Structure is everything. For a company, it influences every aspect of the business in both seen and unseen ways. It dictates reporting structures, provides clarity around roles and responsibilities, and provides employees with a sense of security about where they fit in the big picture.
There’s no shortage of organizational structures, but a matrix organizational structure offers companies an alternative to the traditional top-down hierarchy. Matrix structures approach management from two directions: functional and project.
A basic matrix structure with functional and project managers. [Source]
A functional manager represents the traditional horizontal structure based on department or job function. Great examples are marketing managers, sales managers, and human resource managers.
A project manager, on the other hand, oversees a cross-functional project team with representatives from each department. In this structure, a marketing specialist would report to their functional marketing manager as well as their project manager.
Matrix organizational structures offer companies (and their employees) real, tangible advantages to the way they work. Yet, a matrix organizational structure also has its disadvantages.
Companies succeed with a matrix organizational structure when they play up the advantages and proactively find ways to overcome the disadvantages.
3 advantages of a matrix organizational structure
A matrix organizational structure offers countless advantages that can benefit teams’ daily work. Below are the three top advantages reviewed both in industry and research publications.
1. Improves collaboration and flexibility
Matrix organizations excel at bringing together the right people with the right skills to tackle the task at hand. Think of it as cross-functional teams to the max: experts from every functional area of a company coming together to address a specific challenge, project, or goal.
With matrix structure, project or horizontal assignments are never permanent. This gives employees the flexibility to move between projects or teams as needed, sharing their knowledge, expertise, and skills. This approach to cross-team collaboration encourages a collaborative learning environment, which can boost employee motivation, team morale, and diversity of thought.
I was very close to what the business was doing on a day-to-day basis, and I very much liked that.
Charlotte Anderson, former senior HR manager @ Comcast
For HR professionals, this collaboration plays a key role in providing HR guidance and expertise to teams operating within their own hub.
Speaking of her time as a senior HR manager for Comcast’s Philadelphia-based technical operations division, Charlotte Anderson says, “I was very close to what the business was doing on a day-to-day basis, and I very much liked that.”
When asked whether she would’ve felt the same with a traditional structure, Anderson says no. “I might not have been automatically included in business decisions...[human resources] could have been treated as more of an afterthought.”
2. Encourages open communication
Matrix structures require that employees communicate directly with both their functional and project supervisors. This multidirectional approach to communication ensures information is openly shared—not siloed.
Consider a traditional functional structure. Communication flows from the top of the company down to front-line employees. But these communications very often stay within their own function. HR information flows from a director of People Ops to recruiters or hiring managers, while a VP of product communicates to project managers or owners, who in turn speak with development teams.
With the cross-functional nature of matrix teams, leaders (and teammates) are able to more freely share what they know or information they have available, allowing leaders to make more informed decisions.
For example, an employee who reports to their functional product supervisor learns of upcoming feature releases or key bug fixes. They can take that information to their project supervisor and team, who are currently working on ways to improve the customer experience.
With this knowledge, the project supervisor can task the team to develop a communication strategy that would allow the company to easily share important information, like the product releases and fixes, with their customer base.
3. Helps companies (and teams) stay nimble
Taking an approach to work that unites a functional focus with a specific project focus helps companies keep a finger on the pulse of a specific need or market. It also makes it easier for teams to adapt to an increasingly agile workplace.
Horizontal, or project-focused, teams allow companies to be flexible. Companies can choose to focus teams geographically or by specific strategic goals, like improving a customer experience or driving business growth. Having team members reporting in from various vertical, or functional, departments ensures a wealth of perspectives on the task at hand.
Take Starbucks. The company uses geographic divisions in conjunction with functional goals. As a global company, this approach helps their teams understand and meet the needs of customers in different regions around the world, which includes everything from the type of coffee they like (strong, medium roast, etc.) to what retail items are preferred.
Project and functional elements of the Spotify model—an agile approach to a matrix organizational structure. [Source]
A matrix approach can also support agile workplaces, as evidenced by Spotify and their Spotify model. Spotify implemented a version of this structure to give their teams more autonomy in how they work and to remove the barriers of formal processes. In doing so, they enabled their teams to work faster and deliver on their goals, be they product- or service-oriented.
