Business & ManagementIB

Changes in organisational structures

Changes in organisational structures....Along with the basic organisational structures, some businesses have attempted to adapt their structure in accordance with the changes....
Changes in organisational structures

Project-Based Organization

The evolution of organizational structures towards project-based organization (PBO) represents a significant shift in how businesses approach management, team dynamics, and market responsiveness. This model, characterized by its flexibility and project-centric focus, has become increasingly prevalent among companies striving to adapt swiftly to market demands and technological advancements. This comprehensive analysis explores the concept of project-based organization, its advantages and disadvantages, and is supported by an industry example to provide IB Business & Management students with a deep understanding of this organizational paradigm.

Concept of Project-Based Organization

Overview: A project-based organization is structured around specific projects, rather than traditional functional or departmental lines. In this model, teams are assembled based on the requirements of each project, drawing specialists from various disciplines to work collaboratively towards a common goal. Project managers play a crucial role, overseeing the project from inception to completion, ensuring objectives are met within time and budget constraints.

Operational Dynamics: Upon project completion, teams are disbanded, and members are reassigned to new projects. This dynamic structure allows for a high degree of flexibility and adaptability, enabling organizations to respond more effectively to changes in market conditions or customer needs.

Advantages of Project-Based Organization

Higher Level of Delegation

Advantage: Project-based organizations empower team members through delegation, assigning specific responsibilities that leverage their expertise. This empowerment not only motivates employees by giving them ownership of their work but also facilitates skill development and job satisfaction.

Specialization and Efficiency

Advantage: By assembling teams of specialists, project-based organizations ensure that each aspect of the project is handled by experts in that field. This specialization fosters a high level of efficiency and quality in project execution.

Disadvantages of Project-Based Organization

Increased Training Costs

Disadvantage: The diverse nature of projects may require team members to continually update their skills or learn new ones, leading to increased training costs. Organizations must invest in regular professional development to maintain a competitive edge.

Compatibility with Workforce

Disadvantage: Not all employees may thrive in a project-based environment. Some may prefer the stability and routine of traditional organizational structures. The project-based model requires adaptability and may not suit individuals who prefer clear, long-term departmental affiliations.

Industry Example: Google

Example: Google, known for its innovative culture, employs a project-based organizational structure, particularly in its approach to developing new products and services. Google’s projects, such as the development of new algorithms, apps, or hardware, involve cross-functional teams that include software engineers, product managers, marketers, and UX designers.

Application: For instance, the creation of Google Photos involved assembling a project team dedicated to developing a standalone photo storage and sharing service. This team operated semi-autonomously, drawing on expertise from across Google’s organizational units, demonstrating the company’s commitment to a flexible, project-oriented approach.

Shamrock organisation 

The concept of the Shamrock Organization, introduced by Charles Handy, represents a paradigm shift in organizational design, reflective of the evolving market conditions and the continuous quest for efficiency and adaptability. This model proposes a lean approach to structuring organizations, centering around a core of essential employees supplemented by outsourced functions and a flexible workforce. This detailed analysis aims to provide IB Business & Management students with a comprehensive understanding of the Shamrock Organization’s components, benefits, and drawbacks, supported by a relevant industry example.

The Shamrock Organization Structure

Overview: The Shamrock Organization divides the workforce into three distinct parts:

  1. Core Managers/Employees: This group consists of multi-skilled individuals who are pivotal to the organization’s primary functions, focusing on innovation and strategic direction.
  2. Contractual Fringe: Non-essential activities are outsourced to specialist firms or independent contractors, allowing the organization to leverage external expertise and resources.
  3. Flexible Workforce: Comprising part-time, temporary, or seasonal workers, this segment offers the organization scalability and cost efficiency by adjusting labor force size according to demand.

Advantages of the Shamrock Organization

Specialization and Innovation

Advantage: By maintaining a core of essential staff, organizations can ensure that these employees are fully dedicated to the company’s key areas of innovation and strategy, driving competitive advantage and organizational growth.

Cost Efficiency

Advantage: Outsourcing non-core activities and employing a flexible workforce enable organizations to significantly reduce staffing costs. This lean approach to human resource management ensures that labor costs are closely aligned with operational needs and market demand.

Access to Expertise

Advantage: The contractual fringe allows companies to tap into specialized skills and knowledge that may not be available in-house, enhancing the quality of non-core operations without the need to maintain a permanent staff for these functions.

Disadvantages of the Shamrock Organization

Job Security and Motivation

Disadvantage: The model’s reliance on a flexible workforce and outsourced functions can lead to job insecurity among workers, potentially affecting motivation and productivity. The absence of long-term employment prospects may deter individuals from fully committing to organizational goals.

Integration and Cohesion

Disadvantage: Managing a workforce composed of core employees, outsourced contractors, and temporary workers presents challenges in terms of maintaining organizational culture and ensuring cohesive operations. The diverse nature of the workforce may lead to communication barriers and a lack of unified direction.

Industry Example: Google

Example: Google’s approach to organizational structure embodies elements of the Shamrock Organization. While maintaining a core of highly skilled employees dedicated to innovation and product development, Google also extensively utilizes outsourced services for non-core operations, such as food services and shuttle transportation for employees. Additionally, Google employs temporary workers and contractors for various projects, adding flexibility to its workforce.

Application: This model allows Google to remain at the forefront of technological innovation, focusing its core talents on strategic initiatives while also achieving operational efficiency and scalability through its flexible and outsourced workforce components.


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