A matrix organizational structure is an organizational-based foundation where the reporting relationships get set up as a grid. That means the traditional hierarchy disappears in the chain-of-command. Instead of reporting to a single supervisor or manager, employees have dual-reporting duties. There is usually a product and a functional manager that oversees productivity each day.
Most large companies use the matrix organizational structure because of the efficiencies that it produces. Brands like Texas Instruments and Caterpillar require its supervisors to report along project and functional lines to ensure productivity levels remain high.
Then the project and functional managers report to the C-Suite in some way. Some companies might create a line to a specific executive who then reports to the CEO, the President, or the Board of Directors.
The aerospace industry in the United States was the first to implement this approach to professional reporting in the 1950s. It was able to manage projects with greater size and complexity as expertise needs expanded beyond a single discipline, so more companies began to implement this approach.
Every organization should review these matrix organizational structure advantages and disadvantages to see if this approach might offer usefulness.
List of the Advantages of the Matrix Organizational Structure
1. This structure makes it easier to share resources in different divisions.
One of the most significant advantages of the matrix organizational structure is its ability to share highly-skilled resources. It can shift between the needs of the various projects under development and the company’s functional units. That means communication lines must stay open naturally since obstruction can impact the efficiency of the system. That means there are fewer boundaries between groups, fewer silos, and more collaboration because the business has more integration.
2. It strengthens job security within the organization.
Teams remain loyal within the matrix organizational structure because it offers a more stable work environment. Employees don’t need to worry about the whims of a single individual impacting their livelihood, especially if they are employed in a right-to-work environment. That means a stronger atmosphere of job security can lead to people wanting to work harder because they have direct investments in the outcome of each project.
When people feel like the rug isn’t going to get pulled out from underneath them when they finish a project, it is easier for them to invest. That means the quality and quantity of the work that teams produce gets better over time when using this structure.
3. The matrix organizational structure improves internal communication.
When the matrix organizational structure gets implemented in the modern organization, then communication is simplified. The departmental walls that create competition in other companies disappear, making it easier for workers to move freely between different units. The goal of this method is to have each person share their experiences and expertise freely so that everyone benefits from their perspective.
The ease of communication that exists with this structure almost always leads to new sharing and collaboration opportunities. Although some exceptions can happen, this work typically leads to a stronger and better organization.
4. It encourages more employee development.
The matrix organizational structure encourages employees to continue their career development process. It exposes them to multiple project types instead of confining them to specific departments or team silos. That means a diverse approach to thinking and creativity develops within the company.
Everyone gains valuable experiences by working outside of their traditional boundaries. That means the entirety of their professional skillset begins to experience growth. This advantage works to increase personal job satisfaction while also helping workers to become more valuable as an employee to promote more job security.
5. Companies gain more flexibility with this structure.
Instead of pulling from individualized resource pools, the matrix organizational structure lets a company use the entire business to find the talent it needs. You can ask anyone from any department a question about a project. It means you can always select the best person for a job internally than trying to hire someone new in an unpredictable hiring climate. If someone from customer service has marketing skills that you need, then you can pull them into the work until it gets done – and then send them back to their regular job duties.
6. Less downtime occurs for internal resources.
The matrix organizational structure creates enough flexibility within the employee pool to create more moments of downtime when correctly managed. Instead of forcing people into roles that require them to improve their talents or skills to be productive, each person can focus on their strengths instead. That means the quality of the work naturally improves while the time spent on each project can do down.
Although this advantage creates the risk of having one person juggling multiple projects simultaneously, it still uses the average worker’s skills more efficiently. You’ll have fewer moments of downtime across the organization because other workers can pick up the slack if they aren’t doing anything else.
7. It allows for consistent methods to get used across the organization.
When there is flexibility in the resource pool with a matrix organizational structure in place, then everyone gets more consistency because each person must work in a similar way. It eliminates the confusion of responsibility because the managers expect the same results from each worker, even if they have an assignment on different projects. This advantage makes it easier to transition between projects because the learning curve decreases.
This standardization can create some issues with job security if artificial intelligence can take over repetitive tasks. When you can achieve this outcome, the work gets better with less labor, and that means the cost savings can get passed along to consumers to create a competitive advantage.
8. Several variations of the matrix organizational structure allow for individualization.
Companies can implement one of three variations of the matrix organizational structure. You can have a weak, balanced, or strong approach when forming teams. The first option requires the project manager to communicate with the functional side of the chain-of-command for each respective team member, and then employees report to their functional manager only for specific projects.
If a company takes a balanced approach, then team members report to both managers. This structure requires employees to work on their job duties and a project assignment. Workers in a strong matrix are similar to a dedicated team, giving members a clear line of reporting to the project manager while keeping the functional side in the look.
9. It can be cheaper to implement the matrix organizational structure.
Most companies find that it is cheaper to implement the matrix organizational structure than it is to establish a dedicated project team. This advantage doesn’t apply to long-term commitments, but it is ideal when developing new products or services. Allowing workers from different functions to work under a project manager to create something unique creates new opportunities to draw upon the expertise of multiple disciplines simultaneously.
The diversity that develops from the matrix organizational structure often makes the teams created in this format stronger than those that are purely functional in their overall approach.
List of the Disadvantages of the Matrix Organizational Structure
1. Both managers must be on the same page for it to be an effective structure.
Employees in the matrix organizational structure are typically accountable to more than one direct supervisor. Most companies institute two separate chains of command to manage their needs with this approach, which means each supervisor must be on the same page with everyone else to ensure productivity levels remain maximized. If a worker receives conflicting messages from their bosses, then the end result is a reduction of quality and quantity in their work.
