Why Many Companies Use the Matrix Organization Structure
The most common organizational structure is the functional model with the president in charge and numerous other supervisors reporting directly to him/her with levels of employees under them.
The matrix organizational structure is one of the newer methods for running a company and is based more on teams than on individual departments. This configuration combines the functional organization with more of a product organization. A product organization is based directly on the manufacturing of a specific product by different groups within the company.
In the matrix organizational structure the upper echelon are the top managers- usually consisting of a president/CEO, vice president, and any general managers. Next will be an arrangement of units which may be determined by geographic locations (i.e. US branch, European branch, or other branch). Within each of these branches there will be a project manager who reports directly to someone in the upper management group.
The branches may have their own human resources, accounting, and sales departments. However, with the matrix organization structure these departments do not work separately from each other as they do in the functional approach. Instead, they work as teams across the departments to develop the product(s) and service(s) offered by the company overall.
It helps to think of this arrangement in terms of a company which produces two primary products: apples and oranges. This means there would be an apples sales department, an apple customer service department, and an apple accounting department. There would also be the same configuration for oranges (i.e. an orange sales department, an orange customer service department, and an orange accounting department).
Members of the apple departments would work together to promote and ensure the quality of the apples while the members of the orange departments would work together to do the same for the oranges. None of them would work in isolation; instead there’d be more of a lattice overlapping the various departments for a common goal.
Each team would report to a functional manager on their progress. The functional manager would then report up to the project manager who, like we’ve already mentioned, reports to the vice president and/or general manager.
Some of the benefits of the matrix organizational structure include the fact that having people across department boundaries working together for a common goal means reduced costs in terms of having to bring in outside help. There are usually fewer issues that arise among various departments because they are all working in conjunction with one another.
Additionally, because the teams bring different talents and skills to the group there is more sense of shared authority and responsibility. Each member is expected to carry out their tasks and the group works together as a whole to ensure success. This also means that the stress is disbursed among the team members so that no one individual has to carry the weight of responsibility alone.
As with any business structure, there is no one right organization. Whether or not the matrix organization structure would be right for your business is going to be dictated by the products, services, and size of your operation.