PROJECT ORIENTATION

Over the past two decades, there has been a trend towards project orientation in society, industries, and companies (Gareis, 2005; Cleland and Gareis, 2006). Reasons for this include the need for organizations in the creative and cultural industries, high technology sector, and professional and consulting industries to adopt appropriate structures to respond to their customers’ “highly differentiated and customized nature of demand” (Sydow et al., 2004, p. 1475). It may also be because of a tendency for firms in all types of industries “to undertake projects as a part of their operations even while their primary productive activity might be volume-based or operations-oriented” (Sydow et al., 2004, p. 1475). Gareis and Huemann (2000) define a project-oriented society as one which:

• Considers projects and programs as an important form of (temporary) organization for achieving strategic and change objectives
• Supports a relatively high number of project-oriented organizations
• Requires specific competencies for managing of projects, programs, and project portfolios
• Implements structures to further develop these management competencies.

Structures to further develop project orientation of a society are required. Institutions that harvest the required competencies in a society are, for example, project management education, project management research, and project management stand-ardization providers. Standardization providers develop project management bodies of knowledge, offer project management certification programs, and promote the project management profession. Thus educational institutes and project management associations are contributing to the further development of the project-oriented society.

The increasing use of management by projects in several countries around the world is well documented (Cleland and Gareis, 2006). The project-oriented society is based on the assumption that projectification is becoming invasive in society. Lundin and Söderholm (1998) suggest that the number of projects performed in society is increasing, and that this is explained by the evolutionary demand for projects. In addition to the engineering and construction industries, which are considered as traditionally project-oriented, many public sector industries perceive temporary organizations, such as projects and programs, as appropriate to perform business processes of medium to large scope. Besides traditional contracting projects, other types, such as those in marketing, product development, and organizational development have gained in importance. Gareis (2005) suggests that “management by projects” has become a macro-economic strategy of the society, to cope with complexity and dynamics and to ensure quality of the project results; and that project management is becoming increasingly professionalized. The Project Management Institute estimates that there are about 16 million people worldwide who consider project management as their profession. Within the project-oriented society, both the individual and the project-oriented organization find new and different pressures on them (Packendorff, 2002), creating new and different needs for human resource management and careers.

PROJECT-ORIENTED CAREERS

A Career as a Series of Stepping Stones

Within the project-oriented society, a career becomes a succession of projects (Jones and DeFillippi, 1996), not a series of steps up a ladder. A career is a series of steps outwards, not upwards. Gone is the comfort of working for a paternalistic organization that cares for its employees, knows what is best for them, and tries to ensure that they receive it. Lifetime employment and permanent careers are becoming rare. Individuals must take much greater responsibility for their careers, planning the development they need and looking for projects that will give them those opportunities. Acquiring project management competencies, keeping them state-of-the-art, and getting them certified becomes an issue, even for those project management personnel who belong (permanently) to a project-oriented organization. To remain employable, an individual has to take on the responsibility for the acquisition of the competencies demanded and of his or her professional development.

The Spiral Staircase Career

The consequences for people's careers are both positive and negative. The bad news is they do not have the comfortable certainty of a career climbing the ladder up the functional silo. The good news is they have much more varied and interesting careers. Projects, being transient, cannot provide careers, but each project can be a learning opportunity in a career. Projects provide an opportunity for a broad sweep of learning experiences. Anne Keegan and Rodney Turner (2003) coined the phrase, “the spiral staircase career” to reflect that people will move through a series of varied and wide-ranging jobs. They might spend time in the design function, time as lead designers on a project, time leading projects, and time in client interfacing roles. Rather than each move being a whole step up the ladder, moves can be half or even a quarter of a step sideways and upwards. People can also avoid the Peter Principle and avoid being promoted to the level of their incompetence. If they find themselves in jobs that do not suit them, they can take a move sideways, which does not carry any stigma, compared to taking a step down the ladder of the functional silo, and move back to job roles that suit them much better. In conducting our previous research, we interviewed a man who had been director of projects with a position on the board of his company, but was moved to being director of a highly critical project with a key client. He was given a wage increase with that move, the project director role was of more value to the company, but critically as well he could be of greater value to his company in that role. He was better as a project manager than a line manager, and could move, without loss of face, back to that role, be given a promotion, and so avoid the Peter Principle.

