Structure, regardless of what field in life we are talking about, is an essential part of any foundation. It represents the frame that keeps everything together in one perfect arrangement. The same is true for companies. Each company has a structure that refers to the way the company is organized or set up. The structure defines the company’s hierarchy while the hierarchy shows how groups or functions report within the company. Furthermore, the structure affects the distribution of roles and responsibilities. Simply put, the organizational structure of a company highlights which department is more or less powerful. If we would like to narrow this definition down to what it means for a Project Manager (PM), we could say that the organizational structure has an impact on how resources are allocated to the project. It is also a determining factor in how much influence the PM will have.
Now that we’ve covered some basic definitions of what the structure means, it’s time to shed some light on the three types of matrix organizational structure in a company in terms of project management. These are Functional Organization, Projectized Organization, and Matrix Organization.
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Functional Organization
This type of organization is the most common. In it, people are grouped by areas of specialization. Depending on their size, these groups are managed by managers, directors, or vice presidents. In a functional organization, every employee is positioned within only one function and has one manager they report to, the Functional Manager. The team members do both the project work and operational work. The moment the project assignment is finished, they return to their operational work.
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Projectized Organization
This type of organization is at the complete end of the spectrum compared to the functional one. The project-based organization is structured around projects and not functions. Project managers have the authority for the project and they control the project resources. Once the project is over, people involved with the project either have to find another job or they are assigned to a new project.
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Matrix Organization
The two above-mentioned types of structural organizations are quite rigid by nature, and as we have seen they are at the end of the spectrum. This is where matrix organizational structure steps in. It tries to combine the best of these two worlds and to blend their features. It aims at getting the benefits from both the Functional and Projectized Organizations. As a matter of fact, matrix organizational structure allows companies to choose the structure according to their requirements. On top of that, matrix organizational structure provides an opportunity for companies to have an efficient and flexible structure. The matrix organizational structure can usually be found in large and multi-project organizations. There are three types of matrix organizational structure depending on the distribution of influence and authority between the functional manager and the project manager.
1. Weak matrix organizational structure
2. Strong matrix organizational structure
3. Balanced matrix organizational structure
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Weak matrix organizational structure
This type of organization keeps many of the features of the Functional Organizational structure. Project managers have limited authority and they report to the Functional Manager. The role of the PM is more of a Project Coordinator. They can make some smaller decisions on the allocation of the resources and they act as a communicator point between the customer and the team.
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Strong matrix organizational structure
We could say that roles in terms of authority are reversed here. Now, the power lies within the PM, whereas the Functional manager has a minimal role. Naturally, this type of Matrix comes closer to Projectized Organizational structure. The PM coordinates a project team and manages resources and project activities.
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Balanced matrix organizational structure
As to be expected, this type of matrix organizational structure combines a bit of both Weak and Strong matrix organizational structure. Project and Functional Managers share the authority. The project manager has a full-time role, whereas the project management staff will be part-time. Here, both managers control the budget.
In today’s business environment, most companies use a combination of different organizational structures.
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After we have established the main features of matrix organizational structure, it’s high time to look into the advantages and disadvantages (or rather, challenges) of this type of matrix organizational structure.
Matrix organizational structure – Advantages
As expected, there are numerous advantages of the Matrix system. The skills or knowledge of an employee is shared between the functional units and project tasks and people can be selected based on their skills and suitability. This sharing of employees and transferring them to the positions where they are needed the most makes the Matrix structure highly flexible. It is precisely this feature that is the main benefit of the Matrix structure. In addition, it provides a good ground for professionals to develop their careers. The combination of the Functional and Projectized structures helps organizations achieve higher efficiency, readiness, and market adaptation. They can respond faster to customer demand with less product launch time. In general, the Matrix Organizational structure is suitable for dynamic companies. However, this structure is not really suitable for a stagnant environment since there is very little scope to change. This brings us to some disadvantages, or better said, challenges regarding the Matrix Structure. Let us just name a few.
Matrix organizational structure – Disadvantages
You will quite often encounter the term Two Bosses when the Matrix structure is mentioned. The term quite accurately highlights what seems to be the most dominant challenge for the employees. Having to report to the two managers can create a lot of confusion and conflict. Moreover, employees may be confused about their roles and duties. This primarily occurs in the Balanced Matrix where both managers share equal authority. Not only can the conflict occur between the employees and managers, but it can also happen between the managers themselves. Yet another disadvantage is financially maintaining the Matrix structure. Organizations have to spend more money in order to keep resources that are not always needed full-time but only for a limited period. Another contributing factor is that most matrix companies have more managers than possibly required which makes overhead costs high.
Some of these disadvantages can be overcome. The key element is good communication at all levels. Any conflict between the managers will impede the project and its effectiveness. Therefore, conflicts need to be resolved quickly and privately. Furthermore, clearly defined goals, roles, and responsibilities are necessary in order to avoid confusion amongst the employees. To sum up, big companies provide a very dynamic environment, so the Matrix organization is perfect for them provided they deal successfully with the potential challenges. More stagnant companies would highly unlikely benefit from the Matrix structure. Depending on the type of company and understanding what type of organizational structure will help, will also determine which structure would be the most suitable one. Different organizational structure types will affect various aspects of a project and will require adjusting your management approach accordingly. As it has already been mentioned, in today’s world, most companies use a combination of different organizational structures and that might be the best approach to this after all. Combine the best from every structure just like the Matrix structure does and fruitful results will be achieved.
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Resources:
1. https://en.wikipedia.org/wiki/Matrix_management