Matrix Organizational Structure: Advantages & Disadvantages

Organizational structure is one of the most important elements, if not the most important element, of any business. It influences everything, from core operations and projects to finance and human resources, in both seen and unseen ways.

Organizational structures do this by dictating reporting relationships between employees, showing employees and creating clarity around individuals’ responsibilities.

Before you can go ahead and start building your own organizational structure, you need to decide which type of structure to use. While there are many different ones, most organizations tend to favour a hierarchical, flat, or matrix structure.

 

What is a Matrix Organizational Structure?

A matrix organizational structure is a combination of two or more different types of organizational structure. In the matrix organization, there’s a traditional management hierarchy, however, it’s not as linear as the traditional top-down hierarchical structure.

In a matrix organizational structure, each employee will have a functional manager and an additional project manager.

The functional manager will be the direct “line manager” for employees in specified teams. They represent the traditional structure based on department or job function, with some examples being marketing, sales, product development, human resources, and IT.

Meanwhile, the project manager oversees a cross-functional team of employees who span different departments. For example, you may get two employees from marketing, three from product development, and one from sales working together on a project. These employees will each respond to their own functional manager and the project manager.

The two+ managerial systems in the matrix organizational structure intersect on a grid (or matrix), making it more box-like rather than tall and linear.

 

3 Advantages of the Matrix Structure

A matrix organizational structure is a fantastic potential alternative to the hierarchical organizational structure, and it comes with several benefits. Below are three key advantages:

 

1. Matrix Structures Are Much More Flexible & Encourage Collaboration

As you may have already figured out, the matrix organizational structure is inherently better at bringing people together than the hierarchical structure. Where the hierarchical structure encourages employees to work in silos as individual teams, matrix structures bring the right people with the right skills together from across different teams to tackle a given project.

This also makes the matrix organizational structure much more flexible, because assignments are based on the needs and demands of a specific and are thus never permanent. Employees therefore have a greater degree of flexibility and are able to move between different projects and teams as is necessary, sharing their expertise and skills as they go.

 

2. Fosters Stronger Communication

Matrix organizational structures naturally encourage better and more open communication. This is because matrix structures compel employees to communicate not only with their functional managers but project managers and supervisors, too. This means that information that would otherwise have been kept within individual teams in a hierarchical organization is shared with everybody involved in the project.

In a traditional hierarchy, for example, information relating to the HR department might be passed from the COO downwards to the HR manager, hiring managers, recruiters, and other employees involved in the HR bubble where it remains. In a matrix organization, however, team members are better able and more likely to freely share information that they receive with other teams. This keeps everyone in the loop and enables managers to make more informed decisions.

 

3. Lends a Boost to Motivation

A matrix organizational structure encourages a different type of leadership style. While the hierarchical org structure is very much focused on the overarching chain of command, the matrix org structure is more focused on a democratic leadership style. This naturally prioritizes the valued input of project team members more than a hierarchical structure does, meaning that employees have far more of a say in managerial decision making.

Much like it does in a flat structure, this higher level of employee autonomy lends a big boost to motivation; employees feel more valued and that their work and decisions are making more of a difference to the organization’s long-term success.

 

3 Disadvantages of the Matrix Structure

The matrix organizational structure isn’t perfect. Like any structure, it comes with its own unique set of challenges, three of which all organizations should be aware of:

 

1. Ambiguity Surrounding Roles & Responsibilities

One of the key advantages of the hierarchical structure is its clarity; it does not leave any room for ambiguity or interpretation as to who reports to who and who’s responsible for what. The same can’t be said about the matrix org structure, however.

It’s simply the case that the matrix structure is more complex in nature, and this can create confusion around both manager and employee roles and responsibilities.

For managers, it may create unhealthy competition when it comes to choosing team members. It may also lead to confusion surrounding who is simply responsible for an employee’s input in a project and who is responsible for the employee’s overall professional development and role.

Employees themselves may also experience confusion when moving to new teams with new work dynamics and workloads. When this is paired with an employee’s commitment to their “regular” functional department, anxieties can arise as they struggle with figuring out what their primary responsibilities should be: The project or their functional department responsibilities?

 

2. Slower Decision Making

A matrix structure means that rather than one manager weighing in on a task or issue, there are two or more. This can mean that decision making can take longer, especially if there are any conflicts between these managers and they have difficulty reaching an agreement.

As we touched on in the previous point, it’s this inherent lack of clarity regarding roles and authority, or overlapping authority, that causes this. Managers may end up going back and forth over and over due to a desire to either own the decision that needs to be made or not have any involvement in it. During a project where time is of the essence, this can be a major problem.

In addition, the matrix structure’s complex nature means that it can take longer for teams to reach an agreement regarding what the next steps should be. This is a by-product of the increased levels of open communication that the matrix structure enables.

 

3. More Expensive

A matrix structure is naturally more expensive to maintain. This is because there are more manager-level positions involved. While a hierarchical structure would only have functional managers, the matrix organizational structure has these plus project managers. Depending on the size of an organization and how many projects it is running at a given point in time, this can become a significant additional expense.

On top of this, the fact that decisions take longer to make also translates to increases costs because employee tasks and overall projects take longer to complete.

 

Build Your Own Matrix Organizational Chart

While matrix org structures have come second to more popular ones like the hierarchical structure, they’re quickly becoming seen as a viable alternative for modern, agile organizations that need a greater degree of flexibility.

If you think that the matrix structure could be right for your own organization, why not try it out for yourself by building one with Organimi and see for yourself how a matrix structure could support your team?

Click here to sign up for a free trial.