The pure product organization, as shown in Figure 3–5, develops as a division within a division. As long as there exists a continuous flow of projects, work is stable and conflicts are at a minimum. The major advantage of this organizational flow is that one individual, the program manager, maintains complete line authority over the entire project. Not only does he assign work, but he also conducts merit reviews. Because each individual reports to only one person, strong communication channels develop that result in a very rapid reaction time.
In pure product organizations, long lead times became a thing of the past. Trade-off studies could be conducted as fast as time would permit without the need to look at the impact on other projects (unless, of course, identical facilities or equipment were required).
Functional managers were able to maintain qualified staffs for new product development without sharing personnel with other programs and projects.
The responsibilities attributed to the project manager were entirely new. First, his authority was now granted by the vice president and general manager. The program manager handled all conflicts, both those within his organization and those involving other projects.
Interface management was conducted at the program manager level. Upper-level management was now able to spend more time on executive decision-making than on conflict arbitration.
The major disadvantage with the pure project form is the cost of maintaining the organization. There is no chance for sharing an individual with another project in order to reduce costs. Personnel are usually attached to these projects long after they are needed because once an employee is given up, the project manager might not be able to get him back.
Motivating personnel becomes a problem. At project completion, functional personnel do not “have a home” to return to. Many organizations place these individuals into an overhead labor pool from which selection can be made during new project development. People remaining in the labor pool may be laid off. As each project comes to a close, people become uneasy and often strive to prove their worth to the company by overachieving, a condition that is only temporary. It is very difficult for management to convince key functional personnel that they do, in fact, have career opportunities in this type of organization.
In pure functional (traditional) structures, technologies are well developed, but project schedules often fall behind. In the pure project structure, the fast reaction time keeps activities on schedule, but technology suffers because without strong functional groups, which maintain interactive technical communication, the company’s outlook for meeting the competition may be severely hampered. The engineering department for one project might not communicate with its counterpart on other projects, resulting in duplication of efforts.
The last major disadvantage of this organizational form lies in the control of facilities and equipment. The most frequent conflict occurs when two projects require use of the same piece of equipment or facilities at the same time. Upper-level management must then assign priorities to these projects. This is normally accomplished by defining certain projects as strategic, tactical, or operational—the same definitions usually given to plans.
Tables 3–3 and 3–4 summarize the advantages and disadvantages of this organizational form.
Source : Project management A system approach to planning, scheduling and controlling [EIGHTH EDITION] By HAROLD KERZNER, Ph.D.