No Home Syndrome

Coupled with varied careers is the “no home syndrome” (Keegan and Turner, 2003). People spend their working lives moving from one project to another. They do not have a permanent home, a permanent sense of belonging. They do not have a desk they can call their own, where they can post pictures of their friends or family. (Rodney Turner posts pictures of his family as wallpaper on his laptop or desk computer.) They work on one project for 9 to 18 months, then that team breaks up and they move to a new team. This creates a nomadic life, and it also increases the need for team building on projects to create a sense of belonging to the project (Reid, 2003). A practice adopted by many project-oriented firms is the creation of the project management office (PMO) or an expert pool of project managers. This can provide them with a home between projects and a place to belong to and seek support while working on projects. Sometimes the PMO may be virtual, but it can still satisfy these needs. This creates a degree of uncertainty for employees who cannot be sure what kinds of projects they will be assigned to or what kinds of colleagues they will work with. In discussing employee retention, Noe, Hollenbeck, and Wright (2004) suggest that both tasks and roles, and managers and co-workers, are core aspects of the employee work experience. From an organizational and managerial perspective, failure to address the role conflict of project work may damage efforts to retain workers as both have been shown to cause job dissatisfaction and, in extreme cases, physical, psychological, and behavioral withdrawal and voluntary turnover (Rau and Hyland, 2002).

“Project Nomads”

In project-oriented societies, there is a trend for individuals to be employed in temporary assignments when they work on successive projects and programs (Jones and DeFillippi, 1996). Project participants move from one project to another, often from one company to another, and even from one country to another. This creates a picture of “project nomads” leading a nomadic life, which we might think of as adventurous. However, an HR manager at an international engineering company pointed out that “project nomads” have to move from one place to the other because the country is too poor for them to settle down permanently. Similar pictures are drawn by Peter Drucker (1994) when he describes the knowledge workers and by Charles Handy (2002) when he describes the life of the self-employed “flea.” Handy (1988) previously described such people as being like freelancers, literally mercenaries at the time of the Crusades who were not part of the regular army. We can identify a number of new stresses for employees in this environment. Lifetime employment and permanent careers are becoming less and less common. This is a trend we see across the board captured by the popularity of discussions on the importance of employability instead of job or career security.

THE PROJECT-ORIENTED ORGANIZATION

As we saw previously, the project-oriented organization is a feature of the project-oriented society. The basic assumption of the project-oriented company is that organizations need to be more differentiated to deal with the increasing complexity of the environment. Projects and programs may be considered as a means of differentiation. Further there is some evidence that project work brings competitive advantage, for example, by speeding up product development (Wheelwright and Clark, 1992). Terminology varies for describing those organizations that carry out projects. These types of companies are called projectified, project-intensive, project-based, or project-oriented. In project management research, the consideration of this type of company first came to prominence in the early 1990s (Gareis, 1990; Turner, 1999), although Youker (1977) first coined the phrase “projectized company” in the late 1970s. The project management discipline has broadened its horizon to consider the project-oriented company as an object of research only relatively recently (Söderlund, 2004). In organizational literature there is a somewhat longer tradition of research into this type of organization (Minzberg, 1979). Thus (at least) two streams of literature have looked at project-oriented organizations and have described the structural impact on companies that apply temporary organizations such as projects and programs. There are different perspectives on the topic from two different fields of study:

• General management, including organizational behavior literature
• Project management literature

General Management/Organization Perspective

It has been widely claimed that there is a paradigm shift in the nature of 21st-century organizations towards a post-bureaucratic mode of organizing, with projects as a specific and significant characteristic (Clegg, 1990; Whittington et al., 1999). Galbraith suggested as early as 1977, that there is a continuum of organizational forms ranging from M-form through the matrix to the project-based (Galbraith, 1977). Hobday (2000, p. 874) defines the project-oriented company in contrast to other companies and stresses the importance of projects as their core units.

In contrast to the matrix, functional, and other forms, the project-based organization is one in which the project is the primary unit for production organization, innovation, and competition.

He further points to the inherently flexible and reconfigurable advantages of innovation processes. Lindkvist (2004) offers a similar definition. He defines project-based companies as companies that do most of their work in projects or have a main emphasis on the project dimensions rather than the functional dimensions of organizational structure and processes.

