Organizational structure refers to a way in which an organization or a company arranges its employees and duties. It establishes hierarchy and line of authority. An organization should adopt a structure that is in agreement with its objectives and goals.
Matrix organizational structure employs a multi-dimensional approach (Amaral and Uzzi, 2007). It combines one or two of the other organizational structures. For example, it may combine bureaucratic organizational structure with functional organizational structure. This creates a dual reporting system in which people work together as a team while retaining a recognizable reporting system.
Matrix structure creates teams of workers in an organization based on both the product and department or function. This enables the organization to maximize on the strengths of each employee while making up for their weaknesses.
The teams work independently towards achieving a common goal. If a company produces two products for example, the practice is to departmentalize the production process of each product. All departments of each team would then work together to produce a high quality product (Braha and Bar-Yam, 2007).
Managers have in the recent past restructured their organizations to accommodate matrix organizational structure. It is suited for large multinational organizations with several products and distribution channels. The operations in each country or market segment are consolidated into business units.
Each unit has a manager who reports to the headquarters. Each of these managers acts with equal authority. The unit managers may in some instances report to the vice president who in turn reports to the president or the chief executive officer. Teams collaborate in formulating joint goals in order to project a one-company image.
Matrix organizational structure has been subdivided into three sub-groups.
Weak/Functional Matrix: this structure is found in large companies that use centralized structure as well. In this case, a project manager is given limited authority. The project manager often oversees certain aspects of the project but cannot make major decisions affecting the project.
The functional managers exercise control over their units. The project managers make decisions in consultation with the functional managers. The traditional hierarchy is maintained. Each individual has a superior to whom he is answerable. Therefore, there is a clear command system. Each superior gives orders to the subordinates and leaves room for the subordinates to make some decisions.
Balanced/Functional Matrix: a project manager is directly in charge of the project. However, there is power sharing between the managers of any given project. This approach combines the strengths of functional and departmentalized organizations.
Balanced matrix is challenging to operate because it requires delicate power sharing skills. If this is not done correctly, managers may clash over some duties and responsibilities (Grey & Garsten, 2001). This system requires close monitoring by the company’s chief executive officer or the president.
Strong/Project Matrix: a project manager is in control of the project. Project managers are answerable to the functional managers. Functional managers provide the technical know-how required for the project to run its complete course.
Project managers are able to save time that would have been wasted in tasks like negotiating with the functional managers. Saved time is then used to improve the quality and quantity of production.
Benefits of matrix organizational structure
Matrix organizational structure can benefit organizations in a number of ways. Some benefits are felt in the short term while others are long term benefits. These benefits include:
Reduced costs: staff in different departments work together towards a common goal. This saves time and reduces the cost of running business. Collective effort ensures that less money is spent on outsourcing some company activities. The total project cost is minimized since some employees with particular skills can be shared by several teams. Output and time are also well balanced.
Minimal conflicts: fewer conflicts arise since various departments work together for a common goal. Additionally, because all teams work together there is a sense of shared responsibility. Each member of the team is expected to work with the group to achieve the common goal.
The team works together to ensure success. Shared responsibility and authority means that the stress of responsibility is equally distributed. No individual member has to bear the weight of responsibility alone.
Use of specialized staff: this structure encourages the use of highly specialized employees. The highly specialized staff is shared among various departments. The staff is allowed to work in more than one department. This encourages flow of ideas from one department to another.
International identity: matrix organizational structure may help companies and organizations get an international identity. This structure is suited for a company that intends to expand its operations to geographically diverse areas.
This approach enhances the visibility of the company in new markets. The structure ensures that there is proper flow of information in the organization. It makes management easier since each unit operates as a semi-autonomous business. This model combines geographical areas with unique product functions.
Some corporations that have adopted this structure successfully include: Toyota, star bucks, Xerox, Chrysler, Proctor & Gamble, and Cisco.
Criticism of the structure
Matrix organizational structure has some inherent weaknesses. While these weaknesses are not major, they are still of particular importance to managers. Some of the weaknesses are immediately visible after the adoption of this system while others take some time to manifest. The following are the most common weaknesses associated with this structure:
It slows progress: introduction of this structure can significantly slow the progress of a company especially when implemented without putting into account the objectives and the goal of the organization. It tends to reduce the organizational clarity present in the bureaucratic structure. Every company needs leadership in order to be successful.
Since power is shared equally, allocation of responsibilities may be affected negatively. The structure is highly complex and this may lead to less clear decision making lines in an organization. In such a complex program, it is difficult to isolate those who are responsible for successes from those who are responsible for failures.
Fear of making mistakes: since responsibility is disbursed equally, some managers may fear to make mistakes (Jacobides, 2007). This often happens in the initial stages of restructuring. This may affect the overall results of the organization negatively. The decision making process is slowed. For an organization to be successful, top managers must be prepared to make decisions.
Power struggles: the product managers and the functional managers may get drawn into power struggles. Such power struggles have the potential to hold back the organizational functioning. The top management must be ready to arbitrate in such conflicts. The top management should put in place clear communication protocols.
Some organizations that had difficulty implementing this organizational structure include: Asea and Brown Boveri (ABB) and Unilever Company Limited. Unilever has been trying different organizational structures after matrix structure almost led to its collapse. Asea and Brown Boveri Company was among the first organizations to adopt matrix structure.
Flexibility of the structure
This structure is more flexible than the traditional structures like functional organizational structure. The decisions made at any level are upheld until better decisions are made by the top management. Its flexibility is best demonstrated by multinational corporations (Kogut, Urso, and Walker, 2007). In these organizations, the country manager assumes full control of the corporations’ operation in a country.
The unit is operated independently and decisions, innovations and products are made with the host country in mind. That is to say products are combined with geographical groups. The top management at the headquarters does not interfere much with these units. However, this structure leaves little room for change of plan later on in the course of a project. The plan of action remains the same even when the managers change.
Matrix organization structure is also designed to allow movement of individuals without interfering with overall productivity. Functional managers can change teams any time. This is possible because teams collaborate to realize a common goal.
Matrix organizational structure will continue to evolve in the future. Its complexity may reduce in the future as more and more organizations adopt it. Its main strength is cost reduction. Teams work together as a whole and are able to reduce costs.
It is currently used by large organizations like multinational corporations that operate in many countries. When it is not implemented correctly, it has a tendency to draw attention away from the customer. It may encourage self preoccupation. Customer needs and wishes may be ignored.
References
Amaral, L.A.N., and Uzzi, B. (2007). Complex Systems—A New Paradigm for the Integrative Study of Management, Physical, and Technological Systems. Management Science, 53 (7): 1033–1035.
Braha, D., and Bar-Yam, Y. (2007). The Statistical Mechanics of Complex Product Development: Empirical and Analytical Results. Management Science, 53 (7): 1127–1145.
Grey C., & Garsten, C. (2001). Trust, Control and Post-Bureaucracy. Philadelphia: Sage Publishing.
Jacobides., M. G. (2007). The inherent limits of organizational structure and the unfulfilled role of hierarchy: Lessons from a near-war. Organization Science, 18 (3): 455-477.
Kogut, B., Urso, P. and Walker, G. (2007). Emergent Properties of a New Financial Market: American Venture Capital Syndication, 1960–2005. Management Science. 53 (7): 1181-1198.