Matrix Organization Structure: Advantages and Disadvantages
Matrix Organization Structure: Advantages and Disadvantages
Matrix Organization Structure: Advantages and Disadvantages
By Nodir M
Ataev
Contents
Contents
Organizational Structure
Types of Organizational Structures
Line Organizations
Line-and-Stuff organizations
Committee Organizations
Matrix Organization: An Outline
Matrix Organization: Advantages
Matrix Organization: Disadvantages
Matrix Organization: Conclusion
References
Bibliography
Organizational
Structure
An organization is the result of the
organizing process and can be defined as a structured grouping of people
working together to achieve organizational objectives.1 Every
organization must choose an overall structure that meets its needs best and
allows interactions among individuals and departments to attain the its goals.
For a small business, the organizing
process is comparatively simple. The owner of a grocery store employs a few
people to sell groceries and to take care of the supplies and personally
directs business operations. The handling of such a relatively small store is more
or less simple and easy.
However, as a company grows the need for
organization increases. As a company enlarges its scope of business, it has to
hire more employees. Instead of a single bookkeeper, it will have to employ an
entire accounting department, rather than one seller the owner will need a
number of them. The large number of employees makes it impossible for a single
person to control the business. One or other formal type of organization
becomes necessary.
To effectively accomplish their goals
large organizations use various techniques such as departmentalization,
delegation, and others. Departmentalization is the dividing of work activities
into units within the organization. This method can be used to effectively run
a large organization and has been used in different organizations throughout
the world.
Types of Organizational
Structures
An organizational structure is a hierarchical concept of
subordination of entities that work together and contribute to serve one common
aim2. The structure of an organization is usually built in one of a
variety of styles, dependent on the organization’s objectives. The structure of
an organization will determine the modes in which it shall operate and will
perform.
Organizational structure allows the expressed allocation of
responsibilities for different functions and processes to different entities.
Ordinary description of such entities is as branch, site, department, work
groups and single people.
Organizations can be classified into four main types: line,
line-and-stuff, committee, and, matrix organizations. The classification is done
according to the nature of internal authority relationships of organizations.
Line Organizations
matrix Organization committee
The line organization is the oldest and the simplest organizational
structure. This structure is defined by its clear chain of command, with final
approval on decisions affecting the operations of the company still coming down
from the top. Because the line structure is most often used in small
organizations—such as small law firms, hair salons, and small stores—the president
or CEO can easily provide information and direction to subordinates, thus
allowing decisions to be made quickly.
Line structures by nature are informal and involve few
departments, making the organizations highly decentralized. Employees are
generally on a first-name basis with the president, who is often available
throughout the day to answer questions and to respond to situations as they
arise. It is common to see the president or CEO working alongside the
subordinates. The line organization is effective in the smallest organization
only. The reason is that the manager has total responsibility for a number of
activities and cannot be efficient at all of them.
Line-and-Stuff
organizations
While the line structure would not be appropriate for larger
companies, the line-and-staff structure is applicable because it helps to
identify a set of guidelines for the people directly involved in completing the
organization's work. This type of structure combines the flow of information
from the line structure with the staff departments that service, advise, and
support them
Line departments are involved in making decisions regarding the
operation of the organization, while staff areas provide specialized support.
The line-and-staff organizational structure "is necessary to provide
specialized, functional assistance to all managers, to ensure adequate checks
and balances, and to maintain accountability for end results"3
An example of a line department might be the production department
because it is directly responsible for producing the product. A staff
department, on the other hand, has employees who advise and assist—making sure
the product is advertised or that the customer service representative's
computer is working.
Committee Organizations
In a committee organization, authority and responsibility are in the hands of a group of
individuals rather than a single manager. In this type of organization groups
of individuals, or committees, make decisions together. This ensures that
individuals from diverse departments make more sound decisions. On the other
hand, this slows down the decision making process as each member of the
committee must agree with the decision.
Matrix Organization: An
Outline
A variation of the line-and-staff organizational structure is the
matrix structure (matrix organization structure is sometimes called project
management structure).
Matrix structures have come about as a result of coordination
problems in highly complex industries such as aircraft manufacture4. The term matrix
comes from the intersection of the horizontal authority-responsibility flow
with the vertical flows of the traditional line-and-staff organization5.
In today's workplace,
employees are hired into a functional department (a department that performs a
specific type of work, such as marketing, finance, accounting, and human
resources) but may find themselves working on projects managed by members of
another department. Organizations arranged according to project are referred to
as matrix organizations. Matrix organizations combine both vertical
authority relationships (where employees report to their functional manager)
and horizontal, or diagonal, work relationships (where employees report to
their project supervisor for the length of the project). "Workers are
accountable to two supervisors—one functional manger in the department
where the employee regularly works and one special project manager who uses the
employee's services for a varying period of time" 6
Matrix Organization7
As shown in the figure above, the matrix
organization is built to carry out certain projects or to solve specific
problems. People with diverse skills come together to implement the projects in
hand. A special feature of this type of organization is that employees report
to two superiors instead of one. Members of a project receive
Dual
Authority Structure in a Matrix Organization10
instructions both from the project
manager (horizontal authority) and from the permanent functional department
heads (vertical authority).
The matrix organization type has been
used in organizations such as Procter & Gamble8, the Harvard Business9 School and others.
People working in a matrix organization
are often called two-boss-employees because they report to two
supervisors at the same time10
The matrix organization type is also
used successfully by global companies. Global companies must achieve
simultaneous coordination of various products in each country they operate.
These companies use geographic and product lines of authority. For example, a
company producing computers globally may effectively adopt the matrix
structure. Let us say a company located in Russia has some affiliates in
Central Asian countries. The general manager of a plant in Kyrgyzstan producing
computer monitors will report to both the head of the monitor producing
division in Russia and the head of Kyrgyz operations. In fact, the matrix
organization structure has been used globally by many companies.
