Matrix Organization Structure: Advantages and Disadvantages

Matrix Organization Structure: Advantages and Disadvantages
By Nodir MAtaev
Contents
Contents
OrganizationalStructure
Types of OrganizationalStructures
Line Organizations
Line-and-Stufforganizations
Committee Organizations
Matrix Organization: AnOutline
Matrix Organization:Advantages
Matrix Organization:Disadvantages
Matrix Organization:Conclusion
References
Bibliography
OrganizationalStructure
An organization is the result of theorganizing process and can be defined as a structured grouping of peopleworking together to achieve organizational objectives.1 Everyorganization must choose an overall structure that meets its needs best andallows interactions among individuals and departments to attain the its goals.
For a small business, the organizingprocess is comparatively simple. The owner of a grocery store employs a fewpeople to sell groceries and to take care of the supplies and personallydirects business operations. The handling of such a relatively small store is moreor less simple and easy.
However, as a company grows the need fororganization increases. As a company enlarges its scope of business, it has tohire more employees. Instead of a single bookkeeper, it will have to employ anentire accounting department, rather than one seller the owner will need anumber of them. The large number of employees makes it impossible for a singleperson to control the business. One or other formal type of organizationbecomes necessary.
To effectively accomplish their goalslarge organizations use various techniques such as departmentalization,delegation, and others. Departmentalization is the dividing of work activitiesinto units within the organization. This method can be used to effectively runa large organization and has been used in different organizations throughoutthe world. Types of OrganizationalStructures
An organizational structure is a hierarchical concept ofsubordination of entities that work together and contribute to serve one commonaim2. The structure of an organization is usually built in one of avariety of styles, dependent on the organization’s objectives. The structure ofan organization will determine the modes in which it shall operate and willperform.
Organizational structure allows the expressed allocation ofresponsibilities for different functions and processes to different entities.Ordinary description of such entities is as branch, site, department, workgroups and single people.
Organizations can be classified into four main types: line,line-and-stuff, committee, and, matrix organizations. The classification is doneaccording to the nature of internal authority relationships of organizations.Line Organizations
matrix Organization committee
The line organization is the oldest and the simplest organizationalstructure. This structure is defined by its clear chain of command, with finalapproval on decisions affecting the operations of the company still coming downfrom the top. Because the line structure is most often used in smallorganizations—such as small law firms, hair salons, and small stores—thepresident or CEO can easily provide information and direction to subordinates,thus allowing decisions to be made quickly.
Line structures by nature are informal and involve fewdepartments, making the organizations highly decentralized. Employees aregenerally on a first-name basis with the president, who is often availablethroughout the day to answer questions and to respond to situations as theyarise. It is common to see the president or CEO working alongside the subordinates.The line organization is effective in the smallest organization only. Thereason is that the manager has total responsibility for a number of activities andcannot be efficient at all of them.
Line-and-Stufforganizations
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While the line structure would not be appropriate for largercompanies, the line-and-staff structure is applicable because it helps toidentify a set of guidelines for the people directly involved in completing theorganization's work. This type of structure combines the flow of informationfrom the line structure with the staff departments that service, advise, andsupport them
Line departments are involved in making decisions regarding theoperation of the organization, while staff areas provide specialized support.The line-and-staff organizational structure «is necessary to providespecialized, functional assistance to all managers, to ensure adequate checksand balances, and to maintain accountability for end results»3
An example of a line department might be the production departmentbecause it is directly responsible for producing the product. A staffdepartment, on the other hand, has employees who advise and assist—making surethe product is advertised or that the customer service representative'scomputer is working.
Committee Organizations
In a committee organization,   authority and responsibility are in the hands of a group ofindividuals rather than a single manager. In this type of organization groupsof individuals, or committees, make decisions together. This ensures thatindividuals from diverse departments make more sound decisions. On the otherhand, this slows down the decision making process as each member of the committeemust agree with the decision.Matrix Organization: AnOutline
A variation of the line-and-staff organizational structure is thematrix structure (matrix organization structure is sometimes called projectmanagement structure).
