Org Strategy, Org structure

What is a Matrix Organizational Structure?

By: Tim Brewer

A matrix structure is a simultaneous combination of (usually) two ways of organizing a company, for example, by function as well as geography, or product.

Unlike the traditional hierarchical structure, responsibilities and leadership are organized in a matrix (horizontal and vertical lines), rather than straight lines up and down. It's slightly more complicated, but it does promote some excellent benefits for team building and communication between different departments.

A hierarchy structure commonly has a single person for employees to report to. It's simple and efficient for many businesses.

With a matrix structure, employees will probably answer to more than one superior. This can seem confusing at first, but it is workable. The key to building a good working matrix structure is in developing set rules on how reporting and hierarchy work. This way, your employees can work as a team.

With a set protocol in place to develop the organizational chart, there should be no confusion that might cause stress or complicate relationships.

The danger with a matrix structure is that it can be more time-consuming to develop. If it's not adhered to correctly, you can have confusion among employees over seniority, reporting and other issues. 

However, when handled effectively, a matrix can deliver the allure of strong teamwork together with the benefits of order. The matrix model can also break down silos. Employees can cross-train and work with various departments, simultaneously, making it much easier to move resources when needed.

You can develop a good company culture and help employees develop skills that make them more valuable to the company and also build their personal strengths.

What Is a Matrix Org Chart?

A matrix organizational chart gives you a visual tool to keep your matrix structure transparent and easy to navigate.

Because a matrix is more complicated than a traditional structure, your organizational chart will be key in helping employees learn who they report to, as well as helping management allocate resources and understand their teams.

Example of a Matrix Organizational Structure: by Function and Product

Matrix Organization Structure

As in the diagram (above), employees have several people to report to for different tasks. An employee might have one primary supervisor (such as a Business Analyst), but they may also report to project managers (in Project Team 1).

As employees work across several departments, they have the chance to learn different areas of the business. It also means that the company has better coverage and more flexibility with its manpower.

What Does the Organizational Matrix Structure Focus On?

A matrix structure is usually ideal for companies that run many departments in multiple geographic areas. The focus is really on finding an organizational method that promotes good team building while making it more efficient to train and manage employees.

It also is a better model to promote communication. So, a company that's looking to its team members to feel free to contribute ideas and freely give feedback might choose a matrix structure.

Typically, the matrix structure is a little more fluid. The structure may include pieces from several other organizational structures. There may be some elements of the traditional hierarchy, but they may add several variations to make it more feasible for teams and employees to work together.

Most often, we see employees reporting to a manager and a project manager. The regular manager would be their primary superior. The project manager would be the person they reported to for a specific project, over that certain period. It's important that everyone understands which way information flows.

We do see other Matrix models, though. One successful model we can point to is used by Starbucks. Their model takes from a few different organizational charts because they have product-based business interests, as well as geographic divisions.

Starbucks uses a hybrid mix of structural design with the company’s product-based divisions intersecting with functional groups and geographic divisions, which in turn intersect with other parts of the organization. 

The reason a company chooses a matrix model is that it enhances the workflow, autonomy for employees, and team building. This tends to work better in larger companies where there are several teams and divisions and it should be well planned and outlined.

What Are the Types of Matrix Organization Structure?

A matrix structure is chosen for companies when it benefits them to share skills across different departments.

This allows the team to tap experts from different areas of business on one larger project without hiring more talent or redesigning the organization.

In order to work more efficiently, teams can be smaller, and one project manager can oversee that specific project. This means that team members from other departments will answer to a project manager who is not their usual superior.

The model allows companies to use all of their available talent and skill in a more efficient way. It can boost creativity, create more relationship-building opportunities, and can increase employee satisfaction.