According to a project manager’s degree
of responsibility, matrix organization can be classified as follows 11:
Weak/Functional Matrix: A project manager has
only limited authority. The functional managers maintain control over their
resources and projects.
Balanced/Functional Matrix: A project manager is
assigned to oversee the project. Power is shared equally between the project
manager and the functional mangers.
Strong/Project Matrix: A project manager is primarily
responsible for the project. Functional managers provide technical expertise
and assign resources as needed.
Note, however, it is impossible to say that one type of matrix
organization is better than the others12.
Matrix Organization:
Advantages
Many businesses have turned to a matrix
organization structure to track use of resources across traditional functional,
departmental, and product line boundaries. A matrix can also map
micro-organizations such as project and team structures within an overall
organizational structure. In both cases, a main goal is to save money by
avoiding duplication of effort.
The Matrix type of organization has
several advantages. The matrix can be very effective in a complex, changing
environment. Many high-tech companies use the matrix structure to adapt quickly
to fast-changing markets. In the matrix, meetings are very common and they
allow new issues to be raised and problems to be solved. In the matrix,
employees can be transferred from one division to another easily. The matrix
also enables the sharing of new experiences, methods of handling problems,
skills among employees. In addition, in the matrix employees clearly know who
is responsible for the success of the project. The matrix structure also makes
possible the participation of workers in team meetings, discussions and in the
attainment of divisional objectives. This means that in the matrix organization
employees are motivated because they have relatively larger tasks. Finally,
this type of organization is best suitable for global organizations, as in such
organizations managers can effectively achieve goals and be flexible enough to
adapt to changing environments.
The advantages of the matrix can be
summarized as follows:
Pros of the matrix organization:
·
More efficient use of
resources than a single hierarchy
·
Flexibility, adaptability to
changing environment
·
Development of general and
specialist management skills
·
Cooperation between
departments
·
Expertise available to
everyone in the organization
·
Clear responsibility
·
Enlarged tasks for employees
·
Better suitable for global
companies
Matrix Organization:
Disadvantages
Like any organizational form, the matrix
has its disadvantages. The major problem is the confusion and annoyance caused
by the twofold chain of command. Often employees do not know for sure to whom and
how to report. Potential conflicts can arise concerning the division of
authority. The different styles of the matrix described in the outline of
organizations are not clearly stated in the organizational charters and
this may cause disputes. In global organizations the matrix can cause conflicts
related to functional goals of the company and the country’s goals. The third
disadvantage is that much time is lost to meeting and discussions dedicated to
resolving conflicts. This is true because when the relationships among the
departments of a company becomes tense it is really hard to come to a
compromise. In fact, many companies that have used the matrix have blamed the
structure for wasting time in heated debates and discussions rather than
actions to attain the companies’ goals. Managers in the matrix need human
relations training to learn to work with two bosses, which is not easy and
requires a lot of time and effort. For many organizations, it is difficult to
keep the power balanced between the functional and divisional sides of the
matrix.
Last, opponents to matrix management believe that it is a dated method to
organize a company.13 The belief in the 70's and 80's was that a matrix organization would
be the best way to manage project complexity. This has been proven untrue over
the years by the failures of companies such as IBM, HP, and AT&T.
The summary of disadvantages of the matrix structure is provided
below:
Cons of the matrix structure:
·
Frustaration and confusiona
from dual chain of command
·
Conflicts between two sides
of the matrix
·
Many meetings and
discussions
·
Human relations skills
needed
·
Difficult to maintain the power
balanced
·
Out-of-date method
Conclusion
Previously, before the matrix structure came about, most large
corporations had been structured in departments. These departments were logical
partitions of the company and any given groups of employees reported to the
head of the department. In the 1970s, companies began to restructure its
employees into a matrix organization, mainly with the intent of developing
project managing units.
Even though the matrix structure has some disadvantages, matrix
organizations provide clear accountability within a specific business function
and allow more efficient allocation of specialized skills across the entire
business. By taking advantage of the shared services and skills and not having
to develop and manage those skills themselves, the divisional or product line organizations
can better focus on their core business objectives. This last point was one of
the original driving forces behind the development and popularization of matrix
organizations. Today, matrix organizations are used to describe more than just
the product-based organizations. For example, many IT project managers use
smaller matrix-style structures for project and team organizations to track
skills, tasks, and resources across multiple projects to ensure skills and
resources are used properly. The matrix structure has also been used at
Microsoft, and there are more than 5,000 project managers there out of more
than 50,000 total employees.14 To sum up, if used properly by companies
through clearly defining each manager’s duties, continuously being improved to
meet the organization’s needs, the matrix is probably the most suitable
structure for middle-sized and large organizations.
References
1.
Boone E. Louis, Kurtz L. David: Contemporary
Business, 1996.
2.
“Organizational Structure”, #"www.pg.com">www.pg.com
9.
www.harvard.edu
10.
Richard L. Daft, Management, p.334.
11.
Organizational Structure”, #"#">http://en.wikipedia.org/wiki/Matrix_management
14.
Scott Berkun: The Art of
Project Management, p. 13
Bibliography
Boone E. Louis, Kurtz L. David: Contemporary
Business, Orlando, FL: The Dryden Press, 1996
Richard L. Daft: Management, Orlando, FL: The Dryden
Press, 1997
James M. Higgins: The Management Challenge, New York,
Macmillan College Publishing Company, 1994
Gerald A. Cole: Management Theory and Practice, London:
Thomson Learning, 2004
Scott Berkun: The Art of Project Management, The USA:
O’Reilly Media, Inc., 2005
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