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Matrix Organization

Updated on May 1, 2024
Article byKumar Rahul
Reviewed byDheeraj Vaidya, CFA, FRM

What Is A Matrix Organization?

A matrix organization is a system with many lines of reporting managers. It aims to give the organization more flexibility and break up the routine. Organizations with various product divisions and services employ this type of organization. Employees occasionally receive short-term assignments for tasks or projects outside of their field.

Matrix Organization

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It aims for overall development as each individual is exposed to other functions outside their primary work. Colleagues from various departments who are skilled in multiple parts collaborate with employees. The matrix organization structure costs the organization more than the conventional one because it hires more managers.

Key Takeaways

  • In a matrix organization, teams are organized into various leadership levels. The matrix organization design maintains open lines of communication between departments and can assist businesses in producing more cutting-edge goods and services.
  • The effectiveness of matrix architectures is based on their promotion of resource sharing and cross-team collaboration. In other words, it requires dual chains of command.
  • The primary benefit is that it unites highly talented team members from other departments, enabling the company to make the most of its existing resources rather than looking for knowledge and hiring project teammates from outside the company.  

How Does A Matrix Organization Work?

In a matrix structure, team members provide information to a project leader and their department head. This management structure might assist businesses in developing new goods and services without reorganizing teams.

Multiple management reporting structures are used in matrix companies. Team members often have a principal manager for their department, despite the initial confusion this may cause.

A typical work organization is functionally equivalent to delegating to a department manager. For instance, sales team members answer to the head of the sales division. The vice chairman of the business receives reports from the sales department head. All reporting lines eventually end with the Chief Director.

Choosing a separate manager for each project is appropriate because tasks associated with them frequently require assistance from employees from different areas, such as IT, marketing, and finance.

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Characteristics

A matrix structure’s intricacy is its main characteristic. Let’s examine a few of its other properties to help clarify this concept.

  1. Multiple Bosses: In a matrix organization chart, there are two bosses that the subordinates must answer to the functional manager and the project manager.
  2. Allocating Resources: The goal of choosing a matrix structure is to guarantee the highest utilization of human resources.
  3. Multi-project Viability: A business with a small staff and managing several projects may use such organizational structure to make life easier.
  4. Task Specialization: Managers tend to specialize in specific areas when they focus more on the portion of their operation. The functional manager oversees the technical aspects, while the project manager handles the administrative tasks.
  5. Hybrid Structure: This is a combination of functional and project organizational structures.

Types

The project manager has varying levels of authority under the three different matrix management models. These management roles can be represented as a scale, with the department manager at one end and the project manager at the other.

  1. Poor Matrix: Compared to the other management models, the project manager in a weak matrix has the lowest decision-making authority. Because the department head controls the project’s budget and schedule, the matrix could be more assertive when the project coordinator has more control over it. Communication may avoid becoming lost in a porous matrix by creating a plan for it.
  2. Balanced Matrix: Team members report to the department head and the project manager, who have equal power in a balanced matrix. As a result, the project may go without interruption, and communication between all leadership roles is kept open.
  3. Strong Matrix: Here, the project leader holds most of the decision-making authority over the project, whereas the department head has less control. Due to the project manager’s complete ownership of the project, a solid organizational structure is created. The project’s manager can supervise it, but they need to make meaningful choices.

Advantages And Disadvantages

The use of a matrix organizational structure has both benefits and drawbacks.

Advantages

The key benefits of using such a structure are:

  1. Coordination between various departments: The fact that a matrix structure helps to bring together highly competent team members from various departments is of the most significant benefit. By doing so, the organization can make the most of the resources already at its disposal rather than looking for expertise and hiring project teammates from outside the company.
  2. Combines project management and operational management frameworks: The matrix organization in project management integrates with the functional leadership structure to boost productivity, react to shifting markets, and meet market demand more quickly.
  3. Inter-departmental communication: Additionally, improved departmental coordination and communication are made possible by the matrix framework. The matrix structure encourages a more open work atmosphere by enabling collaboration across many divisions, ultimately making the organization more dynamic.

Disadvantages

The use of a matrix structure occasionally has the following significant drawbacks:

  1. Defining managerial positions clearly may not be possible: One common drawback of the matrix structure is that managers working on projects that the matrix specifies may need clarification. In addition, there could be ambiguity over the specific managerial duties because the power dynamics between the managers sometimes need to be more well-defined within the matrix.
  2. The team’s roles might need to be clearly defined: Another area for improvement is when the project’s roles for team members need to be clearly defined or when there is a blurry line between what an employee is responsible for in their functional position and what they are responsible for in their project role.
  3. Slow decision-making process: As a matrix structure involves several managers, decisions that must go through both managers may occasionally take more time to process than they would in a conventional organization. In addition, choices that involve several processes, such as in quality assurance, are slowed when multiple supervisors and team members are involved.

Examples

Let us understand it in the following ways.

Example #1

For instance, the head of the marketing department in ABC ltd receives reports from the team members who work in marketing. The vice chairman of their division receives information from the head of the marketing department. All reporting lines eventually lead to the Director.

Example #2

For example, the team employees who work in the finance of QPR ltd submit reports to the finance department head. The head of the finance department presents information to the vice chairman of their division. Every reporting chain ends with the Director.

Matrix Organization vs Functional Organization vs Projected Organization

Activities in a projected organization are organized into portfolios or programs and carried out through projects. The project leader is the ultimate decision-maker for the task they are in charge of under these arrangements. They are the only ones whom the project team answers.

In contrast, Businesses are divided into smaller groups or departments in a functional organizational structure by their tasks and skill sets. At the same time, In a matrix organization, teams are organized into various leadership levels.

Key differences among the three structures are:

BasisMatrix OrganizationFunctional Organization Projected Organization
AuthorityDiversified authorityLimited authorityLies with the project manager.
Availability of resourceHighLowHigh
Support of staffHighNilHigh

Frequently Asked Questions (FAQs)

1. What is a matrix organizational chart?

It shows a business where personnel is organized into teams for specific projects or products and reports to a functional manager and the project or product manager. It demonstrates a company that functions using horizontal functional groups rather than vertical divisions.

2. When is matrix structure appropriate to the organization?

These are best suited in a large and multi-projects organization where staff is shuffled according to organizational needs.

3. How can the matrix organizational structure be improved?

It can be improved by a) setting goals, b) managing conflicts, and c) changing the power balance.

4. Which management principle does matrix organization violate?

The traditional rule of command unity is broken. The functional and product managers are the two supervisors of the personnel in this organization. This entails a dual chain of command.

This has been a guide to what is Matrix Organization. We explain its types, advantages, & comparisons with the functional and projected organization. You can learn more about financing from the following articles –

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