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Effect of Organizational Culture on Creating Project Management Offices

Hayal ENYURT, MBA, PMP

Ankara, TURKEY

Abstract

The culture of an organization is composed of the values, beliefs, experiences, and behaviors of the people that create the organization, defining the way that the organization does the work. The organizational culture is so important that anything which does not fit in that specific culture will be immediately rejected. Organizations determine the need for building Project Management Offices (PMOs) to help solve their project management problems, but there is not a single way to build a PMO; PMOs in organizations can be built in different sizes, and with different functions. Creating PMOs are change projects themselves, and choosing a suitable PMO type is crucial for its effectiveness, and especially for its sustainability. This paper discusses important aspects of organizational culture affecting the selection of the PMO type, and gives some practical hints for building a successful PMO, gained from personal lessons learned and best practices.

Keywords

Organizational culture, project management, project management office

1. Introduction

Project management office (PMO) has been a much more popular concept for about ten years, for organizations dealing with many projects in parallel, especially for those operating with the shared scarce resources. However, creating a project management office is a big challenge for an organization, as well as being a difficult change project itself. Since every organization is different in nature, each organization must be carefully analyzed in order to determine its need in the area of project management (PM), therefore, its need for a project management office.

Ten years of professional project management and five years of project management office experience taught me that the most important factor affecting the success of project management organizations is the organizations culture. Other organizational factors include more numerical and objective parameters and therefore easier to analyze: The project managers or PMO personnels level of knowledge may be increased to support project management functions, or experienced consultancy may be provided. The PM organization can be designed and staffed according to the organizations type and size. The sector in which the organization performs could be examined and surveyed to see how PM can be specifically organized in that sector. On the other hand, the culture affects everything in the organization very significantly, and is a very complicated reality to understand and analyze.

Contemplating about creating a PMO for an organization from scratch (with no existing PMO), or improving/changing the existing PMO, it seems that a quick reference guide would help to choose the suitable PMO type according to the PM functionality needs and the cultural aspects of the organization. In order to choose a PMO type, first, we need a PMO categorization. Second, a list of PM functions corresponding to each PMO type; these two tasks constitute the relatively easy part. On the other hand, determining aspects of the organizational culture that may obstruct efficient and effective operation of some PM functions may be a real challenge.

2. Project Management Functions and Types of Project Management Offices

A PMO can be defined as an organizational body or entity assigned various responsibilities related to the centralized and coordinated management of those projects under its domain. (PMI, 2008) Here, these responsibilities can be grouped according to main PM functions: (Hallows, 2002)

Support functions help project managers do their jobs better by providing assistance and clarity in project management processes. They include facilities such as status reporting, procedures for starting and ending projects, and a process to establish priorities among projects.

Control functions are those of line management and include evaluating project managers, assigning project managers to projects, ensuring that project management deliverables are produced and are of adequate quality, and establishing and enforcing standards.

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Development functions involve recruiting, training and developing project managers. The goal is to provide a pool of experienced, talented project managers who are capable of dealing with any project in the organization and managing it successfully.

As PM functions can be listed in numerous ways, PMOs can also be categorized according to various criteria. Among various PMO categorizations, I prefer to use the approach defined below, since it shows significant parallelism with the PM function listing above. In this approach, PMOs are listed from the least responsible form to the most according to PM functionality. (Englund, Graham and Dinsmore, 2003)

Project Support Office provides planning, tracking, contract preparation and administration, administrative and financial services, scope change administration, PM tools, project metrics, document management, asset tracking and status audits.

Project Management Center of Excellence provides PM training, process standardization, internal consulting, PM competency enhancement, identification of best practices, project prioritization, tool definition and standardization.

Program Management Office is in charge of projects, having the responsibility for resource assignment, recruiting, developing project managers, project prioritization and selection, alignment with business strategies, enterprise reporting, development of PM methodology and processes, accountability for programs or projects, and coordination of project managers.

