The Advantages & Disadvantages of a Matrix Organization

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In a hierarchical organization, the lines of power and authority are clear. Each employee reports to a supervisor, who reports to the manager above him, and so on up the chain of command. Decisions come down from upper management through the same pipeline. In a matrix organizational chart, employees routinely report to two managers and sometimes more. This can be confusing, but it offers benefits as well.

The Matrix Organizational Chart

The organizational chart for a classic hierarchical structure is straight up and down. The company president gives instructions to, say, three vice presidents who each oversees five department heads, each of whom has a dozen employees under them.

A matrix organizational chart adds horizontal chains of command as well. Just like a hierarchical organization, employees report to their department head, known as a functional manager. If they're assigned to project teams, they also report to a project manager, setting up the horizontal line of authority.

In a matrix organization, employees routinely report to both the project manager and the functional manager. An employee assigned to more than one project could have more than two managers to answer to.

The Origin of the Matrix Organizational Structure

The matrix concept originated in the aerospace industry. Hierarchical organization worked well for the industry when companies only had one large project to tackle at a time. As the industry boomed in the post-World War II years, aerospace companies often found themselves juggling multiple projects, often requiring multiple different skill sets.

The matrix was a way to cope with the new demands. Each project manager recruited the employees they needed from different departments. This makes it possible to tackle multiple new projects while each department carries on its usual tasks.

How the Matrix Works

In a matrix organization, project managers pull the members they need for their team. Employees from different departments or different geographic regions are able to work together, combining skills to get the project done. They report to and take instruction from their functional manager, the project manager and in some cases multiple project managers.

When org-chart experts list the advantages and disadvantages of matrix organizational structure, the effective use of employees is a big advantage. Suppose your company has two projects that require an IT professional on the team. If the IT department shares its personnel, the company doesn't have to add employees to complete the projects.

Not all businesses use an identical matrix organizational chart. Employees may work on project teams occasionally or constantly, or work routinely on multiple teams, reporting to multiple managers.

Why Go Matrix?

A 2015 survey found 84 percent of employees work at least some of the time on project teams in a matrix situation. Businesses weighing the matrix organizational structure pros and cons usually find at least occasional value in using a matrix.

The freedom to collaborate, rather than being isolated in separate departments, may be the strongest benefit in the list of advantages and disadvantages of matrix organizational structure. Employees who responded to the survey said matrixing helped them collaborate better with coworkers, help their customers and have more freedom to innovate. Heavily matrixed employees were also more enthusiastic about their coworkers' performance and abilities.

By teaming up with workers from different departments who have different skill sets, workers can also learn and develop new skills. They also have more access to the resources they need as the team reaches across department boundaries.

Who Needs Matrixing?

Companies should adopt a matrix if it makes sense for them, not because some management guru or article recommends it. Can individual departments or company branches handle their affairs fine without help? If they need to cooperate, can it be done by informal talk and arrangements?

For example, if you have a dozen branches in different states and they work largely independently, you may not need a matrix. If you need tighter coordination on finances or product releases, bringing members of the different branches into a matrix may become necessary.

Tangled Management and Lack of Clarity

The hierarchical organizational structure gets criticized for its inflexibility and rigidity, but the lines of command are clear. When employees talk about matrix organizational structure pros and cons, one of the downsides is the lack of clarity: They don't know what's expected of them. With two managers, it can be hard to tell who employees should report to and who assigns them the tasks for the day.

In theory, the employees' functional manager and the project manager coordinate their authority so that the project team members know their responsibilities and who they're accountable to. In practice, coordination is often clunky or nonexistent:

  • The project manager and the functional manager may not get along, so they have no desire to coordinate.
  • One manager may try to sabotage the other by monopolizing an employee's time with extra work.
  • Working on a project team and handling regular departmental duties can lead to an insanely heavy workload. It's a particular problem if managers put their own needs first, which can lead to both the functional manager and the project manager simultaneously demanding extra effort from team members.
  • The two managers simply may not communicate effectively. They may also not communicate and give clear direction to employees.
  • Having two managers usually means a lot more meetings and discussion, which can slow work down.
  • Managers who have to share employees with each other may feel they don't control the resources they need. 
  • The more people an employee reports to, the greater the chance of miscommunication and error screwing things up.
  • If employees are particularly skilled, managers may fight for control over them.
  • If employees work on multiple project teams with different managers, that multiplies the potential for miscommunication, excess work and management conflict. 

