upon for the
study. Nevertheless, this type of study as many scholars do is no less reliable as they are
invariably supported by their own primary data.
3.1 Review of Secondary Data and Analysis
Secondary research consists of the analysis of information and data gathered previously by other
people like researchers, institutions and other non-governmental organizations. The data are
usually collected for some other purposes other than one, which is being presently attempted, or
it may help both the collection of data for both the studies (Cnossen, 1997: 1). When undertaken
with proper care and diligence secondary research can prove to be a cost-effective method in
gaining better understanding of the specific issue being studied and conducting assessments of
issues that do not need collection of primary data. The main advantage of secondary data is that
Balanced Matrix Form of Organizational Structure 33
it provides the basis for designing the primary research and often it is possible to compare the
results of the primary research with secondary research results (Novak, 1996: 1).
3.2 Research Design and Purpose
Data analysis and review in the secondary research method involves the collection and analysis
of wide range of information. In order to conduct an efficient research it is important that a
statement of purpose is developed first and a detailed definition of the purpose of the research is
arrived at. It is also necessary that a proper research design be evolved. The statement of purpose
is to have a clear understanding of the reasons for collecting the kind of data and the type of data
the researcher wants to collect and analyze. This will help the researcher to stay focused on the
topic under study and prevent from becoming overwhelmed with large volume of data. Research
design can be defined as a systematic plan, which shows the researcher the direction of data
collection and analysis. The secondary data review normally involves designing the outline of
what the researcher wants to study, the format of final report, list of type of data and a list of data
sources that may be used for collection of data.
3.3 Sources of Secondary Data
There are different sources from which secondary data may be collected for conducting any
social research. The sources include; (i) official statistics – include the official statistics collected
by government departments and various other agencies, trade associations, information bureaus
and other institutions like World Bank and International Monetary Fund (IMF). These statistics
are particularly useful for the researchers since these data can be obtained more easily and
Balanced Matrix Form of Organizational Structure 34
comprehensive source of information that extends to longer periods. It is important that the
official statistics collected as a part of the official statistics need to be verified for accuracy and
reliability because according to Gill (1993: 15) the official statistics are “characterized by
unreliability, data gaps, over-aggregation, inaccuracies, mutual inconsistencies, and lack of
timely reporting”. (ii) technical reports – these reports represent the research works previously
carried out. They are made out to provide the results of the research to different research
institutions, government and other interested research scholars. The report may be generated
either out of a research already completed or from a research that is presently ongoing, (iii)
scholarly journals – these sources generally contain reports generated out of original research or
results of experiments conducted by scholarly people in the field. Articles in the secondary
journals are subjected to a peer review where other knowledgeable people will make a critical
analysis of the contents of the journal articles for the qualities of “accuracy, originality and
relevance”. (iv) Literature Review Articles – review of literature gather and review articles of
original research that deals with the topic under study. The reviews are normally presented by
scholars and academics in the field of study and the reviews represent the overviews written for
the first time on the topic. The review articles normally contain the list and details of all relevant
publications and articles, which formed the basis of review. (v) Trade Journals and Review
Books – While trade journals provide the practical information on the field under study the
reference books form the secondary source where the researcher can find facts or summary of a
topic discussed in detail. Handbooks, manuals, encyclopedias, and dictionaries are considered
reference books (University of Cincinnati, 1996: 1; Pritchard & Scott, 1996: 19)
Balanced Matrix Form of Organizational Structure 35
3.4 Merits and Demerits of Secondary Sources
The main advantage of secondary data analysis is that it can be carried out more quickly as
compared to the formal primary data collection and analysis procedure. If the quality of the
secondary data available is relatively better, the researchers can make best use of the secondary
data rather than spending valuable time on the collection of primary data, which will save a
considerable effort on the part of the researcher. Using secondary data comparatively involves
lower cost of gathering. However, there is the element of variations in the collection of data
between different researchers, countries and settings, which needs to be considered while making
use of the secondary data for analysis as the different methods may impair the comparability.
Based on the level of data disaggregation the secondary data analysis can lead to a trend analysis
to monitor changes in the values of attributes over a period. Secondary data can often be used to
complement the primary data collection and thus will prove to save considerable time of the
researcher in collecting the primary data. Secondary data facilitates the work of a researcher who
lacks training in the collection and analysis of primary data (Beaulieu, 1992: 1).
