POLITEKNIK SULTAN AZLAN SHAH

CIVIL ENGINEERING DEPARTMENT

CC603 - PROJECT MANAGEMENT

ASSIGNMENT 2

SESSION: JUNE 2015

LECTURER’S NAME: EN. ANUAR BIN ABDULWAHAB

CLASS: DKA5B

STUDENT’S NAME MATRIX NUMBER

MUHAMMAD SYAHMI BIN SHAMSUDIN 15DKA13F104
 CONTENTS

 Introduction

 Functional Structure

 Product structure

 Matrix Structure

 Appendix

 Reference
INTRODUCTION
An organizational structure activities such as task allocation, coordination and supervision,
which are directed towards the achievement of organizational aims. It can be structured in
many different ways, depending on their objectives. Organizational structure allows the
expressed allocation of responsibilities for different functions and processes to different entities
such as the branch, department, workgroup and individual.
The importance of organizational structure to businesses and other types of operations is
something that just about any successful enterprise understands. Without proper attention to
the creation of a cohesive and efficient structure, the ability to carry out tasks that have to do
with the stated goals of the organization are highly unlikely to occur. One of the key examples
of how the importance of organizational structure impacts an operation is the creation of
specific job positions within the organization and the assignment of responsibilities to each of
those positions. Without clear, concise assignments, both employees and managers would be
limited in how to respond and carry out essential tasks. By establishing the positions and
determining how they work in tandem, order is brought to the operation, allowing the
enterprise to effectively pursue its goals.
Organizations are set up in specific ways to accomplish different goals, and the structure of an
organization can help or hinder its progress toward accomplishing these goals. Organizations
large and small can achieve higher sales and other profit by properly matching their needs with
the structure they use to operate.
DIAGRAM
FUNCTIONAL STRUCTURE

A functional organization structure is a hierarchical type of organization structure wherein

people are grouped as per their area of specialization. These people are supervised by a
functional manager who has expertise in the same field, which helps him to effectively utilize
the skills of employees, which ultimately helps him in achieving the organization’s business
objectives.

In this kind of organization structure, people are classified according to the function they
perform in the organization. The organization chart for a functional organization structure
shows you the president, vice president, finance department, sales department, customer
service department, administration department, etc.

Each department will have its own department head, and he will be responsible for the
performance of his section. This helps the organization control the quality and uniformity of
performance.

These different departments are sometimes referred to as “silos”. This means the system is
vertical and disconnected. The communication flows through the department heads to the top
management.

Here all authority (i.e. budget allocation, resource allocation, decision making, etc.) stays
with the functional manager. Usually the position of the project manager does not exist in this
type of organization structure. Even if this position exists, the role of the project manager will
be very limited and he will need permission from the functional manager to fulfill his
requirements. The project manager may have the title of a coordinator or an expediter.

The functional organization structure is suitable for an organization which has ongoing
operations and produces some standard products or goods, such as manufacturing and
production industries.
Teams

Creating an organizational structure usually helps define teams who work closely together.
These teams can be organized by department type, such as accounting or marketing, or by
geographic region, such as all sales and administrative staff serving the Southeast. A team can
also include all staff working on a specific project or product. The structure sets the teams,
which typically report to the same manager or director. This helps ensure that all the staff
members on the team are working toward the same goal, have well-defined job duties and can
get to know each other to help balance each others' strengths and weaknesses.

Advancement Potential

Employees often are motivated by the opportunity to advance within the company for more
responsibility and higher pay. An organizational structure provides that advancement
opportunity with higher-level positions and a clear understanding of what those positions are
responsible for. A successful structure assigns job duties to positions instead of people. As the
people advance or change positions, the new person filling the vacancy takes on the same
duties as the previous employee. This allows people who advance to know what duties will be
expected in their new positions and to train the people who take over their old positions
IMPORTANCE OF FUNCTIONAL ORGANIZATIONAL STRUCTURE
The importance of functional organizational structure is to provide order and accountability
to an organization. By creating specific job categories for specific tasks, the efficiency of the
labor needed to accomplish the tasks increases. It would not make sense to have your
accountants repairing pumps at your facility while your maintenance staff shipped out product.
Dividing the labor by function then adding employees to the organization by matching their
skills with the function needed is the way an organization can experience the highest level of
efficiency.

IMPORTANCE OF ORGANIZATIONAL STRUCTURE

1) Communication
The importance of organizational structure is particularly crucial for communication.
Organizational structure enables the distribution of authority. When a person starts a
job, he knows from day one to whom he will report. Most companies funnel their
communication through department leaders. For example, marketing employees will
discuss various issues with their director. The director, in turn, will discuss these issues
with the vice president or upper management.
2) Evaluating Employee Performance
Organizational structure is important for evaluating employee performance. The linear
structure of functional and product organizational structures allow supervisors to better
evaluate the work of their subordinates. Supervisors can evaluate the skills employees
demonstrate, how they get along with other workers, and the timeliness in which they
complete their work. Consequently, supervisors can more readily complete semiannual
or annual performance appraisals, which are usually mandatory in most companies.
3) Achieving Goals
Organizational structure is particularly important in achieving goals and results.
Organizational structure allows for the chain of command. Department leaders are in
charge of delegating tasks and projects to subordinates so the department can meet
project deadlines. In essence, organizational structure fosters teamwork, where
everyone in the department works toward a common goal.
4) Prevention/Solution
Organizational structure enables companies to better manage change in the
marketplace, including consumer needs, government regulation and new technology.
Department heads and managers can meet, outline various problem areas, and come up
with a solution as a group. Change can be expected in any industry. Company leaders
always should strive to find the best organizational structure to meet those changes.
CHARACTERISTICS OF AN ORGANIZATIONAL STRUCTURE

