Functional managers, such as development managers, QA directors, and so on, who are used to working in a matrixed manner will continue to work that way on Scrum projects. A typical functional manager will likely experience some diminution in power after the transition, but this will depend greatly on how the role was defined in the organization prior to transitioning.

Functional managers usually retain the job of assigning individuals to projects. They will be expected to continue to make these decisions based on the competing needs of all projects, project locations, developmental needs and career aspirations of individuals, and so on. In some organizations, functional managers are accustomed to going beyond assigning individuals to projects and have been involved in the assignment of tasks to individuals within their groups. They will no longer do this after transitioning to Scrum. Individual selection of work is a fundamental aspect of how the members of a team self-organize and must be left to the team.

The Leadership Role of the Functional Manager
Functional managers have always been leaders. Broad leadership trends over the years have affected individual style. While I was growing up, for example, my father managed Sears stores. This was back in the era when Sears was the world's largest retailer. My father's management style was very much top-down. He would establish goals, quotas, and other measurements; communicate them to store employees; and then measure each employee against those targets. This was also an era when prevailing wisdom was that a good manager could manage anything. My father should presumably have been able to take his experience managing a retail store and manage a bank or manufacturing operation with equal skill.

In an organization using Scrum, functional managers should operate in the
top-right quadrant, where they combine a deep understanding of the work with
a bottom-up style. A functional manager is responsible for providing guidance and coaching to members of the group. ScrumMasters and product owners also
provide guidance and coaching, but their views are limited to a single project or
product. A functional manager will have a broader perspective, including the ability
to establish cross-project standards and set expectations for quality, maintainability,
reusability, and many of the other -ilities or nonfunctional requirements.

Functional managers also retain responsibility for developing the people in their groups. Securing the budget and time to send them to conferences, challenging them with appropriate projects, and encouraging them to join or form communities of practice are all part of the functional manager's role.

Personnel Responsibilities
In most organizations, functional managers will retain responsibility for writing periodic reviews of the personnel in their departments. Although the functional manager has hopefully always incorporated input from each employee's coworkers and customers into the review, the need to do so is greater in a Scrum environment because the employee will likely be working less closely with the functional manager on a day-to-day basis.

In many organizations, functional managers also retain responsibility for making hiring and firing decisions. Neither the ScrumMaster nor the product owner has this level of authority over individuals on the product development teams.

After the organization adopts Scrum, most functional managers find themselves with more time available than they had before. This time is most often used to stay in closer touch with their direct reports, to know more about each project the group's employees are working on (by attending various sprint reviews and so on), and to pay more attention to cross-project standards and future directions.

Source of Information : Pearson - Succeeding with Agile Software Development Using Scrum 2010


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