The main demerit of secondary sources of data is that they are considered as imperfect in nature
as compared with primary data. Since there will be differences in the settings and purposes for
which the data were collected a proper interpretation and analysis is required to understand the
data presented and to use them for other purposes precisely. It is also necessary to apply
selectivity without which there will be overwhelming volume of data that will influence the work
of the researcher. It may be difficult to determine to judge the quality of some data, which are
Balanced Matrix Form of Organizational Structure 36
being considered. Secondary data sources often conflict with each other. The original purpose
for which the data was collected may bias the purpose of the secondary researcher.
3.5 Justification of the Secondary Research for Current Study
However, primary data would add value to the reliability of the results of the research, in the
chosen topic of study of the adaptability of the balanced matrix form of organizational structure
for a large IT project management, there are no enough opportunities within the time and reach
of the researcher to resort to other research methods. Moreover, since the study proposed to
derive the information and data for accomplishing the objectives of this research to be obtained
from the published journal articles and research reports the secondary data become more reliable
to be used for the purpose of the research. Since there is an abundance of literature on the subject
and most of them can be considered as reliable sources the research has drawn the necessary
information and data from the secondary sources. Therefore, the secondary research has been
considered suitable for completing the study.
3.5 Summary
This chapter presented a review of the secondary research method. It is observed that secondary
data is found to be a valuable source of information for gaining knowledge and an in-depth idea
on the broad range of issues and phenomenon. It is also found, though secondary research cannot
replace primary research it is found to be useful in aiding the primary data collection. In view of
the difficulties involved in using primary data collection methods and since the reliability of
Balanced Matrix Form of Organizational Structure 37
secondary sources of data is more it is justified to use secondary research for accomplishing the
objectives of this study.
Balanced Matrix Form of Organizational Structure 38
Chapter 4 Findings and Analysis
4.1 Introduction
The objective of this paper is to suggest the suitability of balanced matrix form of organization
structure for a long-term IT applications migration project in a multicultural international
banking environment. With a view to achieve this objective this study extended to consider the
challenges faced by an international banking institution having branches across multiple
geographical locations that intended to migrate the large IT system taking care of its various
functions. The project was to undertake a 10-year IT migration program, migrating 10 different
IT platforms on to one platform. Currently these platforms are in 10 different countries and all
will be merged with over 3000 applications that had to be adjusted. The proposed organization
was planned to have a setup of cross-functional executives and staff consisting of one program
with five projects running horizontally. There were 20 work-streams vertical to be handled with
500 stakeholders. The project also was to have one Program Management Office, with one
quality manager, one risk manager, and one requirement manager Number of stakeholders is
immense and the matrix organization was a weak functional matrix form with people also
organizationally reporting to line management who are not within the matrix. This form of
organization structure made this extremely complex and hard to manage. It is necessary to
analyze the different problems of the functional matrix form in order to examine the suitability of
balanced matrix as an alternative form of organization. The following sections detail different
problems associated with weak (functional) matrix organization proposed to be structured for the
Balanced Matrix Form of Organizational Structure 39
large IT migration project in the international banking environment, which is studied for
accomplishing the objectives of this study.
4.2 Problems with Weak/Functional Matrix Form
There were different problems associated with weak/functional form of matrix identified by the
theorists (Bartlett & Ghoshal, 1998: 21). Although each project may have unique challenges and
obstacles, many of them are common to all organizations. Theories suggest that there are
disconnects between different levels in the organization that lead to different challenges to
executives at different levels. In this case, the experiences and challenges of the middle level
managers within the matrix organization would be different from those of the top-level
executives. These differences may be the result of different managerial functions the managers at
different levels are expected to undertake and perform. For example, the responsibility of top-
level managers is to focus on the function of planning implying that their time should be devoted
towards development of new strategies for achieving the project goals. On the other hand, the
middle level managers are expected to concentrate on the implementation of the strategies
evolved by the top-level managers. Therefore, the management functions assigned to managers
at different levels would pose different challenges to the project executives. Especially, in a large
IT migration project, where the number of projects running at the same time with different
verticals, the associated challenges and problems will be too many to handle. Some of the
problems associated with the current investigation on the large IT project are enumerated in the
following sections to suggest a suitable alternative in balanced matrix form.
