Enhanced operational performance, efficient decision-making process, quicker completion of projects, and optimal consistency result from a well-designed organizational structure. From resource planning to task allocation to overall management, projects have multiple activities that raise a demand for a flexible and efficient organizational structure. The matrix organizational structure is one such structure often used in project management as it brings together both the project's product and the function of the management producing it. The following guide provides insights into this organizational structure type, how it works, and its pros and cons in project management.

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What Is the Matrix Organizational Structure?

An organizational structure outlines an organization's hierarchy and defines how responsibilities and activities are directed to achieve the business development goals. 

The matrix structure is a type of organizational reporting structure set up like a matrix or grid. Unlike a traditional hierarchy wherein employees report to a boss, in a matrix organization, employees report to a functional manager and a product/project manager.

The traditional hierarchies saw a decline mainly due to miscommunication. The messages were interpreted differently from manager to supervisor to employee. Additionally, since decision-making was centralized and people at the top of the chain were unaware of the minute details of the action or work being carried out, it significantly hampered performance.  

With the increased complexity of projects, problems, and product lines, demand for flexible and collaborative environments emerged, giving rise to the matrix-type organization structure. 

Types of Matrix Organizational Structures

The balance of power between the project manager and functional manager gives rise to the following three types of matrix organizational structures: 

Weak Matrix Organization

  • The functional manager supervises all project management areas. They are the highest authority in the project's decision-making process. 
  • The project manager has a much lower authority. They report to the functional manager.

Balanced Matrix Organization

  • The project manager has more authority in a balanced matrix organization than in a weak matrix organization. 
  • The functional manager serves as the primary managerial authority. 

Strong Matrix Organization

  • The project manager shares equal or more power than a functional manager. 
  • The project manager controls task management and resource planning. 

The Two-Boss Matrix: How Does the Matrix Organizational Structure Work?

Using a matrix organizational structure needs precise planning and team collaboration tools. They work by promoting cross-team collaboration as well as shared resource planning across projects. It reorganizes companies to accelerate their productivity while using two chains of command for a more dynamic approach. 

It groups resources and employees by function and by project/product. For instance, an employee from the design department can be assigned to a project team and will have to report to several bosses depending on the number of projects they are assigned to at a particular time. 

A balanced matrix organizational structure has various people who have two bosses. It has solid reporting relationships in contrast to dotted-line relationships in traditional structures. While solid lines connect managers with their direct subordinates, dotted lines indicate staff/reporting relationships of lesser importance. In the matrix organization, the project manager is not a staff man. They enjoy equal authority as functional managers. Thus, the project personnel do have two bosses.

It must be noted that the matrix is temporary. Matrix organization recognizes that the functional departments are permanent, whereas the project is temporary. Thus, it is curated to last only for the project duration. 

Advantages of a Matrix Organizational Structure

There key advantages of a matrix organizational structure are as follows: 

1. Allows Interdepartmental Communication

The matrix structure facilitates interdepartmental collaboration and communication by allowing several departments to work together. It makes an organization more dynamic by fostering a more open work environment. 

2. Combines Functional and Project Management Structures

The combination of project management and the functional management structure increases the organization's efficiency and helps adapt to changing markets while ensuring a quick response to market demand.

3. Collaboration Between Different Departments

It brings together skilled professionals from different departments, enabling the organization to capitalize on its resources rather than hunting elsewhere for the expertise and hiring new team members for a project.

4. Fosters Development of New Skills 

It offers employees a perfect opportunity to strengthen their communication and interpersonal skills while collaborating with more than one manager. Moreover, employees who work outside a traditional structure expand their skill sets and add valuable experience to their portfolio.

5. Managers and Team Members Retain Their Functional Roles

Projects may come and go. Therefore, in a matrix organization, managers and team members simply assume their functional roles once a project ends rather than searching for new ones.  

