One approach to organizing projects is to simply manage them within the existing functional organizational structure hierarchy of the organization. Once management decides to implement a project, the different segments of the project are delegated to the respective functional units with each unit responsible for completing its segment of the project (see figure below).
Coordination is maintained through normal management channels. For example, a tool manufacturing firm decides to differentiate its product line by offering a series of tools specially designed for left-handed individuals.
Top management decides to implement the project, and different segments of the project are distributed to appropriate areas. The industrial design department is responsible for modifying specifications to conform to the needs of left-handed users. The production department is responsible for devising the means for producing new tools according to these new design specifications.
The marketing department is responsible for gauging demand and price as well as identifying distribution outlets. The overall project will be managed within the normal hierarchy, with the project being part of the working agenda of top management.
The functional organizational structure is also commonly used when, given the nature of the project, one functional area plays a dominant role in completing the project or has a dominant interest in the success of the project. Under these circumstances, a high-ranking manager in that area is given the responsibility of coordinating the project.
For example, the transfer of equipment and personnel to a new office would be managed by a top-ranking manager in the firm’s facilities department. Likewise, a project involving the upgrading of the management information system would be managed by the information systems department. In both cases, most of the project work would be done within the specified department and coordination with other departments would occur through normal channels.
Functional Organizational Structure Strengths
There are advantages and disadvantages for using the existing functional organizational structure to administer and complete projects. The major advantages are the following:
No Change. Projects are completed within the basic functional structure of the parent organization. There is no radical alteration in the design and operation of the parent organization.
Flexibility. There is maximum flexibility in the use of staff. Appropriate specialists in different functional units can temporarily be assigned to work on the project and then return to their normal work. With a broad base of technical personnel available within each functional department, people can be switched among different projects with relative ease.
In-Depth Expertise. If the scope of the project is narrow and the proper functional unit is assigned primary responsibility, then in-depth expertise can be brought to bear on the most crucial aspects of the project.
Easy Post-Project Transition. Normal career paths within a functional division are maintained. While specialists can make significant contributions to projects, their functional field is their professional home and the focus of their professional growth and advancement.
Functional Organizational Structure Weaknesses
Just as there are advantages for organizing projects within the existing functional organizational structure, there are also disadvantages. These disadvantages are particularly pronounced when the scope of the project is broad and one functional department does not take the dominant technological and managerial lead on the project:
Lack of Focus. Each functional unit has its own core routine work to do; sometimes project responsibilities get pushed aside to meet primary obligations. This difficulty is compounded when the project has different priorities for different units. For example, the marketing department may consider the project urgent while the operations people considered it only of secondary importance. Imagine the tension if the marketing people have to wait for the operations people to complete their segment of the project before they proceed.
Poor Integration. There may be poor integration across functional units. Functional specialists tend to be concerned only with their segment of the project and not with what is best for the total project.
Slow. It generally takes longer to complete projects through this functional organizational structure. This is in part attributable to slow response time—project information and decisions have to be circulated through normal management channels. Furthermore, the lack of horizontal, direct communication among functional groups contributes to rework as specialists realize the implications of others’ actions after the fact.
Lack of Ownership. The motivation of people assigned to the project can be weak. The project may be seen as an additional burden that is not directly linked to their professional development or advancement. Furthermore, because they are working on only a segment of the project, professionals do not identify with the project. Lack of ownership discourages strong commitment to project-related activities.