Matrix organizational structure is the fruit of recognizing that companies not only have vertical chains of command, but that people also work horizontally with others across their functional specialization.
This kind of organizational structure is in fact the extension of project-based organizational structure. It allows managers to harness the services of employees irrespective of their function to work collaboratively on key projects in not only one, but several cross-functional teams.
In matrix organizational structure, these workers will be working simultaneously with one another vertically, horizontally and diagonally all at the same time.
What is matrix organizational structure?
Matrix organizational structure is a hybrid organizational structure that combines elements of both a functional and a divisional structure.
This flexible organization of employees from different departments within an organization who are temporarily working together on many different projects means that each employee reports to two or more managers – one from their official functional department and one from their project team.
Features of matrix organizational structure
There are a few common features for matrix organizational structure.
While functional departments still exist, this approach to organizing businesses aims to eliminate many of the problems associated with the hierarchical structure by giving workers the opportunity to work with colleagues from other departments. This type of organizational structure cuts cut across traditional functional departments to create project teams made up of people from all departments.
The formal lines of control are disrupted frees up leadership in everyone concerned, not only on reporting to few people who have positional power. Authority, accountability and responsibility now belong to employees carrying out specific activities in the project.
It is the capability of each and every individual team member – specialists with the objective of completing a task or a project successfully – that is important rather than formal rank in the hierarchical organizational structure. All emphasis is placed on an individual’s ability to contribute to the team. Hence, the better team members are, the less micromanagement from the project manager.
When is matrix organizational structure used?
When to use a matrix organizational structure:
- When there is a need for increased communication and collaboration. The project team members communicate in a non-hierarchical way instead of the traditional formal chains of command.
- When there is a need for increased flexibility as individuals work across teams and projects.
- When there is a need to make better use of employee skills and expertise. The members of the project team to launch opening of a new store might consist of one representative from each of the following departments: Board of Directors, Marketing, Finance, Human Resources (HR) and Operations.
- When there is a need for more efficient resource allocation. Individuals within teams (groups) have their own responsibilities, but work well for projects or tasks.
- When there is a need for faster decision-making.
Matrix organizational structure – Evaluation
Advantages of matrix organizational structure include:
- Allows total communication between managers. It allows total communication between all members of the team, cutting across traditional boundaries between departments in a hierarchy where only senior managers are designed to link with and talk to each other.
- Approach – what is good for the business as a whole. There is less chance of people focusing on just what is good for their department. This is replaced with a feeling of what is good for the project and the business as a whole.
- Specialist knowledge in different areas means more creative solutions. The crossover of ideas between people with specialist knowledge in different areas tends to create more successful solutions.
- Can respond to changing market conditions. As new project teams can be created quickly, this system is well-designed to respond to changing markets or technological conditions.
Disadvantages of matrix organizational structure include:
- Faster reaction but reduced control. There is less direct control from the ‘top’ as the teams may be empowered to undertake and complete a project. This passing down of authority to more junior staff could be difficult for some managers to come to terms with. Teams empowered – less direct control from the top. The benefit of faster reaction to new situations is, therefore, at the expense of reduced bureaucratic control, and this trend may be resisted by some senior managers.
- Conflicting interests and priorities. Conflicts – two bosses. Team members may have, in effect, two leaders if the business retains levels of hierarchy for departments but allows cross-departmental teams to be created. This could cause a conflict of interests.
Matrix organizational structure is often used by multinational businesses such as General Electric (GE), Boeing, Hewlett-Packard, Apple or Google that need to be flexible and adaptable to changing market conditions globally. This is because the structure allows for easy movement of employees between projects, as well as for the creation of new teams to meet new challenges.