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Problems of the Matrix: Disadvantages of a Matrix Organizational Structure 

An environment where different managers enjoy equal superiority over shared team members can also lead to certain complications. Some of the common disadvantages of using a matrix structure are as follows:

  • Unclear Managerial and Team Roles 

Confusions often arise among managers involved with projects outlined by the matrix. An unclear definition of the power dynamics between the project and functional manager leads to ambiguity in specific managerial roles.

Additionally, the division of responsibilities between an employee's functional and project roles is often blurred. 

  • Slow Decision-Making Process 

Since a matrix structure involves two managers, decisions that require the approval of both can sometimes take longer to process. Furthermore, decisions requiring multiple steps, such as in quality assurance, decisions are often slowed down in a matrix organizational structure.

  • Work Overload

It can sometimes lead to work overload on team members when their project workload comes in addition to their functional duties. The piling work can hamper their quality or result in late deliveries. 

  • Measuring Employee Performance Gets Difficult

Implementing a matrix structure might make it difficult to assess employee performance for a project, as team members may be performing functional duties as well as tasks within the project. Fortunately, technological advancements have helped control this problem. 

  • Conflicting Guidance 

An organization with two parallel lines of authority can possibly face conflicting guidance and instructions.

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Making the Matrix Work

On examining the problems of working in a matrix organization, you might assume them to be insurmountable. So, how does a company get this complex matrix organizational structure to function? 

The operation's success lies entirely in the actions of the people involved. The complexity necessitates the following factors:

  • The top management must provide immediate and real support to the matrix –a clear project charter that states the project's purpose and defines the authority and responsibility of the project manager. 
  • The management must indicate to the fullest extent possible the relationships of a project manager with the functional managers. 
  • Functional management must portray flexibility and modify their managerial and operational procedures to make the matrix work. They will have to make a considerable change in determining their priorities, wherein the project has to come first. 
  • Project management must employ negotiation expertise. With the major decisions made with the consensus of the involved functional managers, the project manager will be in a strong position to implement decisions and accomplish desired goals. 
  • Lastly, the project personnel must adapt to the two-boss scenario.

Who Is the Real Boss?

Every two-boss scenario puts forth the logical question— Who is the real boss? 

Theoretically, it seems possible to equally divide responsibilities and authority between the project and functional managers. However, practically things can get complicated and typically differ for various employees. 

For instance, the discipline manager is typically regarded as the real boss by the employees because of the following reasons:

  • Since the discipline manager symbolizes the disciplinary home to which the employees return upon completing a project.
  • The disciplinary manager has the upper hand in performance evaluations and promotions. 

In contrast, some employees who strongly connect to the overall project perceive the project manager as the real boss. 

In a nutshell, there is no one real boss. Instead, a matrix organizational structure witnesses a continually shifting balance of power.

The Project/Functional Interface

The secret of a successful matrix organizational structure is not just a pure balance of power but an outcome of the interface relationships between the functional and project managers. 

It is crucial to negotiate every project action and decision across this interface. Depending on the dedication and personality of the two managers, this interface relationship can either be a bitter conflict or seamless cooperation. A dictatorial personality is not the solution because such a manager may win the local skirmish but would soon alienate everyone on the project. Moreover, arbitrary decisions by any one of the managers can only intensify the possibility of conflict. 

In a matrix organization, the project manager has two important interfaces — functional and top management. Ready access to the top management and a good working relationship with functional management is essential for eliminating obstacles and resolving big problems. 

Cooperation, consultation, negotiation, and constant support are necessary for the project and functional managers to achieve activity harmony despite their conflicting roles and objectives. 

Should your Small Business Use the Matrix Organizational Structure?

Like any other project management system, the matrix organizational structure comes with both critics and proponents. Despite its complexity, several organizations can benefit from it even while employees report to two managers.

When Opting for the Matrix Structure Makes Sense?

Often small businesses are cash-strapped, and hiring skilled professionals to establish a diligent project team turns out to be a costly endeavor. Therefore, a matrix organizational structure enables small businesses to maximize their available resources. Sharing resources and employees across functions for the development of new products helps them create a stronger and more diverse project team.