Who Has the Power?

Another potential management problem is when the project manager doesn't have any real authority. This is sometimes called a dotted-line manager: Where the functional manager/employee relationship is marked with a straight line, the project manager only gets a fragmentary line.

This can happen because the functional manager has bigger rewards to offer, such as pay increases and future promotions within the department. If the company doesn't back the project manager's authority, that authority may be very limited in practice.

Alternatively, the project manager can attract employees by finding out what's important to them. Even if working on the project team doesn't bring raises, it can bring a higher profile in the organization, more praise or a chance to learn new skills. Any of these may be the right incentive.

The Single Point of Failure

A talented employee working in the matrix system may become increasingly valuable: They're contributing to multiple projects, learning new skills and helping both their managers meet goals.

The downside? If nobody else can do what the employee does, the employee becoming sick or leaving could be a catastrophe. Instead of one job in one department, multiple projects and tasks are going to be on the line.

Costs of the Matrix

The matrix organizational structure pros and cons can include money on both sides of the scale. The matrix organizational chart can benefit the organization's bottom line by getting the maximum value from employees. Rather than work in one department, they can be assigned to whatever project can make good use of them.

A matrix can also hurt the bottom line, though. A matrix organizational structure puts more people into management roles, which isn't always cost-effective. The added meetings a matrix structure requires take time away from useful work.

Complicated Decision-Making

Increased collaboration and communication are a major plus for the matrix, but they have drawbacks too. The more people from different departments that are involved together, the more complicated the decision-making becomes. A department manager may have the authority to commit their department to a week of heavy overtime; a project manager might have to talk to every team member's functional managers before making the same commitment.

At a small company, this may not be a big problem. If all the managers' officers are within a few feet of each other, a quick face-to-face discussion may resolve things fast. As the company grows in size, so does the matrix, making it a lot harder to make decisions fast.

The best way to avoid this is for top management to think carefully about the matrix organizational chart. Opening up cross-department cooperation shouldn't mean everyone has a say about everything. By being selective and careful about who has an influence on projects and decisions, organizations can prevent sclerotic decision-making and excessive meetings.

Leaders Must Be Flexible

The advantages and disadvantages of matrix organizational structure don't just happen: The company's managers and their decisions influence whether the matrix's pros or cons win the day.

If individual department heads can accomplish everything the company needs using the resources in their own silos, there's no need for a matrix. If the matrix benefits the company, functional managers need to accept that some of what they need lies outside their control. Rather than exerting hierarchical authority, they must learn the people skills to develop allies and influence when they can't simply issue orders.

Managers should also think about the way they run meetings. Even if face-to-face is the normal company procedure, switching to chat channels or video conferencing might save time, freeing up employees to do more work. The more spread out the company becomes, the longer it's going to take everyone to gather together and the greater the advantages of going with tech.

Communicate With Staff

Communication is always good, but it can be life or death when you have a matrix organizational chart. Communication can resolve employees' uncertainty about their jobs and responsibilities.

  • Leaders should set clear expectations for employees. That should include talking to them about the role they play in advancing the company's objectives.
  • Talk to employees regularly to keep everyone on the same page. Employees value feedback, whether it's praise for good work or guidance on how to do better.
  • As work demands and project assignments change, managers should meet regularly with employees to clarify what they'll be held accountable for and which managers will hold them to account.
  • Set clear targets for individual employees so they know their responsibilities.

The murky lines of authority in a matrix can leave employees feeling detached and disengaged. Regular communication and feedback can solve this problem.

Balance the Management

Organizational leaders also need to take a role in managing managers. It's not enough for employees to know who has authority – managers need to understand too. Ideally, the project manager and functional manager have equal authority; a system where one manager signs off on whatever the other manager does isn't an effective matrix at all.

Keep an eye out for people who try to leverage their power over employees and use it against other managers. Put a stop to it fast. Define the behaviors you want to see and train your managers to follow them.