3. Organizational Culture

An organizations culture can be defined as the way that the organization does the work. It consists of shared values, beliefs, assumptions, perceptions, rules, norms, artifacts and patterns of behavior. It is a way of looking at and thinking about behavior of and in organizations, a perspective to take for understanding what is occurring. (Gibson, Ivancevich, Donnelly, 1994)

There are numerous works on the classification of organizational culture. For example, Hofstede examines work culture in five dimensions: power distance, uncertainty avoidance, individualism/collectivism, masculinity/femininity, and long/short-term orientation. (Hofstede, 1980) Deal and Kennedy suggests a categorization according to feedback speed and risk level in the organizations activities. (Deal and Kennedy, 1982) Schneider studies organizational culture according to qualities and characteristics associated with the actuality/possibility of the content and process orientation (personal vs. impersonal way of doing things). (Schneider, 1994) Johnson defines a cultural web that identifies elements that describe or influence organizational culture, which can be listed as the organizations paradigm, control systems, organizational structures, power structures, symbols and rituals/routines and stories/myths. (Johnson, 1998) Cooke and Szumal determined twelve behavioral norms that are grouped together into three general types, namely constructive, passive/defensive and aggressive/defensive cultures, in their tool Organizational Culture Inventory. (Cooke and Szumal, 2000)

Each of these categorization schemes has its own characteristics, but they have one thing in common: they all focus on the aspects of organizational culture, e.g. static, resistant to change, dynamic, open-minded, word-of-mouth, progressive, transparent, result-oriented, process-oriented, person-based, team-based, cohesive, groupthink, quick/slow feedback, risk taking/averse, operational, strategic, short/long term oriented, customer-focused, cost control-focused, quality, economy, delegating, power, hierarchy, training, sharing, helping, affiliative, democratic, ethical, achievement, innovative, formal/informal and so on.

4. Analysis How PM Functions, PMO Types and Aspects of Organizational Culture Relate to Each Other

In order to analyze which PM functions are included in which PMO type, and which aspects of organizational culture has effect on which PM function, the following method was utilized:

A matrix to relate PM functions, PMO types and aspects of organizational culture is developed. PM functions suggested by Hallows are utilized as a comparison column in the matrix. (Hallows, 2002) Some PM functions are further analyzed and divided into more functions according to PMO responsibilities. Three project office types suggested by Englund, Graham and Dinsmore are used in three columns. (Englund,

Graham and Dinsmore, 2003)

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PM functions are matched with the project office types according to the responsibilities of each type of project office. If the PM function is in the responsibilities of that specific type of PMO, it is marked with a tick in the corresponding cell.

Most popular and widely defined aspects of organizational culture are listed. (Important! Aspects with positive and supporting effect on PM functions are excluded!)

Each PM function is evaluated in correlation with every aspect of organizational culture to see if that aspect has a significant and direct influence on the efficiency and effectiveness of the PM function. (This examination is based on personal best practice and lessons learned, as well as expert opinion of some of my colleagues.) If a direct relation is defined between the PMO function and the aspect of organizational culture, it is marked with a cross in the corresponding cell. (There may be, of course, transitional or indirect relations between functions and aspects, but only significant and direct relations are marked in the matrix.)

This procedure created a very large and mostly sparse matrix. So, first of all, the aspects affecting PM functions in a similar way are combined in a single row. Then, to eliminate the aspects that have negligible influence on PM functions, columns with the most effective aspects, i.e. with the most cross signs, are chosen.

Now, we have a matrix for PM functions vs. aspects of organizational culture and type of PMO, seen in Table 1.

Table 1. PM Functions vs. Aspects of Organizational Culture and Type of PMO

ASPECTS of ORGANIZATIONAL CULTURE TYPE of PMO

PM FUNCTIONS

Not Trans-parent / Word-of Mouth

Not Process-Oriented

Person-Based / Non-

Cohesive

Operational / Not Strategic

Power / Hierarchical /

Not Delegating

Not Training

Not Sharing /

Not Helping

Project Support Office

Project Man.

Center of Excel.

