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time in unproductive meetings than in performing functional activities. In addition, the nature of the task force position caused many individuals to shift membership within the informal organization. Many functional managers then placed nonqualified and inexperienced
individuals on task forces. The result was that the group soon became ineffective because
they either did not have the information necessary to make the decisions, or lacked the authority (delegated by the functional managers) to allocate resources and assign work.
Development of the task force concept was a giant step toward conflict resolution:
Work was being accomplished on time, schedules were being maintained, and costs were
usually within budget. But integration and coordination were still problems because there
were no specified authority relationships or individuals to oversee the entire project
through completion. Attempts were made to overcome this by placing various people in
charge of the task force: Functional managers, division heads, and even upper-level management had opportunities to direct task forces. However, without formal project authority relationships, task force members remained loyal to their functional organizations, and
when conflicts came about between the project and functional organization, the project always suffered.
Although the task force concept was a step in the right direction, the disadvantages
strongly outweighed the advantages. A strength of the approach was that it could be established very rapidly and with very little paperwork. Integration, however, was complicated; work flow was difficult to control; and functional support was difficult to obtain because it was almost always strictly controlled by the functional manager. In addition, task
forces were found to be grossly ineffective on long-range projects.
The next step in the evolution of work integration was the establishment of liaison departments, particularly in engineering divisions that perform multiple projects involving a
high level of technology (see Figure 33). The purpose of the liaison department was to

ENGINEERING
DIVISION

LIAISON DEPT

ELECTRONICS

THERMODYNAMICS

STRUCTURES

LEGEND
FORMAL AUTHORITY FLOW
INFORMAL/REPORTING
AUTHORITY FLOW

FIGURE 33.

Engineering division with liaison department (The Expeditor).

R&D

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ORGANIZATIONAL STRUCTURES

handle transactions between functional units within the (engineering) division. The liaison
personnel received their authority through the division head. The liaison department did
not actually resolve conflicts. Their prime function was to assure that all departments
worked toward the same requirements and goals. Liaison departments are still in existence
in many large companies and typically handle engineering changes and design problems.
Unfortunately, the liaison department is simply a scaleup of the project coordinator
within the department. The authority given to the liaison department extends only to the
outer boundaries of the division. If a conflict arose between the manufacturing and engineering divisions, for example, it would still be referred to upper management for resolution. Today, liaison departments are synonymous with project engineering and systems engineering departments, and the individuals in these departments have the authority to span
the entire organization.

3.4 LINESTAFF ORGANIZATION

(PROJECT COORDINATOR)
It soon became obvious that control of a project must be given to personnel whose first
loyalty is directed toward the completion of the project. Thus the project management position must not be controlled by the functional managers. Figure 34 shows a typical
linestaff organization.
Two possible situations can exist with this form of linestaff project control. In the
first, the project manager serves only as the focal point for activity control, that is, a center for information. The prime responsibility of the project manager is to keep the division
manager informed of the status of the project and to harass or attempt to influence
managers into completing activities on time. Referring to such early project managers,
Galbraith stated, Since these men had no formal authority, they had to resort to their technical competence and their interpersonal skills in order to be effective.10
The project manager in the first situation maintained monitoring authority only, despite the fact that both he and the functional manager reported to the same individual. Both
work assignments and merit reviews were made by the functional managers. Department
managers refused to take direction from the project managers because to do so would seem
an admission that the project manager was next in line to be the division manager.
The amount of authority given to the project manager posed serious problems. Almost
all upper-level and division managers were from the classical management schools and
therefore maintained serious reservations about how much authority to relinquish. Many
of these managers considered it a demotion if they had to give up any of their longestablished powers.
In the second situation, the project manager is given more authority; using the authority vested in him by the division manager, he can assign work to individuals in the
functional organizations. The functional manager, however, still maintains the authority to
10. Jay R. Galbraith, Matrix Organization Designs. Reprinted with permission from Business Horizons, February
1971, pp. 2940. Copyright 1971 by the Board of Trustees at Indiana University.