Balanced Matrix Form of Organizational Structure 40
4.2.1 Misaligned Objectives
Knight (1977: 21) has identified the aligning of goals among different dimensions as the primary
challenge in working in a functional matrix form of organization. Dimensions in this context
include functions, products, customers, or geographic locations or any other attributes or
elements of a project. Goal alignment in a functional matrix project organization is hampered by
(i) competing or conflicting objectives between different activities of the project, (ii) inadequate
processes to have a perfect alignment of project goals and absence of mechanisms to detect any
possible misalignment, (iii) Lack of synchronization, coordination and poor timing of work plans
and objectives, (iv) insufficient communication and consultation between different functional
areas within the matrix.
In the current study with 20 different verticals, operating at the same time there is the necessity
to adopt strategies for integrating the 3000 applications. This requires the coordination of the
services of a number of programmers and functional analysts. The project will also take
considerable time before it can be analyzed for initiation. It involves significant amount of time
of the top-level executives in planning the strategies for working out the schedule for completion
and the processes to be adopted. There is the requirement manager, whose time will be utilized
mostly in planning the resources required for the execution of the project. He may not have the
time to look into how the strategies developed by him are implemented by the middle level
managers. This implies that, the managers may not be able to devote much time guiding and
directing the middle level executives, which will lead to the middle level managers operating
with different objectives with no coordination. Usually in large projects there will be processes
Balanced Matrix Form of Organizational Structure 41
established to ensure that the goals and metrics are aligned. However, still there is the likelihood
for conflicting goals as the goals of one unit will be designed to reinforce the goals of other units
and therefore, slack in following the goals by one unit will have its cascading effect on the other
units affecting the progress of the entire project.
4.2.2 Lack of Clarity in Roles and Responsibilities
Confusion over the roles and responsibilities of the project team members is a problem in most
of the matrix forms of project organizations (Lawrence, Kolodny, & Davis, 1977: 49). Usually
this problem occurs with the middle level managers than with the top-level managers. Moreover,
ambiguity on the roles and responsibilities make the middle level managers frustrated and this
affects the project performance largely. Some of the reasons for lack of clarity in the roles of the
team members are (i) undefined job descriptions and guidelines covering the roles and
responsibilities, (ii) ambiguity in the roles and responsibilities lead to tension among the project
members, (iii) prevalence of confusion on the person holding the authority as the boss, and (iv)
lack of knowledge about the person to be contacted for information. As the organizations get to
change themselves to adapt for changing customer needs and preferences, it is important that the
roles and responsibilities of the project team members are adapted to the requirements of the
project from time to time (Bartlett & Ghoshal, 1998: 21; Kilmann, 1985: 155). Those employees
who are not accustomed to change would find the project responsibilities creating confusion and
uncertainty in their minds. Poor planning will lead to such a situation. It is quite usual that
organizations do a good job in defining roles and responsibilities for the top-level managers; but
there will be no clear roles and responsibilities evolved for the middle level managers and lower
Balanced Matrix Form of Organizational Structure 42
level staff. “Executives expect employees at these levels to adapt to change as necessary, and
often expect employees simply to take the initiative when a new situation calls for a reaction.
Employees, on the other hand, expect clarity from senior managers during times of change” (Sy
& D’Annunzio, 2005: 3). This disconnection between the parties leads to ambiguity, which is
exacerbated when there is no alignment of the organizational goals or if the goals are unclear. If
there is no clarity on the roles and responsibilities, it will also lead to ambiguity.
