I often work in companies where functional departments are rigidly separated. To me this seems inefficient, as adds a lot of communication overhead.
Are there reasons why companies prefer this type of structure? Does it offer more opportunities to learn from team members working in the same field?
I've especially seen this in agencies where people are involved in many projects simultaneously. Are there environments where cross-functional teams are a bad idea?
It depends pretty much on the Organizational Structure each company wants to follow.
I believe that what you meant by a cross functional structure would follow a Matrix Management.
As your question is related to the disvantages of it, follows the quote from Wikipedia:
Key disadvantages of matrix organizations include:
- Mid-level management having multiple supervisors can be confusing, in that competing agendas and emphases can pull employees in different directions, which can lower productivity.
- Mid-level management can become frustrated with what appears to be a lack of clarity with priorities.
- Mid-level management can become over-burdened with the diffusion of priorities.
- Supervisory management can find it more difficult to achieve results within their area of expertise with subordinate staff being pulled in different directions.
There are three independent questions in your question and so let’s attempt to answer each one of them one at a time.
Your first question – "Are there reasons why companies prefer this type of structure?" - has two Reasons depending on the kind of organization you are dealing with.
Reason 1 – Organizations / Managers who believe in the idea of focus and very little multi-tasking.
These breed of organizations / managers / leadership believe that every time you perform a task switch you lose out on time and efficiency.
These folks would strictly advice against multi-tasking. Joel Spolsky and Scott Berkun are from this school of thought and so am I .
A few organizations take this forward and prefer specialized teams where each person is doing just one function and doing it really well without any deviations or indulging in cross functional tasks or even multiple tasks of the same kind.
In case of these companies the underlying intention is to keep the focus of the team on one thing and cultivating serious specializations.
Reason 2 – Organizations and Management which is built of the foundations of insecurity.
This breed of organizations / managers / leadership believe that employees are replaceable cogs in a larger organizational machinery.
Each part of a machine performs one and only one function and is replaceable with another part that performs that function. Cross function teams who see their work as art with a passion to excel in more areas than one will make this breed of organizations / managers very nervous.
If you ask me, 8 / 10 companies who prefer rigidly separated departments compared to cross functions do so because they have a culture and management built around the idea of insecurity.
Of course there are some who genuinely want to encourage focused expertise but those organizations are hard to come by.
Now on to your second question - Does it offer more opportunities to learn from team members working in the same field?
Yes it does if the intent is to build teams around focused talent and very little cross functional task switching.
But if these rigidly separated departments are built with the intentions of turning employees into cogs, learning opportunities are going to be very few and people are mostly going to act as automatons doing their tasks in a for-loop.
Moving on to third question:
"I've especially seen this in agencies where people are involved in many projects simultaneously. Are there environments where cross-functional teams are a bad idea?"
Well if people are involved in multiple projects simultaneously, there is very little attempt to avoid multi-tasking. In most of these cases I would think that Reason 2 I talked about applies.
Unless you are someone writing a specialized module that controls an aircraft or a defence submarine and that’s all you've done for the most part of your life, I would invariably prefer cross functional teams compared to rigid department.
Multi-tasking can still be avoided by ensuring that folks only have one thing on their plate at a time but they can work on multiple areas or functions one at a time helping both them and the team grow.
Learning in a cross function team tops learning in a specialized team in most day-to-day cases.
I've observed many organizations using Project teams from different functional groups.
Functional groups allow people with the same or similar functions to learn from each other. This assumes interest on the group members, and opportunities for sharing knowledge. These don't always exist. This structure works well for establishing best/standard practices. Administrative functions tend to work well as functional groups. Organizations with a stable environment may also work well using functional groups. However, the functional groups may be partially disconnected from the organization as whole.
Project groups often require people with a variety of different skill sets. These may be available from existing functional groups, or may need be source externally. Projects often result from or create change. A project group can provide expedited communications between representatives of various functional groups. Team members may gain cross-functional exposure, but can have limited contact with their functional counterparts. The lack of contact with functional counterparts can result in non-standard practices. If the project does develop some best practices, they may have trouble getting the adopted by the organization.
Matrix organizations typically have members of a functional group assigned to projects. This is common in some consulting organizations, and other project based organizations. It can be difficult to maintain a balance between the functional organization, and the project requirements. Functional groups that don't have a significant organizational role outside projects may not be cohesive.
It can be difficult to manage project groups with or without a matrix organization. Matrix organizations create a dual set of responsibilities that can be difficult to manage. Projects schedules may leave little time for maintaining ties with the functional organization.
I think the biggest advantage of creating functional teams is that it is easy...or perceived to be easy. And, I think there is a huge perception of control. By control, I mean the organization would believe that if you put an entire function in one team led by a functional manager, you would naturally build a high performing competency and set of very efficient processes. Sadly, I don't think that comes true often.
Creating cross functional teams there is a sense of functions evolving differently, creating different processes, different policies and rules, different relationships, etc., as they figure out how to deliver whatever it is they are delivering. For example, each team's procurement function would solve the buying problem differently over time, giving the organization a sense of "out of control" because each team buys differently. It takes a very mature performance measurement system to prove out the advantages of this type of org design and how many organizations have a mature measurement capability?
Functional teams are intuitive and seemingly easy but too often underwhelming.
I address this topic in detail in my upcoming book: Agile IT Organization Design. In brief:
Have you seen the Spotify videos on this topic?
https://labs.spotify.com/2014/03/27/spotify-engineering-culture-part-1/
I'm a big fan of cross-functional teams, and I insist upon them when resourcing an Agile project, but in my experience they aren't without their drawbacks.
For example, it's very difficult to find software developers who excel at both server-side programming (Java, ESBs, Database Design) and front-end web development (CSS, AngularJS). Throw in some DevOps requirements and you're looking for a bit of a unicorn. That doesn't mean they don't exist, but the pool of talent I have to draw upon is much smaller and it usually means sacrificing the front-end skills a little.
You could argue that this is more of an architectural problem though. Perhaps if the software stack was Javascript all the way down (eg, NodeJS and AngularJS) then I would only need to hire good Javascript developers.
For me, having a cross-functional team has dramatically improved the overall efficiency of the development and quality of the code. I've also found the developers to be significantly more invested in the project as a whole. However, there are some downsides and I think these need to be considered before just accepting the concept as dogma.