3 disadvantages of a matrix organizational structure (and what you can do)
A matrix organizational structure, like any structure, is not without its challenges. Companies that recognize these challenges upfront and plan ways to address them can help minimize the negative impact.
1. Lack of clarity around roles and responsibilities
A complex reporting structure can cause confusion around manager and employee roles and responsibilities. For example, managers may go back and forth on who is responsible for the professional development of individual employees.
Team members, or employees, can also experience confusion. While moving to new teams may present employees with exciting challenges to tackle, it also presents a new set of work dynamics: workload distribution, task ownership, and knowledge sharing. Pair that with an employee’s commitment to their functional department, and it’s easy to see how employees may exist in a near-constant state of anxiety when it comes to their primary responsibilities.
Yet, clear roles and responsibilities are crucial. McKinsey’s Organizational Health Index argues that clear, accountable roles are a top driver of overall organizational health. High role clarity is also linked to increased performance, engagement, and satisfaction.
Companies can navigate role complexity and ambiguity by establishing clear accountability. For example, org chart software lets employees visualize their reporting structure. More robust offerings can even deliver drill-down capabilities that allow employees to click into manager or team member profiles and view their title, skill sets, and responsibilities.
ChartHop's org chart takes you directly to employee's profile pages, giving greater visibility into your team's makeup and structure. Check out ChartHop's org chart capabilities.
2. Potential for conflict between functional and project managers
Functional and project managers are bound to have conflicting goals or priorities, and that conflict trickles down to the team dynamic.
A regional sales manager, for example, might have very clear sales growth goals for an upcoming quarter. However, a project manager might not be prioritizing those goals in their team’s current project. As they engage in discussions—or, let’s face it, arguments—over where efforts should be directed, the team is left in a limbo state, unable to definitively move forward until a resolution is reached.
Conflict can also arise through challenges for authority, or a disagreement over which manager has the final say on a decision. Say a project team built a new software feature or a customer engagement campaign. Which manager has final say on the execution? The project manager might view see it as one of their responsibilities, but maybe a director of product or customer success manager believes the decision is theirs.
Managers must strike a balance or a degree of cooperation if they wish to continue supporting an organization’s mission and goals. Effective training and education programs can ensure managers receive the tools and knowledge to navigate the complexities of a matrix structure.
AGCO, an agricultural machinery company, uses a matrix structure. To support it, they offer specialized training that emphasizes communication between managers. All managers, be they new hires or internal promotions, also take a course on the complexities of the matrix structure. This training covers required management and leadership skills, like “dealing with ambiguity and conducting performance appraisals in tandem with another manager.”
3. Slower decision-making process
More managers weighing in on a task or issue can mean a longer time to resolution or execution, especially if the managers disagree on the best course of action.
As mentioned above, the lack of clarity regarding authority, or overlapping authority, can delay decision-making efforts. While managers may go back and forth over a desire to own the decision, it’s also likely managers do not wish to own a decision for fear of potential fallout. Either would delay execution.
Additionally, the complex nature of a matrix organization means it might take longer for teams to reach consensus regarding next steps. This is due to increased communication. With information moving freely between teams, it can be difficult to ensure everyone is on the same page about the current state of a project.
Companies can prevent these kinds of roadblocks byadopting clear decision-making processes and frameworks. When managers and teams are on the same page about how to approach making a decision, it can help the team move through the stage quicker.
Establishing who owns the final decision or the decision-making process before the work begins can save the team from major delays toward the end of their work or project.
Can a matrix organizational structure support the future of work?
Matrix organizational structures have taken a backseat to other, more popular structures in the last decade. Yet, with the amount of technology that has emerged in that time, are the challenges that once made a matrix structure unattractive to a company still a factor?
As the future of work sees more companies adopting remote, hybrid, or distributed workforce practices, collaborative, transparent, and flexible structures will play a key role in a company’s success.
Knowing that a matrix structure’s flexibility supports agile teams, it's time for research (and the corporate world) to reevaluate the need for matrix organizational structures in today’s working world.
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