When two bosses are at odds with each other, then the project members get caught in the middle of the conflict. It is an issue that can cause all work to grind to a halt.
2. Some employees might play managers against each other.
Discord in the management ranks means there is less supervision that happens during a project. Some workers like to create discord between their two managers because that gives them more freedom to operate independently. This issue can occur sometimes because the employee feels like their supervisors micromanage their duties, but it usually happens when a personal agenda is in play.
If the managers can get on the same page to understand what is happening, then the removal of a potentially problematic team member supports higher productivity levels. This disadvantage gets missed far too often, unfortunately.
3. This structure increases the organizational complexity of the company.
The traditional hierarchy model was used for centuries because it creates a simple foundation for reporting. Each person under that basic system has one boss to who they report directly. Supervisors benefit because they have a clear idea about who their direct reports are and what their responsibilities will be each day.
Shifting to a matrix organizational structure changes this dynamic because it creates multiple paths of responsibility. That means there must be a high degree of cooperation between the project and functional management to ensure the mission and vision of the organization remain a priority.
4. The matrix organizational structure can cause management directives to conflict.
When using the matrix organizational structure, the goal is to have two or more managerial sets focus on a specific area of the business. That approach eliminates the need to multitask, but it doesn’t always result in greater efficiencies. The separate chains of command can sometimes have differing managerial directives that come into conflict with each other. Although the spirit of cooperation is the desired result, the competitive nature of each person and team can come into play.
That means the actions of the project and functional managers might create problems for their direct reports because employees don’t know which side is following company directives. If there is confusion in the C-Suite regarding how to approach this potential disadvantage, then it can create a massive level of gridlock within the organization.
5. Some workers might experience reporting confusion.
Although the matrix organizational structure improves communication within a company, the dual-reporting structure can also create some confusion for some workers. If there is more than one boss supervising a worker’s performance, then the details that get moved up the chain-of-command can get jumbled quickly.
This disadvantage of the matrix organizational structure can also make some workers question who is in charge. That’s why most companies require employee reports to be given to all relevant management personnel simultaneously.
6. It can result in a heavier workload for some people.
It is entirely possible for the workloads of the average worker to grow exponentially in the matrix organizational structure. This disadvantage can lead to lower levels of job satisfaction, higher employee churn, and issues with burnout. It occurs because team members often get tasked with additional responsibilities because of their identified expertise that goes beyond their regular job duties.
Managers can work to avoid this issue by examining work assignments in advance. Although having your best and brightest on each project is an important outcome, people can only do so much in the time they’re allotted for work each day. Overloading the most talented workers consistently is a recipe that usually leads to them searching for a new place to work.
7. The matrix organizational structure can be costly to implement.
The matrix organizational structure can represent an additional significant expense for some companies. It requires them to retain more experienced managers since there are multiple chains of command to manage, along with new department heads, project managers, and other specific roles that the business needs.
Since labor is the primary expense for most companies, using this structure can cause the payroll to balloon rapidly. It can even cause some organizations to keep talent that they don’t use consistently so that they don’t lose someone to the competition. If there isn’t enough work to keep everyone busy, then money can get wasted quickly.
8. It doesn’t work well for long-term projects.
If a project is going to be a long-term effort, then the matrix organizational structure may provide too much flexibility for a company. It may be a better choice in this circumstance to create a dedicated team with a permanent assignment.
This option is also an issue when the skills of a specific employee are critical to the mission or vision of the organization for a specific function. Sharing the expertise of this individual may reduce their overall effectiveness and lead to a downgrade of their functionality.
9. The structure can result in a lack of clarity.
When you have multiple managers in place for individual workers, then there might not be any determination on that person’s professional development. Coaching duties might get passed back and forth until everyone decides that it is a matter not worth pursuing. This issue with a matrix organizational structure can lead to a loss of clarity on who becomes responsible for each employee’s performance evaluation.
People also work better together when they have spent time as a functional team. Disrupting that process can create enough discomfort where individual productivity goes down. If a worker doesn’t have clarity on whey they can return to their usual duties, then the outcome may be riddled with confusion and conflict.
10. Project managers can act as trainers within an organization.
A project manager can act as a trainer internally for anyone who wants to become a functional manager one day. It creates a structured environment where the developed best practices can receive a daily review. Workers are usually their time more efficiently, and no one must wait for their next assignment since they can return to their functional tasks immediately.
That means the project managers can provide leadership support and training by example to the workers who come under their assignment umbrella. It is an advantage that can improve the chains of command while reducing the costs of operating an independent training unit within the company.
The matrix organizational structure helps a company manage large, complex projects. It makes sense to use this option when there is a need to efficiently process a massive volume of information or deploy specialized expertise quickly. The traditional chain-of-command isn’t always well-suited to those purposes.
Companies must identify their motives and needs to implement this structure to determine if it is the correct path to choose. The advantages may be beneficial if the current processes are falling short or there is an expectation of rapid growth soon. Then the disadvantages of cost and complexity might be enough to push some businesses away from this foundational choice.
These matrix organizational structure advantages and disadvantages must get taken into consideration at the local level. It isn’t usually the best option for small business owners, partnerships, or sole proprietors, but it could be a viable solution for large companies that need to build more efficiencies into their systems.
Blog Post Author Credentials
Louise Gaille is the author of this post. She received her B.A. in Economics from the University of Washington. In addition to being a seasoned writer, Louise has almost a decade of experience in Banking and Finance. If you have any suggestions on how to make this post better, then go here to contact our team.