Companies face major challenges when it comes to organisational design: what is the best way to organise their workforce? Globalisation and the unfavourable economic climate put additional pressure as the competitors are not on the fence waiting for our move.
In this post I will talk about the matrix based organisational structure. It is a complex structure and it’s normally adopted by major multi-national companies. The main reason is that it allows to share talent and resources across the company.
The matrix organisation is a “mix” of the functional and product structures. In fact, horizontally it is arranged by functional areas (e.g. sales, marketing, human resources, etc). Vertically it is organised by products/services provided by the organisation.
The matrix structure promotes cross functional support across the layers of the organisation.
This means that the knowledge and skills of an employee in a specific function are available (and therefore can be optimised) for several projects. This allows for a flexible use of the organisational talent and growth opportunities for the employees.
Employees may struggle to understand their role and who they report to due to the complexity of the structure itself.
Typically an employee (in the figure above I make the example of a marketing manager) reports to two bosses: 1) the head of the function (e.g. VP of Marketing); 2) at the same time they may report to a project manager (e.g. Director or Project 2). This may cause confusion with regards to the expectations of an employee.
Additionally matrix organisations may cause power “competitions” between the functional head and the person that is responsible for a specific project.
Those situations have to be carefully managed, especially when they are significant cause of tension and de-motivaton for the employee(s) that report to the individuals that are engaging in a power war. Ultimately this kind of behaviour (that is very common) leads to a decrease in performance and has an overall detrimental impact for the organisation.
The perfect organisational structure does not exist. Decisions on what type of organisational design to adopt have to be carefully considered based on the specific company, strategy and requirements. Just because a matrix organisation works for your main competitor, it does not mean that it is going to work for your organisation.
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