Matrix structures have come about as a result of coordination problems in highly complex industries such as aircraft manufacture⁴ . The term matrix comes from the intersection of the horizontal authority-responsibility flow with the vertical flows of the traditional line-and-staff organization⁵ .

In today's workplace, employees are hired into a functional department (a department that performs a specific type of work, such as marketing, finance, accounting, and human resources) but may find themselves working on projects managed by members of another department. Organizations arranged according to project are referred to as matrix organizations . Matrix organizations combine both vertical authority relationships (where employees report to their functional manager) and horizontal, or diagonal, work relationships (where employees report to their project supervisor for the length of the project). "Workers are accountable to two supervisors—one functional manger in the department where the employee regularly works and one special project manager who uses the employee's services for a varying period of time" ⁶

Matrix Organization⁷

As shown in the figure above, the matrix organization is built to carry out certain projects or to solve specific problems. People with diverse skills come together to implement the projects in hand. A special feature of this type of organization is that employees report to two superiors instead of one. Members of a project receive

Dual Authority Structure in a Matrix Organization¹⁰

instructions both from the project manager (horizontal authority) and from the permanent functional department heads (vertical authority).

The matrix organization type has been used in organizations such as Procter & Gamble⁸ , the Harvard Business⁹ School and others.

People working in a matrix organization are often called two-boss-employees because they report to two supervisors at the same time¹⁰

The matrix organization type is also used successfully by global companies. Global companies must achieve simultaneous coordination of various products in each country they operate. These companies use geographic and product lines of authority. For example, a company producing computers globally may effectively adopt the matrix structure. Let us say a company located in Russia has some affiliates in Central Asian countries. The general manager of a plant in Kyrgyzstan producing computer monitors will report to both the head of the monitor producing division in Russia and the head of Kyrgyz operations. In fact, the matrix organization structure has been used globally by many companies.

According to a project manager’s degree of responsibility, matrix organization can be classified as follows ¹¹ :

Weak/Functional Matrix : A project manager has only limited authority. The functional managers maintain control over their resources and projects.

Balanced/Functional Matrix : A project manager is assigned to oversee the project. Power is shared equally between the project manager and the functional mangers.

Strong/Project Matrix : A project manager is primarily responsible for the project. Functional managers provide technical expertise and assign resources as needed.

Note, however, it is impossible to say that one type of matrix organization is better than the others¹² .

Matrix Organization: Advantages

Many businesses have turned to a matrix organization structure to track use of resources across traditional functional, departmental, and product line boundaries. A matrix can also map micro-organizations such as project and team structures within an overall organizational structure. In both cases, a main goal is to save money by avoiding duplication of effort.

The Matrix type of organization has several advantages. The matrix can be very effective in a complex, changing environment. Many high-tech companies use the matrix structure to adapt quickly to fast-changing markets. In the matrix, meetings are very common and they allow new issues to be raised and problems to be solved. In the matrix, employees can be transferred from one division to another easily. The matrix also enables the sharing of new experiences, methods of handling problems, skills among employees. In addition, in the matrix employees clearly know who is responsible for the success of the project. The matrix structure also makes possible the participation of workers in team meetings, discussions and in the attainment of divisional objectives. This means that in the matrix organization employees are motivated because they have relatively larger tasks. Finally, this type of organization is best suitable for global organizations, as in such organizations managers can effectively achieve goals and be flexible enough to adapt to changing environments.

The advantages of the matrix can be summarized as follows:

Pros of the matrix organization:

· More efficient use of resources than a single hierarchy

· Flexibility, adaptability to changing environment

· Development of general and specialist management skills

· Cooperation between departments

· Expertise available to everyone in the organization

· Clear responsibility

· Enlarged tasks for employees

· Better suitable for global companies

Matrix Organization: Disadvantages

Like any organizational form, the matrix has its disadvantages. The major problem is the confusion and annoyance caused by the twofold chain of command. Often employees do not know for sure to whom and how to report. Potential conflicts can arise concerning the division of authority. The different styles of the matrix described in the outline of organizations are not clearly stated in the organizational charters and this may cause disputes. In global organizations the matrix can cause conflicts related to functional goals of the company and the country’s goals. The third disadvantage is that much time is lost to meeting and discussions dedicated to resolving conflicts. This is true because when the relationships among the departments of a company becomes tense it is really hard to come to a compromise. In fact, many companies that have used the matrix have blamed the structure for wasting time in heated debates and discussions rather than actions to attain the companies’ goals. Managers in the matrix need human relations training to learn to work with two bosses, which is not easy and requires a lot of time and effort. For many organizations, it is difficult to keep the power balanced between the functional and divisional sides of the matrix.

Last, opponents to matrix management believe that it is a dated method to organize a company.¹³ The belief in the 70's and 80's was that a matrix organization would be the best way to manage project complexity. This has been proven untrue over the years by the failures of companies such as IBM, HP, and AT&T.