4.2.3 Ambiguous Authority
The leadership rights are cleared defined in the traditional functional structure with authority
equaling responsibility (Fayol, 1949: 23). In such structure leaders take charge of the situation by
making tough calls are not accustomed to sharing of decision-making authority. This lack of
experience in collaborative style of functioning often leads to tension and conflicts as the leaders
always look for their own authority to the maximum. In the weak matrix, form managers may
have responsibility without corresponding authority, because of the dual reporting structure. For
instance in the current study the quality manager may have the responsibility for instituting a
global quality policy but may not have the authority for implementing it at the branch levels in
the international context. There are the following issues concerning ambiguity of authority may
arise in a weak or functional matrix form of organization structure: (i) lack of clarity on the
person holding the final authority, (ii) lack of clarity on areas of accountability, (iii) leaders are
not used to sharing of decision-making authority and (iv) consequent delay in the process of
decision-making. This clearly elucidates the role of culture in creating or resolving ambiguity in
authority. In an international banking environment there will be a multiplicity of cultures and it
Balanced Matrix Form of Organizational Structure 43
cannot be expected that managers at all levels will react in the same way to avoid ambiguity in
authority levels. This problem should be clearly visualized and addressed, while, framing the
project organization structure. “In companies with a collaborative culture, employees appear to
be more focused on problem solving and were able to resolve the issues through informal
negotiations. Negotiation and persuasion skills are critical for matrix performance” (Hodgetts,
1868). Where there exists a political culture, employees tend to concentrate on the maintenance
of their status and power rather than resolving the project issues.
4.2.4 Lack of Matrix Guardian
While most of the companies are keen in measuring the ROI, market share and profitability, they
do not seem to be interested in measuring the performance of the matrix structure (Sy &
D'Annunzio, 2005: 4). In the absence of performance measure metrics to find out how the
company operates it becomes difficult for the managers to spot the problems and take the
necessary steps to correct the issues. It is usual that the managers often are not able to find the
issues in the structure that impede the project performance without a proper mechanism to
measure the performance of the project. The key issues associated with the matrix guardian are:
(i) absence of consequences and rewards for matrix performance leads to lack of motivation
among the employees and this affects the working of the matrix, (ii) establishing a process to
monitor to identify the problems in performance of matrix, (iii) ensuring that the top-level
managers support the matrix guardian and ensure the authority for taking corrective actions, (iv)
preserving the objectivity of the matrix guardian and preventing undue political pressure.
Balanced Matrix Form of Organizational Structure 44
4.2.5 Silo-Focused Employees
One of the most critical challenges that projects face is the behavior of the project team members
(Bartlett & Ghoshal 1998: 25; Butler, 1973: 87; Goold & Campbell, 2002: 14; Joyce, 1986:
540). While organizations strive to maintain a balance between different projects and the main,
business by shuffling staff from the functional departments it creates tension among the
employees. Although such tension is one of the characteristics of the functional matrix, it
requires high level of collaborative teamwork among the project members to avoid the tension
and behave as a team.
Unfortunately, in the large IT project, there is a chance that most of the employees would be
more silo-focused. For instance, the staff from the resources department would attach more
importance and priority to their regular chore than attending to the project development work due
to the pressures from other departments. There may be lack of integration due to personal
conflicts among the managers. The issues connected with the silo-focused views of the
employees are (i) personal conflicts among the managers would lead to lack of collaboration
among the project units, (ii) it may lead to withholding of the resources from being allocated to
the project purposes, (iii) lack of trust between the employees of different units is one of the
main issues, (iv) lack of skill with the employees to function effectively in the matrix, (v)
Insufficient communication between different project units. There are two main reasons
identified for the silo-focused behavior of the project members – (i) because the employees
remain in the same function for a longer time, they tend to interact with the same group of
members and make use of the same systems. This will leave no chance for the project members
Balanced Matrix Form of Organizational Structure 45
to work with the members of other units. (ii) Functional matrix form of structure requires high
degree of collaboration, which the project members would not have developed over the period.
Working in matrix form requires unique set of interpersonal skills, in the absence of which the
speed of the project may be hindered.
4.3 Analysis
With the given details about the proposed structure to handle the IT migration project for a large
international bank, it is observed that the organization has made some strides in moving toward a
matrix organization from a purely functional hierarchy. A Project Management Office (PMO)
has been put in place without giving proper attention to the project management issues during the
initial planning phase. Instead of creating a PMO to manage the migration program, the exiting
program has been inserted into a PMO. It is quite apparent that the PMO lacks authority in the
absence of a project manager to take the lead. Since the authority is divided between the quality
manager, risk manager and resources manager accountability will be problematic. There will
lack of proper communication channels and project members will be in dark about the person to
contact for information, guidance and direction. The major drawback of the structure is that the
program budgets and staffing decisions would be made within the functional set up and not
within the programs themselves. Under this structure, resources are not accountable to programs
for deliverables.
