Formal Organization – Matrix Organization

The management of a company will build an organizational structure to help achieve the objectives of the company. This formal organization of a company refers to the structure of jobs, the flow of authority, defining the relations between employees etc. One such form of formal organization is a matrix organization. Let us study about it in some detail.

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Matrix Organization

We have previously seen three types of organizational structures – line, functional and line and staff. A matrix organization is more complex and complicated than these three. In a matrix organization, the structure of the company represents a grid-like structure or a matrix.

This is a fairly new and evolving organizational structure, which was first developed in the West. It is somewhat a combination of functional organization and project management structure.

In a modern matrix organization, there is a grid structure rather than the traditional hierarchy structure. There are still departments according to functions like IT department, finance department etc.

These are the vertical structures of the grid. Then there is also a project division, which forms the horizontal chain of command in the grid. So in this structure, an employee will have two reporting authorities – his functional (departmental) manager and his project manager.

So in this structure, a group of employees from various departments comes together to form another group assigned to a particular project or a particular product. And they are headed by a project manager who then directly reports to the CEO or COO. At the same time, these employees also report to the departmental managers or department heads.

matrix organization

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Advantages of Matrix Organization

  • Matrix organizational structure is really beneficial to the employees. They gain the advantage of having dual support. Their functional manager can help them with their knowledge and skills, and the product manager can give direction to their work and efforts.
  • In a matrix organization, there is a better and more efficient use of resources. Resources can be shared across projects, reducing the cost and increasing the efficiency.
  • The projects or different products are coordinated with all the departments. This avoids any miscommunication.
  • Information flow is seamless. It flows from top to bottom as well as across the organization.
  • The employees have to manage two managers. This means they have to take a few autonomous decisions. This will help them in the long term with their decision-making skills and managerial abilities.
  • It also promotes specialization to some extent as well as lateral coordination.

Disadvantages of Matrix Organization

  • This type of organization has a complex structure. It may be slightly difficult for all the employees to fully understand and integrate themselves into this structure.
  • There is a dual authority in a matrix organization. An employee may find this complexity hard to deal with. Thee will be confusion as to who has higher authority over the employee.
  • Ineffective management by either manager can lead to massive miscommunication and misunderstanding in this system.
  • It is also the most expensive organizational structure due to the dual authority feature. Experts are an expensive commodity and here for every employee, we have two.
  • And finally, if there is internal competition between the line managers and product heads, it can lead to unhealthy internal conflicts. And this will distract the employees from their main aim – to achieve the company’s objectives.

Solved Question for You

Q: Matrix organization is most suitable for ____ companies

  1. small
  2. medium
  3. large
  4. none of the above

Ans: The correct answer is C. Matrix organization is very suitable for large organizations. This is because while the system is complex, it is also somewhat flexible making it ideal for large organizations.

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