Some organizations that manage projects use a traditional hierarchical structure with an executive office and departments of finance, operations, and sales, with individuals running these departments. To accommodate projects, these organizations have one central "Department of Special Projects," which is staffed to meet the needs of projects in the organization. As a project manager in this environment, you work in a specialty unit and all of the staff in this unit do nothing but work on projects. You typically have a specific staff that works just for you on all projects you manage. You set priorities for this staff and resolve assignment conflicts. You evaluate your staff’s performance and control performance appraisal, and approve raises, promotions, and requests for leave.

Some organizations that manage and complete projects use a hierarchical organizational structure that addresses project management on a project-by-project basis. In this organization, you’ll find the typical executive office and departments of finance, operations, and sales, with individuals running these departments. When it comes to completing projects, there’s no "Department of Special Projects." Instead, projects are staffed by people from varying functional areas in your company. In this environment, you might find yourself with people whom you manage administratively—that is, you control administrative activities such as performance appraisal and approving raises, promotions, and requests for leave. You might also find yourself with different people whom you manage in a project environment, where you oversee their day-to-day work but have little or no input on administrative issues.

Some organizations use a hierarchical structure and, within each department area, they establish a "Department of Special Projects." This organization matches the traditional hierarchical structure in the way things occur: As a project manager in this environment, you work in a specialty unit within a functional department and you typically have a specific staff that works for you on projects. You set priorities for this staff and resolve assignment conflicts. You evaluate your staff’s performance and control administrative activities such as performance appraisal and approving raises, promotions, and requests for leave.

Each of the three above-mentioned company organizations has pros and cons for getting the job done. For example, the organization that has a company-wide special projects department tends to select projects to perform using consistent criteria, and the project team reports to the same manager for daily work and for administrative activities such as performance appraisal. However, in this situation the project team may not be completely familiar with the functional requirements of the unit that requested the project, making the project take longer to complete. And the workflow of the Department of Special Projects tends to be a "feast or famine" situation—either there’s too much work or not enough work.

The organizations that handle projects as they arise typically can assemble teams quickly and usually gain support from the various functional units because supplying personnel to those projects helps the functional unit see the benefits of the project. On the other hand, this same structure makes team members report to two managers and requires coordination between a project manager and an administrative manager.

The organizations that set up a Department of Special Projects in each functional unit have the same advantages as organizations with a single, company-wide Department of Special Projects. No "two manager" problems here. In the disadvantage column, these organizations don’t fare well when a project crosses over functional unit lines. Further, the chances increase for overlap and duplication in projects because multiple functional units might try to tackle the same project.

But we’re not here to reorganize your company’s structure. Instead, we need to work within it. As long as you recognize what structure your company uses, you’ll be in a good position to understand how to deal with the people who work on your projects.