Project Man. Office

SUPPORT FUNCTIONS Providing an escalation path for project issues X X Developing procedures to help project managers who are also team participants balance the demand on them

X X X X

Providing assistance to project managers in planning, scheduling, tracking, etc. to manage a project

X X X X

Providing assistance to project managers who are required to manage multiple projects

X X X

Providing a central source of data gathering for costs and time (project metrics) X X X

Providing a central source of data gathering for best practices and lessons learned X X X X Producing standard reports on the status of projects such as performance against budget or schedule

X X

Producing standard enterprise / portfolio / program-wide reports X X X Establishing standards for initiating and closing projects X X Establishing standards for project management processes X Providing mechanism for managing changes to project scope X X Providing templates for project management deliverables such as the project charter or project plan

X X

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ASPECTS of ORGANIZATIONAL CULTURE TYPE of PMO

PM FUNCTIONS

Not Trans-parent / Word-of Mouth

Not Process-Oriented

Person-Based / Non-

Cohesive

Operational / Not Strategic

Power / Hierarchical /

Not Delegating

Not Training

Not Sharing /

Not Helping

Project Support Office

Project Man.

Center of Excel.

Project Man. Office

Helping project managers negotiate for needed resources X X Implementing project management tools X Standardization of project management tools X X Providing a forum for mediation when a project manager and a customer dispute aspects of the project such as scope changes

X X

Establishing a process to define priorities among projects X X X Establishing a process to evaluate, prioritize and select projects while aligning them with business strategies

X X X

CONTROL FUNCTIONS Defining mandatory project requirements such as project plans, status reports, team meetings or project plans

X X

Reviewing project management deliverables to ensure that they are produced and to validate their quality

X X

Establishing project management standards X Providing line management for project managers X X X X Assigning project managers to projects X X DEVELOPMENT FUNCTIONS Providing project management trainings X X Defining a project manager training path and ensuring that it is followed X X

Providing internal project management consulting for the organization X X Recruiting project managers from within the organization X X Hiring project managers externally X X Providing mentors for novice project managers, establishing a mutual assistance program for project managers

X X

Conducting project reviews to determine if a project manager needs help X X X Evaluating project managers at the completion of each project and recommending steps for improvement

X X X X

At this point, it would be helpful to explain the logic behind the way of filling the cross signs in the matrix with some examples:

Example 1. Project office supports reporting and stands as an information center for management; therefore, it may be difficult to accept such an entity in a word-of-the mouth organization, since it provides a significant transparency to the organization by sharing information. So, put an X to Providing a central source of data vs. Not Transparent/ Word-of-Mouth cell.

Example 2. If the organization gives a high importance to education and training is a part of the culture, then training support of the office will be appreciated. So, put an X to Providing project management trainings vs. Not Training cell.

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Example 3. Project office provides infrastructure for sharing best practices and lessons learned of project professionals with other people in the organization. If knowledge sharing and helping other people are not of important values in the organization, then this function of the office will not be properly used. So, put an X to Providing a central source of data gathering for best practices and lessons learned vs. Not Sharing/ Not Helping cell.

Example 4. Project office defines and applies processes, procedures and standards for project management. In process cultures, it is easier to incorporate these into project management. So, put an X to Establishing project management standards vs. Not Process-Oriented cell.

Example 5. Project management office supports strategic management with project evaluation, prioritization and selection, and also by aligning projects with business strategies. Project evaluation, prioritization and selection is provided and made according to related theory and methods in the office. In power cultures, it is hard to put this to work, since every decision is made by the highest power person in the organization. Moreover, it is difficult to integrate this dynamic and strategic view of business into static and status quo organizations. So, put an X to Establishing a process to evaluate, prioritize and select projects while aligning them with business strategies vs. Power cell and vs. Operational/ Not Strategic cell.

5. Discussion - Practical Hints for Creating a PMO

Establish a project management culture. For organizations to be successful with the adoption of project management, they need to establish a shared set of values and beliefs (i.e. a project management culture) that aligns with the social and technical aspects of project management in order to achieve the organizations business objectives. The success of project management relies on the four dimensions; the project manager skills and competencies, organization structure, measurement systems, and managements practices that represent an organizations culture. Organizational values provide the linkages between the organizations members, structure, systems, and processes used in the adoption of project management methods. (Kendra and Taplin, 2004) Investigating and understanding the values of the organization (e.g. the aspects of organizational culture) affecting the PM functionality (a professional human resources department would help) and configuring the PMO accordingly would work.