Matrix structures have come about as a result of coordinationproblems in highly complex industries such as aircraft manufacture4. The term matrixcomes from the intersection of the horizontal authority-responsibility flowwith the vertical flows of the traditional line-and-staff organization5.
In today's workplace, employees are hired into a functionaldepartment (a department that performs a specific type of work, such asmarketing, finance, accounting, and human resources) but may find themselvesworking on projects managed by members of another department. Organizationsarranged according to project are referred to as matrix organizations.Matrix organizations combine both vertical authority relationships (whereemployees report to their functional manager) and horizontal, or diagonal, workrelationships (where employees report to their project supervisor for thelength of the project). «Workers are accountable to two supervisors—onefunctional manger in the department where the employee regularly works and onespecial project manager who uses the employee's services for a varying periodof time» 6
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Matrix Organization7
As shown in the figure above, the matrixorganization is built to carry out certain projects or to solve specificproblems. People with diverse skills come together to implement the projects inhand. A special feature of this type of organization is that employees reportto two superiors instead of one. Members of a project receive  

/> DualAuthority Structure in a Matrix Organization10
instructions both from the projectmanager (horizontal authority) and from the permanent functional departmentheads (vertical authority).
The matrix organization type has beenused in organizations such as Procter & Gamble8, the Harvard Business9 School and others.
People working in a matrix organizationare often called two-boss-employees because they report to twosupervisors at the same time10
The matrix organization type is alsoused successfully by global companies. Global companies must achievesimultaneous coordination of various products in each country they operate.These companies use geographic and product lines of authority. For example, acompany producing computers globally may effectively adopt the matrixstructure. Let us say a company located in Russia has some affiliates inCentral Asian countries. The general manager of a plant in Kyrgyzstan producingcomputer monitors will report to both the head of the monitor producingdivision in Russia and the head of Kyrgyz operations. In fact, the matrixorganization structure has been used globally by many companies.
According to a project manager’s degreeof responsibility, matrix organization can be classified as follows 11:
Weak/Functional Matrix: A project manager hasonly limited authority.  The functional managers maintain control over theirresources and projects.
Balanced/Functional Matrix: A project manager isassigned to oversee the project. Power is shared equally between the projectmanager and the functional mangers.
Strong/Project Matrix: A project manager is primarilyresponsible for the project. Functional managers provide technical expertiseand assign resources as needed.
Note, however, it is impossible to say that one type of matrixorganization is better than the others12. Matrix Organization:Advantages
Many businesses have turned to a matrixorganization structure to track use of resources across traditional functional,departmental, and product line boundaries. A matrix can also mapmicro-organizations such as project and team structures within an overallorganizational structure. In both cases, a main goal is to save money byavoiding duplication of effort.
The Matrix type of organization hasseveral advantages. The matrix can be very effective in a complex, changingenvironment. Many high-tech companies use the matrix structure to adapt quicklyto fast-changing markets. In the matrix, meetings are very common and theyallow new issues to be raised and problems to be solved. In the matrix,employees can be transferred from one division to another easily. The matrixalso enables the sharing of new experiences, methods of handling problems,skills among employees. In addition, in the matrix employees clearly know whois responsible for the success of the project. The matrix structure also makespossible the participation of workers in team meetings, discussions and in theattainment of divisional objectives. This means that in the matrix organizationemployees are motivated because they have relatively larger tasks.  Finally,this type of organization is best suitable for global organizations, as in suchorganizations managers can effectively achieve goals and be flexible enough toadapt to changing environments.
