Matrix Organizational Structure: Pros and Cons

How you organize your business’s internal structure can have a major impact on the company’s productivity and transparency. You have many choices when it comes to organizational structure, from traditional models to flexible options. The matrix organizational structure combines elements of several structures to create an easy-to-understand reporting system that accounts for the cross-departmental responsibilities many employees have. Learn what an organizational structure is, understand what matrix organizational structures are, assess the pros and cons of this system and consider when to use a matrix organizational structure. 

 

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What is an organizational structure?

An organizational structure is a company’s system for internal reporting and communication. Organizational structures define professional relationships and explain which employees report to which managers. While there are many ways to organize a company, these are the most common:

  • Hierarchical organizational structure: This is a vertical chain of command which links employees to a single manager. 
  • Functional organizational structure: This organizational structure groups employees by function or department. 
  • Product organizational structure: This system groups all employees who work on the same product or project. 
  • Customer organizational structure: In this system, the customer’s needs determine the employee grouping. 
  • Geographic organizational structure: For companies with offices all over the state, country or world, this system is ideal since it groups employees by region. 
  • Matrix organizational structure: This structure shows both vertical and horizontal reporting. 

Related: What Is a Learning Organization? Best Practices

 

What is a matrix organizational structure?

A matrix organizational structure looks like a grid. Rather than showing employees on the grid in small groups, delineated by project or department or connecting employees through a vertical reporting chain, a matrix structure shows the vertical and horizontal connections between employees. Matrix structures help organize non-traditional reporting and management systems within a company. 

For example, say Blue Ware Inc. has a small team of employees who handle tasks related to several departments. John, who handles social media marketing and content writing, reports to both Kathy, the head of marketing, and to Kristin, a content editor, through the daily course of his work.

Related: Building Organizational Values for your Business: A Guide

 

Pros of matrix organizational structures

Matrix organizational structures have a number of benefits. Consider these advantages when thinking about adopting the matrix structure for your company:

 

Flexibility

Unlike traditional organizational systems that lock employees into specific roles, a matrix organizational structure makes it easy to move employees from one project to another. Since employees aren’t grouped exclusively by department, you can move them around as needed for short- or long-term assignments. 

 

Resource management

Often, in traditional organizational structures, you allocate funds into departmental budgets. Moving money from one department to another can be a hassle. In a matrix structure, it’s usually easier to freely share funds since you set your budgets by project or product rather than by department. 

 

Consistency

When employees regularly move from project manager to project manager and perform varied tasks, it’s vital that everyone in the company practices consistent procedures and processes. Consistency throughout the company makes management much easier and helps keep products and customer interactions the same no matter who’s in charge. 

 

Communication

Since most employees work with one another occasionally, company communication is usually excellent in a matrix organizational structure. All employees are familiar with one another and often open to collaboration and working together on projects. 

 

Employee Development

In a matrix organizational structure, employees have the opportunity to work on a multitude of projects and perform a variety of tasks. This exposure to new ideas and jobs helps facilitate development and growth. 

 

Cons of matrix organizational structures

The matrix organizational structure is not without its disadvantages. Consider these downsides before committing to this system. 

 

Conflict

Occasionally, employees may feel they have to choose between working on one project over another, leading to conflict with their coworkers. Since their duties are ever-changing, some employees struggle to know which tasks they should prioritize and end up causing conflict when they don’t complete their portion of the project as quickly as others on the team. 

 

Inconsistent teams

Not every employee will have the same skills and abilities. You may want to place a certain employee on a team, but find that they’ve already committed to another project, leaving you to use an employee with a slightly less desirable skill set simply so the project can continue to move forward. 

 

Confusion

While matrix organizational structures do foster inter-company communication, they can also lead to reporting confusion. Since roles are ever-changing, some employees might struggle with whom to go to with a question or request, leading to wasted time. 

 

Lack of balance

Workloads can become unbalanced in a matrix organizational structure. It’s vital that you closely monitor  each employee’s regular tasks and the extra projects to which they’re assigned to ensure they have enough time in the day to meet all their responsibilities. Overly taxed employees often feel burnt out and are less productive than their colleagues with manageable workloads. 

 

When to use a matrix organizational structure

Matrix organizational structures are best for companies that meet a certain set of criteria. For other companies who don’t meet the criteria, attempting to employ a matrix organizational structure when it’s not needed can lead to loss of productivity and confusion. If you’re considering an organizational shift to the matrix structure, consider these criteria.

  • The company’s current processes do not meet our needs. If your current processes require lots of paperwork and complex cross-departmental communication, a matrix structure could help streamline those issues. 
  • The company is about to enter a period of rapid growth. Companies that are about to expand or take on new projects can benefit from the project-orientation of a matrix structure. 
  • The company needs more flexibility. Employees who feel they can’t perform their jobs to the best of their ability may find the matrix structure gives them more freedom to contribute. 
  • The company completes large and complex projects. Matrix structures are ideal for companies that are project-based. 

The matrix organizational structure can be an excellent system for organizing your employees. It’s best to consider the pros and cons before adopting this structure for your organization. 

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