Figuring out necessary jobs, how the jobs are related, who works with whom and who will make decisions -- this is organizational design. The proper organizational design helps position a company to achieve its goals. If a company needs employees to innovate, for example, a strict structure with many rules will impede work. If a company mass-produces products, strict controls help ensure products meet a reliable standard. Sometimes companies need a little of both, wanting control without sacrificing the ability to quickly adapt to the marketplace. For these companies, the hybrid structure was invented.

Tall Vs. Flat

When represented on an organizational chart, tall structures have a vertical orientation due to a management hierarchy. The hierarchy means rules, a strict chain of command and centralized power. Jobs are specialized, typically grouped together by a work function such as marketing. It’s a machine-like structure described as mechanistic. Flat structures are described as organic or loose. Hierarchies are removed, and employees are grouped into teams made up of people possessing different abilities. Groups rely on expertise to make decisions. In exchange for less control, flat structures gain creativity and adaptability.

Matrix Design

The hybrid structure is also known as the matrix structure, because, depicted on an organizational chart, it forms a matrix grid. Designers first create a vertical, functional organization, dividing employees into work departments or, perhaps, into company divisions -- say, women’s and men’s clothing divisions -- with further subdivision into functional areas such as production. Horizontal divisions are next created across departments, each devoted to particular products, programs or projects. Each employee, then, is connected vertically to a functional manager above and laterally to team members from other functional departments as well as to a project manager.


Setting up a vertical-horizontal organizational hybrid can give companies the advantages of both component structures. Lateral teams give what would otherwise be a rigid vertical structure flexibility. Teams can be formed, adjusted and dissolved according to need. There’s no bureaucracy standing in the way of a team’s ability to innovate. The functional segregation that usually gets in the way of interdepartmental cooperation, coordination and communication is gone, leaving the teams able to make rapid progress toward goals. The functional hierarchy still exerts control, meanwhile, making sure there’s no duplication of effort and resources.


The major pitfall of the hybrid structure lies in its two command chains. Every employee must answer to two supervisors, opening every employee up to divided loyalties and conflicts of interest. Bosses might also have conflicts if functional goals are at odds with project goals. For instance, a functional department needing to keep down costs might balk at providing more departmental resources to a particular project. Communication and conflict resolution skills are necessary abilities for this structure to succeed. Power between the vertical and horizontal frameworks must be kept in balance.