From the general management perspective, the core object of consideration is the company and its structures or their cooperation in inter-organizational projects and network contexts (Sydow, 2006). Another concern of the management literature is knowledge management (DeFillippi, 2001) and innovation (Hobday, 2000). Studies are often industry-specific, for example filmmaking (DeFillipi and Arthur, 1998), or engineering and construction (Hobday, 2000).

Project Management Perspective

In project management, authors who consider project-oriented companies in their research are Gareis (1990, 2005), Morris (1994), Turner (1999), Keegan and Turner (2001, 2002, 2003) and Turner and Keegan (2000, 2001, 2004). These authors, coming from a project management perspective, often concentrate on the management and governance of projects, programs, and project portfolios as specific features of the project-oriented company. Turner and Keegan (2001, p. 256) defined a project-based company as one:

in which the majority of products made or services delivered are against bespoke designs for customers.

This implies that it is project-based because of the customized nature of the demand from their customers. On the other hand, the Austrian school suggests a project-oriented organization is such by choice, based on the idea of “management by projects” (Gareis, 1990). In essence, what defines a company as project-oriented is that it perceives itself as being project-oriented and shapes its policies and practices for working, for organizational culture, and for strategy towards the challenge presented by the management by projects. Gareis (2005, p. 25) suggests that a project-oriented organization is one which:

1. Defines “management by projects” as their organizational strategy
2. Applies projects and programs for the performance of complex processes
3. Manages a project portfolio of different internal and external project types
4. Has specific permanent organizations like a project portfolio group or a project office to provide integrative functions
5. Views itself as being project-oriented

These two definitions appear to be different, but they are two sides of one coin. Not every organization delivering customized products and services to customers uses projects as a way of working. The corporate governance still needs to make the choice to adopt project-oriented ways of working as a strategic choice. In our research, we used the term project-oriented organization to stress the strategic choice in this concept of the contemporary firm.

Specific Competencies of Project-Oriented Organizations

To operationalize the project-oriented company, research by the Vienna University of Economics and Business Administration suggests a maturity model to describe and assess the maturity of the project-oriented company (Figure 2.1) (Gareis and Huemann, 2007). The basic assumption is that the model shows competencies and capabilities of the project-oriented company that differentiate this type of company from classically managed companies. These specific competencies are project and program management, assurance of management competency of projects and programs (including project auditing, project consulting), project portfolio management (including assignment of a project or program, project portfolio coordination, and networking between projects), organizational design (including features like PMO, project management standards, and guidelines), personnel management, and process management.

Is Any Organization Project-Oriented?

Many writers distinguish between companies that do most of their work in projects and/or have a main emphasis on projects, and firms where the functional dimensions of organizational structure and processes dominate and projects take place in the back office to support the functionally based front office (Turner and Keegan, 2001; Lindqvist, 2004).

Gann and Salter (2000) stress that new management practices need to link project and business processes. Even types of projects may be differentiated according to the business processes of the company they are linked to. Internal projects are performed to carry out support business processes, such as organizational development, personal development, and product development. External projects are performed to carry out primary processes to deliver products and services to external customers.

Many companies have made a strategic choice to perform their core business as projects or programs, but do not consider that they may need professional project management for internal projects. However, these companies may still be considered to be project-oriented, but they have some development potential. Other companies, for example, from the banking and insurance industries, have (mainly) routine primary processes, such as selling bank accounts to customers, which is definitely not to be performed as projects. But still, the same company may have a need for product development projects and programs.

Indeed, the project-oriented organization does not need to be a legal entity; it can be a department or group within a larger organization (Hobday, 2000; Turner and Keegan, 2001; Gareis and Huemann, 2007). Therefore, a department in a back office doing repositioning or renewal work for a routine front office is a project-oriented organization; and so it may be project-oriented by strategic choice, even if the front office is routine by strategic choice. A typical example is the product development of an automotive manufacturer (Midler, 1995). A single firm may deploy both project-oriented divisions and functional divisions. The consequence is that they may need different HRM practices between the divisions.

