Matrix Organizational Structure: Advantages & Disadvantages

Home » Resources » Matrix Organizational StructureUpdated: April 20, 2022

Here is a guide to matrix organizational structure and its advantages and disadvantages.

A matrix organizational structure is a company structure where the reporting ladder is in a matrix or grid instead of the traditional hierarchy. This structure means that workers simultaneously report to a functional manager and a product manager. This management system may help organizations develop new goods and services without reorganizing existing groups.

The matrix design facilitates cross-team collaboration and leads to more innovative products and services. In addition, this framework eliminates the need for teams to realign before starting each new project.

Matrix systems are a strategy for team management. These tactics share some similarities with employee engagement frameworks. You can gain more insight into this concept by reading books on project management.

Beyond explaining the definition of matrix organizational structure, this article also covers the types of matrix organizational structure, along with the concepts’ advantages and disadvantages.

Here is everything you need to know.

Types of matrix organizational structure

Matrix organizational structure has three forms. Each version is based on how much authority the project manager has. These types include:

Weak matrix

The project manager has the least decision-making authority in a weak matrix compared to the other matrix management types. Since the department head controls the project’s budget and deadline, the matrix gets weaker when the project manager has minimal influence over the project. This matrix requires the project manager to speak with each functional manager. Then the workers only give reports to their functional manager for particular projects. Developing a communication strategy will help prevent communication from being muddled up in a weak matrix.

Balanced matrix

Project managers and department heads have equal power in a balanced matrix, and team members report to both parties. Keeping the lines of communication open between the project’s various leaders is essential to progress. Under this framework, employees will work on both job obligations and special projects simultaneously.

Strong matrix

Strong matrixes allow project managers to control projects more than the department heads. This arrangement generates a strong organizational structure since the project manager has complete responsibility for the project. Although the departmental head can supervise the project, they do not have the final say on project direction. The strong matrix gives participants a direct path to the project manager while maintaining the functional aspect of the operation.

The advantages of matrix organizational structure

Some of the advantages of implementing the matrix organizational structure include:

1. Convenient sharing of resources in different divisions

The matrix organizational structure’s capacity to share highly-skilled resources is one of its most important benefits. The structure is flexible enough to adapt to the demands of multiple ongoing projects and the many divisions within the firm. Therefore, the system’s efficiency will suffer if obstructions occur within communication channels. The company’s increased integration reduces the restrictions between groups and silos and promotes collaboration.

2. Better opportunity to learn new skills

Since multiple managers play a part in the matrix structure, workers have the chance to improve existing interpersonal and communication skills and learn new ones. Employees that operate in a non-traditional or hierarchical organization might benefit from learning new skills and gaining experience by collaborating with colleagues from various departments.

3. Every team member and manager maintain their clearly-defined roles

Although projects inevitably finish, the project team and management may continue to perform assigned duties throughout the project. At the end of the project, there are no doubts about job stability or looking for new work as a contractor. Instead, both supervisors and team members may take functional positions. In addition, members of the team may also engage in future endeavors.

4. Improved internal communication

Communication becomes more manageable when a firm adopts a matrix organizational structure. Employees can shuttle freely between departments due to the lack of departmental barriers. This approach encourages workers to openly share their knowledge and skills to benefit the entire team.

Almost invariably, new sharing and cooperation possibilities arise because of this structure’s simplicity of communication. Despite occasional exceptions, the work done here often results in a more effective and efficient organization.

Check out this list of books on communication.

5. Professional growth for employees

With the matrix organizational structure, workers are more likely to pursue professional growth opportunities and progress in careers. The structure opens the employees up to various projects rather than limiting them to the work of a single department or team. As a result, the organization can foster fresh perspectives, creativity, and problem-solving methods.

Working outside of one’s comfort zone provides an invaluable experience for the entire team. Experience increases the full scope of professional abilities. This benefit helps employees feel better about their work while increasing their value as workers. Greater job stability is one result of this benefit.

6. More flexibility within the firm

The matrix organizational structure allows a corporation to leverage the human capital of the whole company rather than drawing from single resource pools. Any member of a project’s team may answer questions. Instead of relying on a fluctuating labor market to find the best candidate for a position, you may look inside your organization. For example, suppose a customer service team member has the required marketing abilities. You may bring the candidate on board for the project’s duration and then return them to their usual responsibilities after the project is over.

7. Less downtime with internal resources

With proper management, the flexibility of the matrix organizational structure allows for more rest for employees. Employees may build their strengths instead of having to enhance their abilities or skills for effectiveness. This system leads to a natural increase in quality and reduces the time required to execute the project.