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ORGANIZATIONAL STRUCTURES

3.6 MATRIX ORGANIZATIONAL FORM

The matrix organizational form is an attempt to combine the advantages of the pure functional structure and the product organizational structure. This form is ideally suited for
companies, such as construction, that are project-driven. Figure 36 shows a typical matrix structure. Each project manager reports directly to the vice president and general manager. Since each project represents a potential profit center, the power and authority used
by the project manager come directly from the general manager. The project manager has
total responsibility and accountability for project success. The functional departments, on
the other hand, have functional responsibility to maintain technical excellence on the
project. Each functional unit is headed by a department manager whose prime responsibility is to ensure that a unified technical base is maintained and that all available information can be exchanged for each project. Department managers must also keep their people aware of the latest technical accomplishments in the industry.
Project management is a coordinative function, whereas matrix management is a collaborative function division of project management. In the coordinative or project organization,
work is generally assigned to specific people or units who do their own thing. In the collaborative or matrix organization, information sharing may be mandatory, and several people may
be required for the same piece of work. In a project organization, authority for decisionmaking and direction rests with the project leader, whereas in a matrix it rests with the team.
Certain ground rules exist for matrix development:

Participants must spend full time on the project; this ensures a degree of loyalty.
Horizontal as well as vertical channels must exist for making commitments.
There must be quick and effective methods for conflict resolution.

GENERAL MANAGER

ENGINEERING

PROJECT MGR.
Y

PROJECT MGR.
Z

FIGURE 36.

FUNCTIONAL RESPONSIBILITY

PROJECT MGR.
X

Typical matrix structure.

OPERATIONS

FINANCIAL

PROJECT RESPONSIBILITY

OTHERS

Matrix Organizational Form

103

There must be good communication channels and free access between managers.
All managers must have input into the planning process.
Both horizontally and vertically oriented managers must be willing to negotiate for
resources.
The horizontal line must be permitted to operate as a separate entity except for administrative purposes.

Before describing the advantages and disadvantages of this structure, the organization
concepts must be introduced. The basis for the matrix approach is an attempt to create synergism through shared responsibility between project and functional management. Yet this
is easier said than done. No two working environments are the same, and, therefore, no two
companies will have the same matrix design. The following questions must be answered
before a matrix structure can be successful:

If each functional unit is responsible for one aspect of a project, and other parts are
conducted elsewhere (possibly subcontracted to other companies), how can a synergistic environment be created?
Who decides which element of a project is most important?
How can a functional unit (operating in a vertical structure) answer questions and
achieve project goals and objectives that are compatible with other projects?

The answers to these questions depend on mutual understanding between the project
and functional managers. Since both individuals maintain some degree of authority, responsibility, and accountability on each project, they must continuously negotiate.
Unfortunately, the program manager might only consider what is best for his project (disregarding all others), whereas the functional manager might consider his organization
more important than each project.
In order to get the job done, project managers need organizational status and authority. A
corporate executive contends that the organization chart shown in Figure 36 can be modified
to show that the project managers have adequate organizational authority by placing the department manager boxes at the tip of the functional responsibility arrowheads. With this approach, the project managers appear to be higher in the organization than their departmental
counterparts but are actually equal in status. Executives who prefer this method must exercise
caution because the line and project managers may not feel that there is still a balance of power.
Problem-solving in this environment is fragmented and diffused. The project manager
acts as a unifying agent for project control of resources and technology. He must maintain
open channels of communication to prevent suboptimization of individual projects.
In many situations, functional managers have the power to make a project manager
look good, if they can be motivated to think about what is best for the project.
Unfortunately, this is not always accomplished. As stated by Mantell11:
There exists an inevitable tendency for hierarchically arrayed units to seek solutions and
to identify problems in terms of scope of duties of particular units rather than looking

11. Leroy H. Mantell, The Systems Approach and Good Management. Reprinted with permission from
Business Horizons, October 1972 (p. 50). Copyright 1972 by the Board of Trustees at Indiana University.

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ORGANIZATIONAL STRUCTURES

GENERAL
MANAGER

DIRECTOR:
PROJECT MGMT

DIRECTOR:
ENGINEERING

DIRECTOR:
OPERATIONS

OTHERS

PROJECT MGR.
X

PROJECT MGR.
Y

PROJECT MGR.
Z

FIGURE 37.

Development of a director of project management.

managers. The desired span of control, of course, will vary from company to company and
must take into account:

The demands imposed on the organization by task complexity

Available technology
The external environment
The needs of the organizational membership
The types of customers and/or products

As companies expand, it is inevitable that new and more complex conflicts arise. The
control of the engineering functions poses such a problem:
Should the project manager have ultimate responsibility for the engineering functions of a project, or should there be a deputy project manager who reports to the director of engineering and controls all technical activity?
Although there are pros and cons for both arrangements, the problem resolved itself in
the company mentioned above when projects grew so large that the project manager became
unable to handle both the project management and project engineering functions. Then, as