Whether small or large, each company must consider the way in which its organization is
designed and structured. To operate effectively and efficiently, a company needs a formal
system of communication, decision-making and task-completion that matches the needs of the
organization. A small company, for example, may only need a simple organizational design. As a
company grows and becomes more complex, so the organizational structure grows and
changes. As such, organizational design is often considered a continuous process.

1) Work Specialization

Work specialization, also referred to as the division of labor, is the degree to which specific
tasks within an organization are broken down into individual jobs. When work specialization is
extensive, a company may assign a single task to an individual as part of a larger project. Often,
this type of environment creates repetitive, narrow, smaller tasks. For example, assembly line
factories may designate a single task, such as running a machine or welding a part, for the
completion of an end product. On the other hand, companies may decide to enlarge jobs for
the purpose of challenging employees or giving them additional responsibilities.

2) Departmentalization

Departmentalization describes the way in which an organization groups different jobs or

segments of its company together. For example, a functional organizational structure groups
jobs according to function, such as marketing, sales, customer service and manufacturing. An
organization that uses a divisional approach groups according to geography, such as a western
and eastern region. Other forms of departmentalization include product, customer or market
departmentalization.
 3) Hierarchy of Authority

Hierarchy of authority -- or chain of command -- refers to an organization's line of authority and

describes who reports to whom. Related to hierarchy of authority is the span of control, which
refers to the number of subordinates over which managers have authority. Organizational
structures can either be flat or tall. Flat structures have fewer levels of authority and wide
spans of control. For example, a small startup company may position the CEO at the top, who
has authority over all other company employees. Tall organizational structures, such as larger
companies and corporations, have many levels of authority and narrow spans of control.

4) Line and Staff Relationships

Line and staff relationships extend throughout the organizational structure and describe the
way people are involved in the organization. Line managers are responsible for achieving
company objectives or goals and include those in the direct line or chain of command. Staff
employees or managers give advice or make recommendations to line managers and support
the overall operations. In retail corporations, for example, line employees may include
department managers, store managers, the vice president and president of operations, and the
board of directors. In contrast, a scientific research organization may have scientists and
researchers as line managers and administrative employees as staff employees.

5) Decentralization and Centralization

Decentralized organizational structures spread decision-making responsibilities to lower-level

managers and some no managerial employees. In contrast, a centralized organization maintains
control and decision-making responsibilities near the top of the company. For example,
companies that have franchise operations may centralize control at company headquarters.
Whether a company is decentralized or centralized, however, may depend on several factors,
such as how many hierarchical levels the organization has or the extent to which a company is
geographically dispersed.
ADVANTAGES AND DISADVANTAGES

Advantages:

The following are a few benefits of the functional organization structure:

 Employees are grouped as per their knowledge and skills, which helps achieve the
highest degree of performance.

 Employees are very skilled and efficient because they are experienced in the same work
and hence they perform very well.

 Their role and responsibility is fixed, which facilitates easy accountability for the work.

 The hierarchy is very clear, and employees don’t have to report to multiple bosses. Each
employee reports to his functional manager, which reduces the communication
channels.

 There is no duplication of work because each department and each employee has a
fixed job responsibility.

 Employees feel secure, and therefore they perform well without any fear.

 Since there is a sense of job security, employees tend to be loyal to the organization.

 Employees have a clear career growth path.

 Within the department, cooperation and communication is excellent.

Disadvantages:

The following are a few disadvantages of the functional organization structure:

 Employees may feel bored due to the monotonous, repeated type of work and may
become lazy.

 If the performance appraisal system is not managed properly, conflicts may arise. For
example, an employee may feel demoralized when a lower performing employee is
promoted.

 The cost of high skilled employee is higher.

 The departments have a self-centered mentality. The functional manager pays more
attention to only his department; he usually doesn’t care about other departments.

 Communication is not good among the departments, which causes poor inter-
department coordination. This decreases flexibility and innovation. Moreover, there is a
lack of teamwork among different departments.

 Employees may have little concerns and knowledge about anything happening outside
their department. This causes obstacles in communication and cooperation.

 The functional structure is rigid, and therefore is slow to adapt to changes.

 Due to bureaucratic hierarchy, delays happen in decision making.

 Generally the functional manager makes decisions autocratically without consulting the
team members, hence it may not always work in favor of the organization.

 When the organization becomes larger, functional areas can become difficult to manage
due to their size. Each department will start behaving like a small company with its own
facilities, culture and management style.

 Functional departments may be distracted by their own goals, and focus on them rather
than the organization’s goal.
APPENDIX
FUNCTIONAL STRUCTURE
REFFERENCE
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