A matrix organizational structure generally describes a business with multiple managerial accountability and responsibility. The main types of matrix structures comprise the strong matrix (authority lies with a project manager who has a senior role within the company), balanced matrix (it equally distributes power to both the project and functional manager), and weak matrix (where power lies with the functional manager completely).
Understanding a matrix organizational structure
There are no set guidelines for a matrix organizational structure. This is because the matrix structure is simply a combination of two or more structure types to give each more balance.
As a result, a business can create a matrix structure according to its particular needs and the industry it operates in.
Nevertheless, most organizations using this structure incorporates two chains of command.
One manages functional activities while the other is tasked with managing projects, products, or clients. It’s important to note that these roles are fluid and the balance of power between each manager is not organizationally defined.
Rather than one project manager overseeing every aspect of a project, employees report to two or more managers. This arrangement is often useful when skills need to be shared across departments to complete a task.
Where authority lies with a project manager who has a senior role within the company.
With control over resources and distribution of tasks, the project manager may have more power than the functional manager.
Balanced matrix
As the name suggests, the balanced matrix equally distributes power to both the project and functional manager.
Employees report to the project manager who in turn reports to the functional manager to ensure accountability.
Weak matrix
Where power lies with the functional manager completely. In this scenario, the project manager has a role better defined as a project coordinator or expeditor.
They act as a facilitator between the customer and the project team and can only institute minor project management directives.
Advantages and disadvantages of the matrix organizational structure
Advantages
Enhanced communication – with none of the communication barriers seen in a purely hierarchical structure, communication between departments is fluid and collaborative. Large and diverse companies featuring many functional units can collectively work toward a shared goal.
Employment development – employees working under a matrix structure are exposed to new methods and ways of thinking. This helps them push the boundaries of their comfort zones to further personal and organizational objectives.
Disadvantages
Lack of effectiveness. Large companies may suffer from organizational bloating, where a surplus of managerial and administrative roles combined with more points of communication may decrease productivity. The decision to combine various organizational structures may instead dilute the benefits each structure brings in isolation.
Disharmony. Cross-functional working under a matrix structure does not always succeed. Teams can lose their best talent to other teams or departments indefinitely, causing further productivity losses and a decrease in morale. In some cases, employees returning to their teams after an unsuccessful stint elsewhere may have trouble re-integrating.
In a functional organizational structure, groups and teams are organized based on function. Therefore, this organization follows a top-down structure, where most decision flows from top management to bottom. Thus, the bottom of the organization mostly follows the strategy detailed by the top of the organization.
In a flat organizational structure, there is little to no middle management between employees and executives. Therefore it reduces the space between employees and executives to enable an effective communication flow within the organization, thus being faster and leaner.
Project portfolio management (PPM) is a systematic approach to selecting and managing a collection of projects aligned with organizational objectives. That is a business process of managing multiple projects which can be identified, prioritized, and managed within the organization. PPM helps organizations optimize their investments by allocating resources efficiently across all initiatives.
Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.
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Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