The other issue is that programs will be initiated by the functional departments and this makes
any kind of strategic alignment or project prioritization difficult. Since the project teams within
the program will be organized by the functional department within the matrix and not according
Balanced Matrix Form of Organizational Structure 46
to the deliverables, there will be problems to communication because of physical and
organizational barriers between project teams.
4.3.1 Suitability of Balanced Matrix
With a view to consider quality, cost and schedule having an equal thrust a more project-friendly
“balanced matrix” may be considered for implementation of the large IT migration program in a
large international banking environment. This structure maximizes the productivity of the project
through continuous negotiations and trade-offs between a weak form and a strong form of matrix
structure. Since there is the need for increased communications and resource negotiations
between project manager and functional managers and the added complexity of the project due to
number of concurrent programs running there is a need for balanced matrix form of
organizational structure which calls for modified roles and responsibilities in the IT and business
functional departments. The continuous status reporting and enhanced staff management
activities also necessitate the institution of a balanced matrix form of structure. The most
significant part of the adoption to the balanced matrix form is the revision in the roles and
responsibilities of the project team members. It is necessary that IT functional management
shares joint staff management with program management and had to coordinate in the areas of
standards and process implementation. At the same time, the business functional management
also shares the joint staff management with the program management.
4.3.2 Steps involved in Making the Balance Matrix Organization
The following steps may be considered for instituting a proper balanced matrix form of
organization.
Balanced Matrix Form of Organizational Structure 47
1. An exclusive project manager needs to be assigned to take the responsibility for the
completion of the project.
2. The role and responsibilities of the project team members need to be revised based on a
matrix document to be prepared detailing the roles and responsibilities of the project and
functional managers.
3. The process of assigning resources to roles must be approached in a collaborative way by
involving the functional management in the project initiation activities as the functional
managers will have a better insight into the skills and ,limitations of the staff
4. The performance management process is to be revised providing for periodic
performance related information to functional managers
5. A comprehensive program communication plans detailing who reports to whom and
when
6. Above all, it is essential that the support of the senior executives be obtained for the
balanced matrix form of organizational structure.
4.4 Summary
This chapter analyzed the drawbacks of the proposed weak functional form of organization
structure for the proposed IT migration project in a large international banking environment and
suggested the balanced matrix organization as the alternative proposal. This also answers the
research question.
Balanced Matrix Form of Organizational Structure 48
Chapter 5 Conclusion and Recommendations
5.1 Conclusion
This study analyzed the salient features, merits and demerit of different forms of project
management organization structures. By bringing out the drawbacks of the weak functional form
of organizational structure proposed for a large IT program in the context of an international
bank. There are few lessons learnt out of this analysis. First, there must be deliberate decisions
taken about program and project organization when planning the program. The important
constraints for the program to be ascertained form the nature and complexities of the program
and different forms of organizational structures available must be considered while designing the
organizational structure. While considering the project teams the geographical locations of the
facilities and the staff should also be considered. It is necessary to maintain team integrity in a
single location. The roles and responsibilities of the team members at all levels should be clearly
defined. This includes the provision of assigned responsibilities for the functional managers who
are in-charge for taking care of the resources needed for the project. It I advisable to obtain the
agreement and sign-offs of all concerned parties to ensure the respective roles and
responsibilities are understood and agreed.
Another equally important step is to develop a comprehensive communication plan, which
supports an effective communication within and outside the programs. There must be provision
for horizontal communication flows in addition to vertical flows and the information need for the
organization as a whole is to be considered. A continuous assessment of the performance of the
project by instituting proper performance measures will also improve the quality and speed of the
Balanced Matrix Form of Organizational Structure 49
execution of the project. The prevailing organizational culture especially in the case of
international bank plays a vital role in the determination of an appropriate organization structure
and this factor should be or prime consideration. Changes and adaptations to the changing
circumstances is one important thing any project manager should remember.
52. Recommendations
From the knowledge gained in the study the following recommendations are made for further
research to expand the knowledge gained.
1. A study on the performance assessment metrics being used by a large IT project would
throw light on increasing the effectiveness of the project organization structure
2. The effectiveness of the form of organization structure can also be improved through a
study on the ways to improve the cross-functional relationship between the project
managers and project managers.
3. An elaborate study on the individual factors affecting the form of organizational
structure for a large IT project would enhance the knowledge gained in this study.
Balanced Matrix Form of Organizational Structure 50
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