Although this advantage increases the likelihood of having one employee handle numerous tasks at once, it still makes better use of the abilities of the ordinary worker. There will be fewer times of idleness across the company since other employees can work on other tasks if they are not busy elsewhere.

8. More standardized procedures across the company

Every employee can work together when the resource pool is flexible due to the matrix organizational structure. Results are more consistent across the board since employees follow standard operating procedures. The management demands the same outcomes from all employees, even if they work on separate projects. This situation means there is no uncertainty about who is responsible for a task. Standard procedures mean transitioning between projects is seamless since there is minimal learning.

There may be job security concerns with standardization if artificial intelligence can perform repetitious work. On the other hand, when you generate better results with less labor, you may pass the savings on to customers and gain a competitive edge.

9. Cheaper to implement

Most firms find that using a matrix organizational structure is more cost-effective than establishing a specialized project team. This benefit does not apply to long-term commitments, but it is perfect for prototyping new goods or services. When employees from other departments can collaborate with a project manager to build new products and solutions, you open the door to use the knowledge and skills of numerous specialties at once.

In many cases, teams created with a matrix organizational structure are stronger than those formed just using a functional approach due to the resulting diversity.

10. A greater degree of uniformity in the workplace

The contemporary workplace often suffers from the unfair distribution of tasks. If some employees work more than others yet earn the same wages, those constantly working are likely to be less enthusiastic about work. In matrix organizations, the workload is more predictable, with a broader range of possibilities for tasks. There is less ambiguity with job responsibilities. Everyone must follow the same procedures to avoid communication issues.

11. More opportunities to save money

Consider a company with three distinct divisions. In some way, each of these divisions helps improve the customer service experience. The company might hire three employees for this role in a hierarchical organizational structure, one for each department. A matrix organizational structure allows a single employee to oversee all departments’ customer service demands since all three divisions can benefit from this expertise. With this system, the company saves money by cutting waste, removing duplication, and simplifying work processes.

12. Project managers can be coaches

Internally, a project manager might serve as a trainer for those team members aspiring to be functional managers in the future. This structure allows for a daily review of best practices. As a result, employees need not wait for new projects since they can return to what they do best right away.

Thus, project managers may serve as leadership role models for subordinates. This benefit improves the chain of command and decreases the expense of maintaining a separate training unit inside the firm.

13. Better job security in the firm

The matrix organizational structure provides better work stability, meaning the firm enjoys higher employee loyalty. Employees who work in a right-to-work environment do not need to fret that one person’s impulses will affect their livelihood. Working in a company that offers a sense of job security can motivate employees to work more diligently, considering workers have a high stake in the success of each project.

Contributors are more likely to invest time and energy when certain they will not be left holding the bag after the project finishes. With this structure, one can expect the quality and quantity of work to improve with time.

Disadvantages of matrix organizational structure

Some of the drawbacks of matrix organizational structure include:

1. Less effective without managers’ cooperation

In a matrix system, employees often answer to different higher-ups. With this strategy, most firms have two independent chains of command, which means that each supervisor must be on the same page with other parties to ensure maximum productivity. If superiors provide conflicting information to workers, work quality and quantity drop.

When there is a power struggle between two project leaders, everyone on the team bears the brunt. This issue can hinder productivity.

2. High risk of discord

Project supervision suffers when there is discord in the ranks of management. Some employees like sowing disagreement between two bosses because it provides more autonomy. If employees believe their superiors are micromanaging their work, then this problem may arise. However, conflict is more likely when employees have a personal agenda. If the managers can agree on the issue, then getting rid of a potentially tricky employee can help boost productivity.

3. Higher organizational complexity

Traditional hierarchical models have been in use for millennia because they provide a straightforward framework for reporting. Every employee has one manager. Supervisors benefit from knowing exactly who their direct subordinates are and their day-to-day tasks.

There are various ways to take responsibility in a matrix organizational system, which alters this dynamic. There must be a high level of coordination between the project and functional management to guarantee that the organization’s goal and vision remain at the forefront.

4. Conflicting management directives

The purpose of a matrix organizational structure is to have two or more sets of managers concentrate on a certain area of the company. While this method reduces the need for multitasking, it is not necessarily more efficient. Different management directions from other lines of command might occasionally clash. Each individual and team has its unique competitiveness that might influence teamwork.