When Should You Choose Another Organizational Structure?

Certain situations can be unfavorable for the flexibility of the matrix team structure, such as: 

  • When specific skill sets are crucial to a business function, picking up people from a department to join project teams can reduce their usefulness. 
  • When a project is likely to continue long-term, it is better to formulate a dedicated team rather than share people and resources through the matrix system. 

Best Project Management Software for a Matrix Organizational Structure

The use of efficient project management tools can undoubtedly help organizations maximize their benefits from a matrix organizational structure. Some of the best project management software options that can help make matrix management work for your team are as follows:

1. Wrike

Best suited for: Resource Planning.

It is crucial to ensure that you don't underutilize or burn people out while sharing people and resources. Therefore, a project management tool with optimal resource planning features is vital for success.

Wrike helps you monitor what everyone on your team is doing, enabling project managers to react efficiently to requests, allocate tasks, and balance team members' workloads.

Wrike also provides real-time visibility into the project's overall status, authorizing managers to improve the process and adjust personnel in a timely manner.

2. Monday

Best suited for: Budget Management

A well-structured project risk management plan is vital to the project planning phase, and budgeting is one potential risk that every project manager must watch out for.  

Using monday.com, you can set budgets and even create your budget dashboards. You can set budgets per activity, per person, or per event. Moreover, Monday's formula column helps you with advanced Excel-type formulas that facilitate tracking budgets.  

3. Podio

Best suited for: Communication and Collaboration

The project management process in a matrix structure relies heavily on open communication and team collaboration. A project manager is expected to create a communication plan suitable for all stakeholders throughout the project's life cycle.

With Podio, your team gets access to a centralized workspace for comments, updates, and files. The managers can upload their project plan or necessary documents into Podio, and the team gets easy, on-demand access as and when needed.

Additionally, its social network-like feed system keeps every team member in the loop. Podio also assists in swift meeting scheduling, integrated chats, and personal dashboards. 

Tips for Using the Matrix Organizational Structure

Implementing the matrix organizational structure requires you to consider how to address key details that arise when defining manager and team roles. Some important tips for effective matrix organizational structure are as follows: 

  • Clarify Managerial Expectations

Managers must outline clear expectations for each team member, such as due dates for specific milestones.

  • Manage Expectations From Different Managers

The top management must outline the expectations of different managers involved in a project. For instance, the project manager might have to report on the project's overall progress, while the marketing manager may be expected to account for the results.

  • Hold the Staff Accountable for Their Work

In a matrix structure, you must consider methods to foster employee engagement and hold employees accountable for their work. For instance, employees can be asked to fill out a weekly report template and mark the tasks completed in a project.

  • Effective Communication Maintenance 

For a smoother operation, consider setting clear criteria for communication between managers and team members. For instance, weekly chats through a communication tool or app can help get a quick overview of the progress of the project from various departments involved.

  • Foster Healthier Relationships Between Departments

Consider offering opportunities for collaboration among involved departments so that each manager and team develop a better understanding of how they must work together towards specific goal achievement. 

  • Supplement Employees With the Necessary Resources

Automating tasks to avoid redundancy is one of the best methods for effective project management. In a matrix organizational structure, where employees carry out different duties, you must consider adopting the right tools that help perform tasks efficiently. Additionally, addressing employee misconceptions regarding all that the project entails is a must to lessen their overall burden. 

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Conclusion

Matrix organizational structure is one of the many smart moves for effective project management and fostering overall organizational effectiveness. Dive deeper into project management and take your career to the next level. Enroll on Simplilearn's world-class online Project Management Training Courses and add the PMP certification to your resume. 

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Simplilearn is one of the world’s leading providers of online training for Digital Marketing, Cloud Computing, Project Management, Data Science, IT, Software Development, and many other emerging technologies.

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  • *According to Simplilearn survey conducted and subject to terms & conditions with Ernst & Young LLP (EY) as Process Advisors