Project organizational structure advantages and disadvantages

A functional organizational structure is the most common of the three organizational structures adopted by most companies. Companies organized by function group employees according to their activities in the organization. Human Resources employees have their own HR department, for example, as do employees working in sales, marketing, finance and technical support. Organizing a company in this way has inherent advantages and disadvantages.

Advantage: Specialization 

The most obvious advantage of a functional organization is that grouping employees by specialization ensures a dependable level of departmental competence. This is particularly so for large organizations that have several functional levels within a department – a particular tech group that follows up on tech issues not resolved by the primary telephone tech support group, for example.

Membership in this group could require a bachelor's degree in computer science, a manager's recommendation and a minimum number of years of field experience. This ensures that support issues moved up to the follow-up group are handled by fully qualified personnel, which increases customer satisfaction and retention.

Advantage: Operational Speed

A related benefit of this kind of organizational specialization is operational speed. By and large, a senior tech is going to handle a support problem faster than someone with less experience. There're probably going to train new staff members faster, too.

Advantage: Operational Clarity

Segregating the workforce according to function clarifies organizational responsibility and allocation of tasks. This tends to eliminate duplication of assignments that waste time and effort and makes it easier for management to direct work to appropriate employees.

Disadvantage: Segregation

Having departments populated by employees specializing in specific work areas means that teams become siloed. Employees in different teams do not get the opportunity to meet and share perspectives, which can be harmful for the progress of the business in the long run.

Disadvantage: Weakening of Common Bonds

Having a common organizational purpose improves employee morale and performance and is an important predictor of organizational success. When each group of specialists in a functional organization is relatively isolated, the common bond that emphasizes a single overarching organizational purpose is almost inevitably weaker than in an organization where different kinds of employees regularly interact.

Disadvantage: Lack of Coordination

In a perfect functional organization, each group's tasks would require no input from other functional groups, but this is often not the case. As communication becomes increasingly dominant in organizations, isolated groups may underperform or even fail because they have no institutionally recognized way of communicating needs and issues to other functional groups that might have helped.

In some instances, managers of other functional groups may not respond helpfully or in a timely way because "it's not our problem." By the time the need for cooperation has been established, the moment when cooperation would have been most effective may already have passed.

Disadvantage: Territorial Disputes

A further disadvantage of a functional organization closely related to the failure of functional groups to cooperate with one another is the possibility of territorial disputes. These disputes may have to do with disagreements over goals, budgetary competition or any number of issues that stem from a clash of egos that occur when each department has its own separate functional structure or where a strong sense of a common purpose is lacking.

1. An organization's structure determines the way employees and jobs are arranged to meet its needs and objectives. In a functional structure, employees are departmentalized by task similarity, and projects are performed inside the departmental unit. Accounting, marketing and human resources departments are examples of units grouped together based on the functions they perform.

Clear Line of Command

1. Project teams within a functional structure benefit from clearly defined reporting relationships. Functional structures are managed through a coherent top-down approach, with employees generally reporting to only one manager. Fewer layers of management means employees are more likely to know what is expected of them, and from whom.

Autonomy

1. Another main advantage of projects performed inside a single department is that the unit has complete control over the results. Project goals are determined internally, not by an external project owner, and thus are better suited to meet departmental need. Additionally, an atmosphere driven by self-government fosters a supportive environment in which growth and skill development thrive.

Quick Decision Making

1. Lamar University's website notes that "people who approach problems from the same perspective can often make decisions more quickly and effectively than can people whose perspectives differ." Under the functional structure, project decision making is swift and authoritative. Although conflicts may still arise, similar backgrounds and perspectives generally facilitate quicker turnaround times and less wasteful deliberation.

Knowledge Sharing

1. As with quick decision making, clustering people together according to professional similarities also fosters communication and knowledge sharing between co-workers. Instead of reliance on costly seminars and workshops, more experienced project team members serve as mentors to colleagues with less experience. Effective application of this knowledge results in a stronger, more productive project team.

Easier Supervision

1. Functional structures create a clear career ladder for project members to follow. Project managers within a functional structure are usually experts within their particular unit who have been promoted to that role due to high performance. These leaders possess a superior skill level that helps make their job easier and makes them better equipped to monitor the individual performance of their team members to distribute recognition, rewards and punishments accordingly.

What are the advantages and disadvantages of project organizational structure?

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