Projectized and functional organizations are rigid by nature. In a functional structure, there is a little scope of change in the way they work. This causes issues dealing with projects. All staff cannot be temporary.
A projectized organization has a temporary structure. This is not a favorable condition for dealing with projects. They need some permanent staff to take care of regular activities.
This is where a matrix organization comes in; it has the best of both worlds. It allow organizations to choose the structure to suit their requirements. They can have an efficient and flexible structure.
The projectized and functional structures represent the two extreme points of a string, while the matrix organizational structure is a balance. It is a mix of two or more organizational structures.
This combination helps organizations achieve higher efficiency, readiness, and market adaptation. They can respond faster to customer demand with less product launch time. This structure is suitable for organizations operating in a dynamic environment.
However, a matrix structure is not suitable for a stagnant environment: for example, organizations with production operations. They have minimal scope to change. They should adopt the functional structure.
Matrix Organizational Structure
As per the PMBOK Guide, the matrix organization is a combination of the projectized and the functional structures.
In a matrix structure, the authority of a functional manager flows downwards, and the influence of the project manager flows horizontally. Hence, it is called a matrix organizational structure.
Employees may report many managers in a matrix organizational structure.
For example, let us say you are an engineer working in a functional department. Your organization gets a project, and they need an engineer to assist the project manager. You may be assigned to the project for a short period or be called you whenever they will need your services. You will have two bosses to report to.
Functional managers will look after the functional part of the project. They may decide on the staff assignments. The project manager will have authority over the administrative part of the project: for example, carry out the work, follow-up on the schedule, evaluate the performance, etc.
Working in a matrix organization is challenging. Your role will be complex because you have many bosses. Work priorities, a clear reporting system, and responsibilities are important to avoid confusion and provide a better work environment in a matrix organization.
The matrix organization structure usually exists in large and multi-project organizations. Here they can move employees whenever and wherever their services are needed. The matrix structure has the flexibility of transferring the organization’s talent by considering employees to be shared resources.
Types of Matrix Organizational Structure
You can classify the matrix structure into three categories:
- Strong Matrix Structure
- Balanced Matrix Structure
- Weak Matrix Structure
Strong Matrix Organizational Structure
In strong matrix organizations, the project manager has the authority and a full-time role. A full-time project management team will report them and they control the budget. This structure has the characteristics of a projectized organization.
The functional manager has a minimal role in a strong matrix organization.
Balanced Matrix Organizational Structure
In balanced matrix organizations, project and functional managers share the authority. The project manager has a full-time role, while project management staff will be part-time. Here, both managers control the budget.
Weak Matrix Organizational Structure
In weak matrix organizations, the project managers have limited authority. Their role is part-time and no administrative staff report to them. Their role is like a coordinator or an expediter. Here, the functional manager controls the project budget.
A weak matrix organizational structure resembles the characteristics of a functional organizational structure.
Advantages of a Matrix Organizational Structure
The following are a few advantages of a matrix organizational structure:
- Highly skilled and capable resources can be shared. This allows open communication and knowledge sharing within the organization.
- The matrix structure is dynamic. It allows employees to communicate across the boundaries and creates a pleasant, cooperative, work environment that helps to integrate the organization.
- Employees can enhance their skills and knowledge by taking part in different projects. The matrix structure provides a good environment to learn and grow.
- Employees are skilled in functional departments. Project teams can get these highly skilled employees whenever their services are needed.
- Because of job security, employees will be faithful and perform well, meaning the efficiency of a matrix organization is higher.
- Resource usage is optimal. You can get access to experts easily from your organization, and you can share equipment between projects. Negotiation is better in matrix organizations.
Disadvantages of a Matrix Organizational Structure
The following are a few disadvantages of a matrix organizational structure:
- Employees may have to report to two managers which adds confusion and may cause conflict. This happens in a balanced matrix organization where both bosses have equal authority.
- A conflict may arise between the project manager and the functional manager regarding authority.
- Employees may be confused about their roles and responsibilities. Work priorities can cause conflict among employees if they are not well defined. This happens when employees are assigned a task different from what they were doing.
- There can be competition for scarce resources. This may cause hostility and could impair the work.
- It is generally perceived that matrix organizations have more managers than required, which increases overhead costs.
- The workload tends to be high in a matrix organization. Employees have to do their regular work along with the additional project-related work. This can exhaust them. Employees may ignore their regular responsibilities if they are overtaxed.
- A matrix structure is expensive to maintain. Organizations have to spend more to keep resources because all resources are not busy at all times and some are needed only for a short duration.
How to Overcome the Disadvantages of a Matrix Organizational Structure
Some of these disadvantages can be countered in the following ways:
- There must be close cooperation between the project manager and the functional manager to avoid confusion and conflict.
- Communication should be well defined and it should occur in all directions. This is important to gain support from executives, managers, supervisors, and employees.
- Organizations must communicate their vision, objectives, and goals with their employees.
- Power distribution between the project and the functional manager should be kept properly. Any imbalance may impact the effectiveness of operations.
- Any conflict between the project manager and the functional manager must be resolved as quickly as possible and in private.
- Roles and responsibilities should be clear and communicated to employees to avoid confusion.
Big organizations have dynamic environments. They need to respond quickly to customer requirements and market demand, meaning a matrix structure is suited to them. This allows for better resource utilization and provides experts when needed. The matrix organizational structure tries to blend the best of both worlds: the power-sharing between the project and functional manager change according to the matrix.
This concludes this blog post on the matrix organizational structure. If you have something to share, please do so in the comments section below.
This is an important topic from a PMP exam point of view.
Reference: Alternative Organizational Structures 1976 and “Is the Matrix Fad a Fast Fading Flower?” 1984, Bob Youker.