Advocate (and prove) the benefits of using a project office to the executives first. Some work cultures believe that some disciplines are much more valuable then the others and they believe that they do not need managerial knowledge and experience, and moreover, they think that they already know managing. Gaining the buy-in by showing the benefits of using a project office for the executive levels of management would be a good starting point. As Kerzner summarized, these may be: standardization of operations, company rather than division decision-making, better resource allocation, quicker access to higher quality information, reduction of company silos, more efficient and effective operations, less need for restructuring, fewer meetings which rob executives of valuable time, more realistic prioritization of work, and development of future general managers. (Kerzner, 2003) Of course, listing and telling about the benefits of project offices would not help acceptance of them in the organization; instead, you should plan for and put PM functions into work by making peoples life easier in project management.

Start with a project support office, if the organization has little PM knowledge. Resistance to a new entity in the organization is quite normal, so the project office will also face such a resistance. Kerzner defined three levels of resistance while implementing a project office:

o Low risk: Easily accepted by the organization with very little shift in the balance of power and authority. Virtually no impact on the corporate culture.

o Moderate risk: Some resistance by the corporate culture and possibly a shift in the balance of power and authority. Resistance levels can be overcome in the near term and with minimal effort.

o High risk: Heavy pockets of resistance exist and a definite shift in some power and authority relationships. Strong executive leadership may be necessary to overcome the resistance.

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As Kerzner suggested, it may be easier to gain support for the establishment of PO by implementing low-risk activities first. The low-risk activities are operational activities to support project management efforts in the near term whereas the high-risk activities are more in line with strategic planning responsibilities and possibly the control of sensitive information. (Kerzner, 2006) With this point of view, as the project support office is the basic form of project management offices, if the organization has no or very little project management experience; it is a good point to start with a project management support office.

6. Conclusion

The matrix shown in Table 1, constitutes a quick reference for selecting a PMO type according to the PM functions required by the organization and shows important aspects of the organizational culture that the PMO leader must pay special attention while executing those PM functions. As it can be seen from the method of the study, the analysis is based on personal best practices and lessons learned, and expert opinion of project managers. In order to make the result of the study more reliable, I plan to support it with organization-wide questionnaire data in further studies. The questionnaires will be used to determine the important cultural aspects for the organizations, which hinder functionality of the project management offices.

7. References

Cooke, R.A. & Szumal, J.L. (2000) Using the Organizational Culture Inventory to Understand the Operating Cultures of Organizations, Handbook of Organizational Culture and Climate, Sage Publications (Thousand Oaks, USA)

Deal, T.E. and Kennedy, A.A. (1982) Corporate Cultures: The Rites and Rituals of Corporate Life, Penguin Books (Harmondsworth, UK)

Englund, R.E., Graham and R.J., Dinsmore, P.C. (2003) Creating the Project Office, John Wiley & Sons Inc. (San Fransisco, USA)

Gibson, J.L., Ivancevich, J.M. and Donnelly, J.H.Jr (1994) Organizations Behavior, Structure, Processes, Gibson, Ivancevich, Donnelly, Richard D. Irwin, Inc. (Boston, USA)

Hallows, J.E. (2002) the Project Management Office Toolkit, American Management Association (New York, USA)

Hofstede, G. (1980) Cultures Consequences: International Differences in Work-Related Values, Sage Publications (Beverly Hills, USA)

Johnson, G. (1988) Rethinking Incrementalism, Strategic Management Journal Vol.9 (USA)

Jones, G.R. (2004) Organizational Theory, Design, and Change, Gareth R. Jones, Pearson Education Inc. (Upper Saddle River, USA)

Kendra, K. and Taplin, L.J. (2004) Project Success: A Cultural Framework, Project Management Journal, April 2004 (USA)

Kerzner, H. (2003) Strategic Planning for a Project Office, Project Management Journal, June 2003 (USA)

Kerzner, H. (2006) Project Management, a Systems Approach to Planning, Scheduling and Controlling, John Wiley & Sons Inc. (Hoboken, USA)

Project Management Institute (PMI) (2008) Guide to Project Management Body of Knowledge (4th Edition), PMI Publications (Pennsylvania, USA)

Schneider, W.E. (1994) the Reengineering Alternative: A Plan for Making Your Current Culture Work, Professional Publishing, Inc. (Burr Ridge, USA)