Departmentalization by Matrix

Departmentalization by Matrix in management is a technique of managing an

organization (or, more commonly, part of an organization) through a series of dual-

reporting relationships instead of a more traditional linear management structure. In

contrast to most other organizational structures, which arrange managers and

employees by function or product, matrix management combines functional and product

departments in a dual authority system. In its simplest form, a matrix configuration may

be known as a cross-functional work team, which brings together individuals who report

to different parts of the company in order to complete a particular project or task. The

term "matrix" is derived from the representative diagram of a matrix management

system, which resembles a rectangular array or grid of functions and product/project

groups.

The practice is most associated with highly collaborative and complex projects, such as

building aircraft, but is also widely used in many product/project management situations.

Even when a company does not label its structure a matrix system or represent it as

such on an organization chart, there may be an implicit matrix structure any time

employees are grouped into work teams (this does not normally include committees,

task forces, and the like) that are headed by someone other than their primary

supervisor.
Matrix Organization

Matrix management structures combine functional and product departmentalization.

They simultaneously organize part of a company along product or project lines and part

of it around functional lines to get the advantages of both. For example, a diagram of a

matrix model might show divisions, such as different product groups, along the top of a

table (See Figure 1). Along the left side of the same table would be different functional

departments, such as finance, marketing, and production. Within the matrix, each of the

product groups would intersect with each of the functional groups, signifying a direct

relationship between product teams and administrative divisions. In other words, each

team of people assigned to manage a product group might have an individual(s) who

also belonged to each of the functional departments, and vice-versa.

Theoretically, managers of project groups and managers of functional groups have

roughly equal authority within the company. As indicated by the matrix, many

employees report to at least two managers. For instance, a member of the accounting

department might be assigned to work with the consumer products division, and would

report to managers of both departments. Generally, however, managers of functional

areas and divisions report to a single authority, such as a president or vice president.

Although all matrix structures entail some form of dual authority and multidisciplinary

grouping, there are several variations. For example, Kenneth Knight identified three

basic matrix management models: coordination, overlay, and secondment. Each of the

models can be implemented in various forms that differ in attributes related to decision-

making roles, relationships with outside suppliers and buyers, and other factors.
Organizations choose different models based on such factors as competitive

environments, industries, education and maturity level of the workforce, and existing

corporate culture.

In the coordination model, staff members’ remains part of their original departments (or

the departments they would most likely belong to under a functional or product

structure). Procedures are instituted to ensure cross-departmental cooperation and

interaction towards the achievement of extra-departmental goals. In the overlay model,

staff members officially become members of two groups, each of which has a separate

manager. This model represents the undiluted matrix form described above. In the third

version, the secondment model, individuals move from functional departments into

project groups and back again, but may effectively belong to one or the other at different

times.
Advantages and Disadvantages

Advantages

The cardinal advantage of a matrix structure is that it facilitates rapid response to

change in two or more environments. For instance, a telecommunications company

might be extremely concerned about both unforeseen geographic opportunities and

limited capital. By departmentalizing its company with the financial function on one axis

and the geographic areas on the other, it might benefit from having each of its

geographic units intertwined with its finance department. For example, suppose that an

opportunity to purchase the cellular telephone rights for a specific area arose. The

matrix structure would allow the company to quickly determine if it had the capital

necessary to purchase the license and develop the area, or if it should take advantage

of an opportunity in another region.

Matrix structures are flatter and more responsive than other types of structures because

they permit more efficient exchanges of information. Because people from different

departments are cooperating so closely, they are eager to share data that will help them

achieve common goals. In effect, the entire organization becomes an information web;

data is channeled both vertically and horizontally as people exchange technical

knowledge, marketing data, product ideas, financial information to make decisions.

In addition to speed and flexibility, matrix organization may result in a more efficient use

of resources than other organic structures. This occurs because highly specialized

employees and equipment are shared by departments. For example, if the expertise of

a computer programmer is needed in another department, he or she can move to that

department to solve its problems, rather than languishing on tasks of low priority as

might happen in a nonmatrix setting.

Other benefits of matrix management include improved motivation and more adept

managers. Improved motivation results from decision-making within groups becoming

more democratic and participatory because each member brings specialized knowledge

to the table—and since employees have a direct impact on day-to-day decisions, they

are more likely to experience higher levels of motivation and commitment to the goals of

the departments to which they belong. More adept management is the result of top

decision makers becoming more involved in, and thus better informed about, the day-to-

day operations of the company. This involvement can also lead to improved long-term

planning.
Disadvantages

Despite their many theoretical advantages, matrix management structures have been

criticized as having a number of weaknesses. For instance, they are typically expensive

to maintain, partly because of more complex reporting requirements. In addition, many

workers become disturbed by the lack of a chain of command and a seeming inability to

perceive who is in charge. Indeed, among the most common criticisms of matrix

management is that it results in role ambiguity and conflict. For instance, a functional

manager may tell a subordinate one thing, and then a product/project boss will tell him

or her something different. As a result, companies that change from a comparatively

bureaucratic structure to matrix management often experience high turnover and worker

dissatisfaction.