There are generally three types of matrix organizational structures:

  • Weak. In the weak matrix structure, the functional manager has all the decision-making power. This structure most closely resembles the traditional hierarchy model. The organizational structure serves more to develop teams and adds a project manager to oversee the project, but they don't hold any superiority or chain of command over team members in the project.
  • Balanced. In the balanced matrix structure, the functional manager and project manager share a more equal amount of authority. Team members report to the project manager on the project, and they have some latitude with regard to decision-making about that project. The employee may still report to their functional manager as a priority but will need to report to the project manager, as well.
  • Strong. In the strong model, the project manager has authority over the project, resources, and decision-making. They hold equal or more authority than the functional manager.

Is a Matrix Structure Good? Pros and Cons

There are pros and cons to the matrix structure. It can be an excellent model to develop teams and increase communication. It's often more beneficial for larger organizations and structures that are more creative in nature.

Potential Matrix Benefits

1. Improved Communication Between Departments

Traditional business models tend to silo (compartmentalize) talent. All marketing work in the marketing department. All sales work in sales. All accounting work in finance.

While this model can work in many cases, some companies have found that taking experienced staff members from different specialties and putting them together on projects means that they get a full 360-degree view of that project. Their business insights are more advanced because they have talent that each bring a set of skills and viewpoint that's valuable.

2. Cross-Training for Staff

A matrix model provides the opportunity for staff to work in different departments and develop new skills and experiences. This is beneficial for the company as employees become more efficiently trained and knowledgeable. It's also a bonus for staff because they add to their own expertise and knowledge base, appreciating what other departments do. Retaining key talent is also promoted, as these people tend to be interested in careers that promise job growth and learning opportunities.

3. Improved Company Culture

With better communication, staff members have the opportunity to develop relationships between departments for better company culture.

4. More Efficient Use of Resources and Staff

A matrix structure gives you more flexibility in moving and allocating staff members and resources. You'll be able to fill positions without being short-staffed due to injury or illness.

Drawbacks of the Matrix Structure

1. Power Struggles

This is one issue that you may have when roles are not clearly defined. There can be power struggles between managers and even employees because there's no defined hierarchy, or it's not effectively mapped out.

This is something that you need to address immediately. These types of issues can impact the entire team negatively.

2. Confusion and Diminished Productivity

If the roles aren't clearly defined, employees may not know who to report to and that means managers may not be fully aware of their own authority and responsibility. This type of confusion is detrimental to productivity and efficiency.

3. Competitiveness Between Teams

Competition can be a good thing. But taken too far it can be a negative influence on company culture.

Why Should You Use a Matrix Organizational Structure?

A matrix structure can be the ideal choice for a larger organization that is struggling with larger business issues, business insights, and things like product development.

Traditional silo approaches may be too constrictive for large companies because those experts never communicate and knowledge bases stay separate, creating silos. This can mean that large projects aren't getting the best talent from the organization.

With a matrix structure, talented employees can still work in their chosen field, but they also contribute to larger business problems, new development, and ongoing projects to propel business growth.

Developing a matrix chart is more time-consuming and the lines of command need to be clearly identified. The organizational chart should showcase exactly who reports to whom and in which way information flows. This makes it simpler for new hires to understand where they fit into the company. It also makes it easy for management to see their teams at a glance.

A matrix organizational structure isn't ideal for every company. If your company is smaller, a more traditional hierarchy model may work better. But for companies that need better communication and would benefit from bringing different departments and team members together, the matrix model can be an excellent alternative.

Functionly-icon: Developing Your Own Matrix Structure

If you think the matrix organizational structure may work for now, there's good news. With Functionly, you can experiment with this as an option, without disrupting any existing workflows or departments.

In an online environment, you can place staff into a matrix-type structure and see how it could work - or not. 

Sign up for your free Functionly account, and get started today.

~~

Sources

  • Org Design Models Series: What's a Matrix Structure? Clayton M, Functionly
  • Understanding Starbuck's Organizational Structure, SOBIYA, Advergize
  • Matrix Organizational Structure: Advantages and Disadvantages, Indeed Editorial Team, 17 Dec 2021
  • Starbucks Coffee’s Organizational Structure & Its Characteristics, P Meyer, Panmore Institute, 14 Feb 2019

Trial Functionly for free

Take your first step towards a more effective organization