The advantages of the matrix can besummarized as follows:
Pros of the matrix organization:
· More efficient use ofresources than a single hierarchy
· Flexibility, adaptability tochanging environment
· Development of general andspecialist management skills
· Cooperation betweendepartments
· Expertise available toeveryone in the organization
· Clear responsibility
· Enlarged tasks for employees
· Better suitable for globalcompaniesMatrix Organization:Disadvantages
Like any organizational form, the matrixhas its disadvantages. The major problem is the confusion and annoyance causedby the twofold chain of command. Often employees do not know for sure to whom andhow to report. Potential conflicts can arise concerning the division ofauthority. The different styles of the matrix described in the outline oforganizations are not clearly stated in the organizational charters andthis may cause disputes. In global organizations the matrix can cause conflictsrelated to functional goals of the company and the country’s goals. The thirddisadvantage is that much time is lost to meeting and discussions dedicated toresolving conflicts. This is true because when the relationships among thedepartments of a company becomes tense it is really hard to come to acompromise. In fact, many companies that have used the matrix have blamed thestructure for wasting time in heated debates and discussions rather thanactions to attain the companies’ goals. Managers in the matrix need humanrelations training to learn to work with two bosses, which is not easy andrequires a lot of time and effort. For many organizations, it is difficult tokeep the power balanced between the functional and divisional sides of thematrix.
Last, opponents to matrix management believe that it is a dated method toorganize a company.13 The belief in the 70's and 80's was that a matrix organization wouldbe the best way to manage project complexity. This has been proven untrue overthe years by the failures of companies such as IBM, HP, and AT&T.
The summary of disadvantages of the matrix structure is providedbelow:
Cons of the matrix structure:
· Frustaration and confusionafrom dual chain of command
· Conflicts between two sidesof the matrix
· Many meetings anddiscussions
· Human relations skillsneeded
· Difficult to maintain the powerbalanced
· Out-of-date methodConclusion
Previously, before the matrix structure came about, most largecorporations had been structured in departments. These departments were logicalpartitions of the company and any given groups of employees reported to thehead of the department. In the 1970s, companies began to restructure itsemployees into a matrix organization, mainly with the intent of developingproject managing units.
Even though the matrix structure has some disadvantages, matrixorganizations provide clear accountability within a specific business functionand allow more efficient allocation of specialized skills across the entirebusiness. By taking advantage of the shared services and skills and not havingto develop and manage those skills themselves, the divisional or product line organizationscan better focus on their core business objectives. This last point was one ofthe original driving forces behind the development and popularization of matrixorganizations. Today, matrix organizations are used to describe more than justthe product-based organizations. For example, many IT project managers usesmaller matrix-style structures for project and team organizations to trackskills, tasks, and resources across multiple projects to ensure skills andresources are used properly. The matrix structure has  also been used atMicrosoft, and there are more than 5,000 project managers there out of morethan 50,000 total employees.14 To sum up, if used properly by companiesthrough clearly defining each manager’s duties, continuously being improved tomeet the organization’s needs, the matrix is probably  the most suitablestructure for middle-sized and large organizations.

References
1. Boone E. Louis, Kurtz L.David: Contemporary Business, 1996.
2. “Organizational Structure”, en.wikipedia.org/wiki/Organizational_structure
3. Allen, 1970, p. 63.
4. Gerald A. Cole, ManagementTheory and Practice,2004, p. 192.
5. Boone E. Louis, Kurtz L.David: Contemporary Business, 1996, p.206-207.
6. Keeling and Kallaus, 1996,p.43.
7. Boone E. Louis, Kurtz L.David: Contemporary Business, 1996, p.206.
8. www.pg.com
9. www.harvard.edu
10.  Richard L. Daft, Management,p.334.
11. Organizational Structure”, en.wikipedia.org/wiki/Organizational_structure
12.  Galbraith, 1971
13.  “Matrix Management”, en.wikipedia.org/wiki/Matrix_management
14.  Scott Berkun: The Art ofProject Management, p. 13
Bibliography
Boone E. Louis, Kurtz L. David: ContemporaryBusiness, Orlando, FL: The Dryden Press, 1996
Richard L. Daft:  Management, Orlando, FL: The DrydenPress, 1997
James M. Higgins: The Management Challenge, New York,Macmillan College Publishing Company, 1994
Gerald A. Cole: Management Theory and Practice, London:Thomson Learning, 2004
Scott Berkun: The Art of Project Management, The USA:O’Reilly Media, Inc., 2005