PROJECT MANAGEMENT PERSONNEL

In project-oriented organizations, there are several different types of personnel, including line management, technical experts, and project management personnel. Project management personnel are those people who need to draw on project management competence to fulfill their roles. They include project managers, but also include people in other project roles. The HRM practices we discuss apply to project management personnel and technical experts working on projects. The project-oriented organization may apply similar processes, or conventional ones, to people working in line management or technical experts not working on projects. Project management personnel include people working in temporary structures such as projects and programs, and people working in permanent structures such as a project management office, a project portfolio group, or expert pool. The former include:

1. Project personnel, such as:
   • Project owner, project sponsor, or project champion
   • Project manager, project leader, or project director
   • Project management assistant
   • Project controller
   • Project team members and project contributors
2. Program personnel, such as:
   • Program owner or program director
   • Program manager, project director, program coordinator
   • Program assistant or program controller
   • Program office members

People working in permanent structures include:

1. Project management office personnel such as the office leader and office members. They are the process owners for the project management process within the project-oriented company.
2. Project portfolio group members who take the responsibility to manage the project portfolio from a strategic perspective. Usually these members of the project portfolio group are managers of those business units of the permanent organization that are frequently involved in projects and programs.
3. Quality management personnel such as project or project management auditors and reviewers, project or project management coaches, and project or project management consultants.
4. Expert pool personnel such as the leader and members of the project expert pool. From these expert pools the project personnel is drawn.

Project owners are very often line managers. Employees in the project-oriented company have often more than one role and can therefore belong to different groupings of project management personnel. For example, one person can be a program manager, while at the same time he or she also works as project auditor for a different project. People may also fulfill different project roles from one project to the next. They may have a project management role on one and a technical expert role on the next, or vice versa, which can influence their relationship with other project team members, particularly if they do not know what role they will be fulfilling on the next project.

CHARACTERISTICS OF HRM IN THE PROJECT-ORIENTED ORGANIZATION

The HRM literature suggests an organization should adopt HRM practices which are aligned both vertically and horizontally with its strategy (Lengnick-Hall and Lengnick-Hall, 1998):

• HRM practices should be vertically linked to the strategy of the organization
• HRM practices should horizontally support the other operational processes in the organization

If the project-oriented organization adopts project-oriented ways of working as a strategic choice, the HRM practices should support that strategic choice and support the project-oriented ways of working adopted. There is no reason to assume that normative HRM practices developed for the large, routine, classically managed organization will suit the project-oriented organization. The working environment in the project-oriented organization may be different, and different HRM practices may be more suitable. So let us now consider the nature of the working environment in the project-oriented organization.

What are the features of project-oriented firms that influence the nature of employment within them? Projects are temporary organizations undertaken to bring about change (Lundin and Söderholm, 1998; Turner, 2007). Some, primarily functional, organizations undertake projects to enact specific changes. They can adopt classical human resource management practices and assign resources to projects from within the functions as and when necessary. For project-oriented organizations, however, projects are their business and the majority of the work they do is project-based. Keegan and Turner (2003) showed that project-oriented organizations need to take a different approach to human resource management than the classical approach adopted by functionally oriented organizations. As temporary organizations, projects are unique, novel, and transient. They are unique; the organization has never done anything exactly like this before. They, therefore, require novel processes and have novel resource requirements. Being unique and novel, the method of delivery can be uncertain. The consequences of the unique, novel, and transient nature of projects on human resource management requirements is described in the following sections.

Temporary Work Processes

Project-oriented organizations use projects and programs to perform their work. Projects and programs are temporary organizations (Turner and Müller, 2003; Sydow, Lindkvist, DeFillippi, 2004; Gareis, 2005). Every time a new project or program starts or an old one finishes, the human resource configuration of the parent organization changes. Not only will the organization require HRM practices in the parent organization, but also it will need to apply practices at the level of the temporary organization that is the project. This creates the need for new HRM practices like assigning personnel to projects, assessing, developing, and rewarding their work on projects, dispersing them on project completion, and linking project assignments to careers. These practices will need to be applied every time a project or program starts or finishes.

Dynamic Work Environment

The temporary nature of the work creates dynamic work boundaries and contexts. The number and size of projects performed can constantly change, making predictions of future resource requirements difficult. Many organizations respond to the fluctuating resource demands by employing temporary workers (Keegan and Turner, 2003). In a dynamic environment in which the HR configuration is constantly changing, the challenges of ensuring employee well-being is important. In this environment, individual workloads can peak as project workloads peak together. When the demands of clients for immediate organizational response are realized at the project level, there may be a requirement for HRM practices to guide the response and ensure that employees are not confronted with excessive levels of stress, and demands for working long hours.

