A company's organizational structure plays a vital part in determining the efficiency of its operations and the productivity of its employees. Traditionally, businesses used the same standard structure: a top-down approach where the founders and owners sit up top and hierarchy moves downward to entry-level employees. As time has progressed, companies have begun to incorporate various organizational structures that differ widely from the conventional approach.

The matrix organization structure has become popular and has many business advantages.

Examples of Organizational Structures

Top-Down: The top-down is the standard, traditional business structure. C-Suite executives – like the chief executive officer, chief financial officer, chief operating officer and chief technology officer – sit at the top. Under the C-suite executives sits senior management – such as the vice president positions – followed by middle management and so forth.

The company itself is divided into traditional departments like finance, human resources, marketing and sales. Employees that share similar skill sets and job descriptions are grouped together.

Divisional: A divisional organizational structure organizes the company by specific geography or product line. For example, Samsung has completely separate divisions for its mobile communications (like smartphones), consumer electronics and technical support.

Each of these divisions run independently of each other and often have their own subdepartments for things like IT, research and development, accounting and marketing.

Flat: A flat organizational structure consists of very few – if any – levels between upper-level management and other employees. This is usually a structure that a smaller business would enact, but there are some larger companies that manage to run with this setup.

Matrix Organization Structure

Although it involves a bit more complexity, the benefits of a matrix organizational structure make it worth the implementation efforts. In companies that use the matrix structure, employees are often divided into teams based on specific products or projects.

Instead of regularly reporting to the same supervisor, employees report to different product and project managers based on the specific product or project they are assigned to at that moment. Although they may be separated into different departments, companies pool together top talent from each to ensure the successful completion of a particular project.

Employees in matrix organizational structures will typically report to two managers – one for their functional position and one for a specific project.

For example, a person working in the marketing department of a company may be responsible for designing print advertisements. If the company decides to start a campaign for an upcoming project, management may choose to assign that person to the project team. During the time of this campaign, that person will report to both their marketing manager and the project manager.

Three Types of Matrix Structures

The matrix organization structure can be implemented in one of three main forms: functional, project and balanced. They all follow the same fundamental concept, but the matrix management roles and responsibilities vary.

Functional matrix: A functional matrix approach is often referred to as a "weak" matrix because of the lack of power that project managers have in this form. Project managers are responsible for coordinating the efforts of functional groups, but they do not put together the specific plans and strategies. That role is the functional manager's responsibility.

Project matrix: A project matrix approach is often referred to as a "strong" matrix because project managers have more power and control over the direction of projects. Project managers are given control over the resources, and functional managers serve as advisors for the project, with the power to control the teams that work on them.

Balanced matrix: As the name suggests, a balanced matrix approach is a mix between the functional and project matrix forms. Project managers define what needs to be accomplished in a project and when, while function managers are responsible for choosing the teams and putting together the plan on how to complete the project.

Workplace Communication Benefits

One of the primary benefits of a matrix organizational structure is that it allows companies to have better communication across different departments and divisions. Traditional corporate structures and hierarchies generally lead to isolated communication strictly between employees of the same department. Employees in marketing communicate with other marketing employees, employees in IT communicate with other IT employees, finance employees communicate with other finance employees and so forth.

With a matrix organizational structure, there is a lot of communication across departments because there are more collaborative projects that involve multiple departments.

As information flows more frequently across departments and projects, management can make quicker business decisions because they do not have to go through approval processes generally set in place with other hierarchal structures. For example, in a traditional hierarchical structure, functional managers may need two levels of management approval to change vendors for a project, which takes away valuable time.

The ease of communication in matrix structures keeps employees more informed and puts them in a position to make business decisions without wasting time going through old-fashioned logistical processes. This allows a company to be more competitive because it can adapt quickly to changes that happen in the marketplace.

Employee Talent Benefits

A company's best resource is its employees. When a company limits employees to just the functions of their department, they put themselves at risk of wasting their employees' underutilized talents. The matrix structure is centered on bringing the best employees together to address a specific problem, regardless of their functional job.

A company does not limit itself to working within matrix organizational structures. They can become task-oriented and use their employees' talents more efficiently.

Being fluid in job duties and being exposed to various projects and problems to solve also aids with employee development. Rather than being confined to the duties of a particular role and becoming complacent, employees work across many boundaries and expand their professional skills.

Not only does a company benefit from a more talented workforce, but its employees are also more likely to have higher morale from their professional growth and sense of impact.

An Increase In Autonomy

One problem with traditional hierarchical structures is that it gives off a more authoritative, you-work-for-me feel, whereas matrix structures bring a more democratic approach. Focus is put on a particular problem or project, and the best talent is put in place to get it done, regardless of traditional titles and positions. Employees have the flexibility to solve problems however they please, and generally enjoy the autonomy because they are able to witness the direct impact of their efforts and hard work.

Disadvantages of the Matrix Structure

One of the main disadvantages of the matrix structure is that employees can often feel overwhelmed with heavy workloads, potentially leading to burnout. Employees receive tasks from their functional department, as well as tasks from their assigned project, so it can become a lot to manage.

For the company, one of the problems with this structure is the additional expense involved – such as the need to hire traditional functional managers and project managers. The doubling of managers can skyrocket a company's payroll expenses and overhead costs.