Therefore, the activities of the project and functional managers may generate issues for direct reports since workers do not know which adheres to the company’s guidelines. A lack of clarity in the C-Suite on how to handle this potential disadvantage may lead to significant deadlock in the business.

Additionally, the dual-reporting nature of a matrix organizational structure might be confusing for employees. Confusion might arise about a worker’s performance if more than one boss oversees the workforce. This confusion might cause some employees to question which boss is in charge. Therefore, most businesses demand that all relevant management people get employee reports simultaneously.

5. A heavier workload for certain employees

Matrix organizational structures may lead to a dramatic increase in the workload of the ordinary employee. A higher workload may lead to a decrease in work satisfaction, increased staff turnover, and a rise in stress and burnout. Due to their experience and expertise, team members often get tasks above and beyond their normal work obligations.

To prevent this problem, managers can review job assignments. It is critical to have the best and the brightest working on each project. However, there is a limit on what the worker can cover within the allotted daily work time. Overworking the best employees can drive them to seek employment elsewhere.

6. Expensive to implement

Some firms may incur higher costs due to a matrix organizational structure. These organizations must hire or retain more experienced managers to handle various chains of command, as well as new department heads, project managers, and other particular positions in the company,

Using this structure might lead to a significant increase in the company’s payroll, considering labor is the principal expenditure for most businesses. Some companies may even hold on to underutilized employees to avoid losing a valuable employee to a competitor. However, without enough work to maintain a busy workplace, the company loses money rapidly.

7. Not applicable for long-term initiatives

The matrix organizational structure may give too much flexibility for a firm if a project is a long-term initiative. An all-permanent, committed team may be the best option in these circumstances.

This structure is also problematic if a particular employee’s abilities are crucial to the company’s purpose or vision for a given role. Sharing this person’s knowledge may lower their overall effectiveness and degrade their capabilities.

8. Lack of clarity

Having several supervisors for a single employee may not contribute to professional growth. The managers may ignore coaching responsibilities and eventually forget altogether. Matrix organizational structures may lead to a lack of clarity on who is accountable for evaluating the performance of individual employees.

When workers have spent time working as a cohesive unit, they are more effective as a whole. Disrupting this flow might make team members less productive. Workers who are unsure when they may return to their regular tasks may find themselves in uncertainty and conflict.

9. Problem with resource allocation

When everything goes according to plan, the matrix organizational structure will place the best employees in critical positions. The reality is that managers often keep their most talented employees confined so they cannot work for other teams. Eventually, available employees have fewer qualifications and expertise, ultimately hurting the final product or service.

10. Mismatch of goals in the workplace

Although two departments serve the same organization, metrics may differ. A worker transferred from one department to another may have to do tasks that conflict with the goals of their current position. When this clash happens, the message from the managers is nearly always inconsistent. Finally, the employee’s productivity suffers due to confusion.

11. Hard to tell who is in charge

In the traditional chain of command, a worker reports to a direct supervisor. There is a new chain of command for every new supervisor appointed to a project in a matrix organizational structure. It is difficult to figure out who is in control when there are several supervisors making demands on a worker’s time and attention. As a result, it may be challenging to determine which leader has the last word in making key choices.

Conclusion

A matrix organizational structure works better for a company’s huge, complicated projects. It makes sense to use this option when it is necessary to efficiently process a massive volume of information or quickly deploy specialized expertise. The conventional chain of command might not work well in such situations.

Companies need to analyze their motivations and requirements before deciding whether or not to employ a matrix structure. The advantages may be beneficial if the current processes fall short or there is an expectation of rapid growth. The costs and complexity of this essential decision may discourage some organizations.

Firms must consider the benefits and drawbacks of a matrix organizational structure. The structure might not work for small company owners, partnerships, and single proprietors, yet major corporations needing to streamline their operations may find it helpful.

Next, check out this exploration of leadership vs. management and this list of manager books.

FAQ: Matrix Organizational Structure

Here are answers to questions about matrix organizational structure:

What is a matrix organizational structure?

A matrix organizational structure is a company structure where the reporting ladder is in a matrix or grid instead of the traditional hierarchy.

What are the characteristics of a matrix organization?

The characteristics of a matrix organization include multiple chains of command, a collaboration between different departments, and sharing of skilled resources.

What are the advantages of matrix organizational structure?

Some advantages of matrix organizational structure include better opportunities to learn new skills, more job security, and improved internal communication.

What are the disadvantages of matrix organizational structure?

Some of the disadvantages of matrix organizational structure include lack of clarity, a higher organizational complexity, and risks of conflict.

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