Uncertain Requirements

In the classically managed, functional organization, resource requirements are assumed to be well determined. The jobs to be done are well known from past experience. A job description is written for a job, defining what is to be done, the levels of management responsibility required, and the competence required, including levels of education and training and past experience. Somebody is recruited against that specification. There is a saying, “grade the job and not the person.” The requirements of the job are defined, and the best match found to those requirements—this is the Taylorian approach. That level of certainty does not exist in the project-oriented organization:

1. Projects are unique, novel, and transient, with high uncertainty. It is not possible to define precisely the requirements of the current job. You need to recruit people known to work well on projects, and let them define the job around themselves. You don't define the job and then find the right person; you find a competent person and let them define the job.
2. Contract organizations often cannot precisely predict the levels of resources required for the immediate future. They may have several jobs in progress, with one coming to an end, and several bids out. For example, an organization may have five bids out, with a normal success rate of winning one bid in five. If this is achieved, the organization would have one job to replace the one coming to an end. If they are unsuccessful and do not win any of the bids, their workload will fall, if they win two, they may be able to cope, but if they win three, they will be overloaded. Keegan and Turner (2003) report that the only way project-oriented organizations cope with this uncertainty is by employing between 20% and 40% contract staff. They report one organization employing up to 80% contract staff. This is essential to cope with fluctuating and uncertain workloads.
3. As for forecasting future resource requirements, that is clairvoyance. If it is not possible to predict resource requirements one month out, how can anyone predict them one year out? Organizations can assume they will continue doing the same types of projects, and try to use economic forecasts to predict future numbers of projects in the industry, but it is much less certain than in a functional organization.

Specific Management Paradigm

The ideal POC has a specific management culture expressed in the empowerment of employees, process orientation and teamwork, continuous and discontinuous organizational change, customer orientation, and networking with clients and suppliers (Gareis, 2005). Therefore specific competencies and skills are needed by the project personnel to successfully work together in projects. This may require the POC to adopt training and development practices to develop employees capable of working in the project environment, which in turn may require it to adopt specific HRM practices in these areas matched to the management paradigm adopted.

Project-Portfolio Resource and Role Demands

A project-oriented company holds a portfolio of different internal and external project types at any given time (Project Management Institute, 2004; Gareis, 2005). A person can work in different projects at the same time, maybe even in different project roles. In one project, he or she may be a project manager, and in another, a project team member or sponsor. A person could carry a role in one project and at the same time carry another role in the permanent organization, for example in the project office or in a technical department. This can create role conflict at an individual level (Rau and Hyland, 2002). A particular problem arises when a person is a technical expert on one project and project manager on another, and a member of their team is the project manager on the other project. The organization also needs HRM practices to assign people to several projects or programs simultaneously, and to smooth the demands between projects and programs. This creates the need for multi-resource allocation (Eskerod, 1998), and the potential for project overload (Zika-Viktorsson, Sundström, and Engwall, 2006),

Well-Being of Employees

In the dynamic work environment where the HR configuration is constantly changing, the challenges of ensuring employee well-being and ethical treatment are important but may be overlooked. We have shown that the temporary nature of the work and the dynamic nature of the work environment can create pressures on employees in terms of managing their workloads in the face of peaks in project work, in turn creating problems in managing their work-life balance. Recent case studies have indicated evidence that companies have problems in grasping the work and the emotional situation of the individual (Söderlund and Bredin, 2006) and multi-role assignments that may lead to burnout for younger employees (Huemann, Turner, and Keegan, 2004a) or management of the damaging consequences of role overload and role conflict.

Providing Development Opportunities

Finally there is a need to link project assignments to career development, both from an organizational and individual perspective. The organization needs to develop staff for its future projects, but if staff members do not feel that their project assignments offer them the development opportunities they aspire to, they may look elsewhere (Turner, Keegan, and Crawford, 2003). We propose that when it comes to considering the effects of HRM policies and practices, the organizational or managerial perspective dominates and the effect on individual employees is marginalized. Failure to consider the specific requirements of HRM in project-oriented companies may mean theorists overlook these issues, and fail to consider the effects, positive and negative, of project-oriented work practices in individuals.

These challenges are summarized in Table 2-1. In the next chapter we consider what has been previously written about HRM in this context.

TABLE 2.1 HRM Challenges in the Project-Oriented Organization