A functional organizational structure features a powerful management hierarchy running departments devoted to broad work classifications such as assembly or marketing. Departmentalizing this way encourages job specialization. Specialization and oversight are desirable when a company’s strategy calls for standardization, efficiency and control. Unfortunately, these characteristics make for sluggish responsiveness to the needs of particular niches. The divisional structure solves that by grouping jobs to increase focus on niches, but sacrifices some efficiency in the process. The matrix structure typically combines the divisional and functional structures, retaining the advantages of each. Creating this hybrid produces some disadvantages, however.
Companies forming a matrix typically begin with a vertical hierarchy of permanent departments led by managers from above. The departments contribute one or more employees to different divisional projects, each project reaching across departments to create a horizontal team focused on a particular product, customer or region. The combination of vertically oriented departments and horizontally oriented divisional projects forms a grid. This matrix makes every employee responsible for both divisional and departmental goals. These combined responsibilities generates the disadvantages of the matrix organizational structure.
Divisional project managers have staff authority over all project-related matters, giving these leaders power over employees committed to the project. These employees remain accountable to their functional managers. The dual chain of command can easily put employees in an untenable situation when functional and divisional bosses have different ideas on such things as work style, priorities and procedures. Employees with divided loyalties might begin to feel pressure to choose one boss over another, skewing the power dynamic at the workplace
Balance of Power
Problems with power imbalances may not only develop because of employees, but also from the company culture as a whole. Upper management must ensure that project authority and functional authority are balanced, with each given equal consideration and resources. The imbalance otherwise undercuts the effectiveness of managers and the matrix structure as a whole.
Horizontal Versus Vertical
Problems arise in the matrix structure when divisional missions are at odds with functional goals, plans and priorities. When horizontal and vertical priorities diverge, functional and divisional managers may begin to compete for resources and power. This includes competition for subordinate support. Managers working within the matrix structure must coordinate and synchronize their plans to avoid conflicts.
Given the potential for conflict caused by the dual command structure, the matrix demands ample meeting time. This should be scheduled as a regular part of doing business, a preventative measure that keeps the organization running smoothly. Additionally, companies adopting the structure must realize going in that the success of such meetings and the organization itself are dependent on the interpersonal, communication and conflict resolution skills of employees and management. Companies might need to invest in training to that end.
- Management: Meeting and Exceeding Expectations; Warren R. Plunkett, et al.
- Reference for Business: Organizational Structure
- Pearson Higher Education: Chapter 6 - Organizing the Business
- Jason Reed/Ryan McVay/Digital Vision/Getty Images