4. Why would it make sense for smaller projects to be handled by functional managers?

The R&D laboratory of a large Dutch multinational corporation served two roles, split roughly 50/50: product/process development (PPD) and support service to product/process development, production, marketing, and other areas of the corporation. The lab’s employees were grouped into 13 departments, 7 (with 85 employees) devoted to PPD, 6 (with 84 employees) providing support services.
The decision was made to restructure the lab to operate as a matrix, and a policy committee was appointed to draft a proposal for the restructure. After a year of discussion, a “balanced matrix” was introduced, and five project managers, recruited from the lab, were appointed to coordinate PPD projects. The functional managers of the restructured R&D departments (who were excluded from strategic decision-making) felt uneasy about the balanced matrix and suggested instead a “weak matrix,” but they were overruled. Functional managers responsible for PPD complained about loss of operational authority. Those responsible for support services had a different grievance: in the past, their work supporting stakeholders outside the R&D lab (e.g. production and marketing) always took precedence over PPD activities, which they performed in whatever time remained. The matrix now changed that, with priority going to PPD activities with enforced due dates.
The functional managers, who “didn’t feel called upon to cooperate much,” rebelled and ceased making constructive contributions to the projects their departments were involved in.
This forced the project managers to attempt to manage the projects single handedly, which resulted in serious work overloads. Trying to speed up project work, they stealthily bypassed functional managers whenever they visited the functional departments. Further contributing to the rift was the fact that project managers received higher salaries and nicer company cars than the functional managers.