Matrix Structure

Fundamentals

Firms are typically structured around different forms of departmentalization: functions (e.g., sales, marketing, manufacturing, and research and development, or R & D), projects, product lines, geographic areas, customer segments, and so on. Matrix management encompasses a series of efforts to lay one or more new forms of departmentalization on top of an existing form (e.g., function by project, function by product line). Thus, if the existing form is the vertically organized functional organization, the new form of departmentalization is a horizontal overlay of project teams or product lines on top of the vertical hierarchy. As the new form of departmentalization grows more elaborate (e.g., as projects increase or product lines proliferate), the grid becomes more dense, and the structure approaches a full matrix structure.

The decision to adopt a matrix structure is strongly motivated by the desire to have the best of two or more forms of departmentalization used. Thus, in a typical function-by-product line structure, the firm seeks to maintain the advantages of functional organization (e.g., specialization, efficient use of resources, scale economies, focus on in-depth skill development, strategic control kept at the top of the firm) with the advantages of product line organization (e.g., coordination between functions, product focus and accountability, development of greater breadth in managerial training, flexibility in adapting to changing product needs, and maintaining proximity to the customer). The matrix is further adopted to solve problems of information processing and communication across functional personnel in firms with multiple ongoing projects, product lines, geographic segments, and so forth.

Of course, the matrix also possesses some of its own weaknesses. These include possible confusion over who is responsible for what, conflicts resulting from two competing hierarchies with authority over personnel, power struggles between functional and product line managers, the premium placed on teamwork and interpersonal skills, and development of common ground and goals across the multiple hierarchies. Robert Ford and W. Alan Randolph include a full review of the strengths and weaknesses of the matrix structure, and Thomas Sy and Laura D’Annunzio articulate the challenges of managing matrix organizations.

Matrix structures vary in terms of the structural and administrative elements that build upon one another to form more dense grids. The new departmentalization form can be structurally differentiated from the existing form, using a matrix director and matrix department. The two forms of departmentalization that the matrix comprises can exert dual authority in terms of supervision of shared subordinates (e.g., two-boss managers). Managers in the new form of departmentalization can have formal decision-making authority for administration, budgeting, and policy making. The matrix structure can also possess dual support systems (information systems, planning). Matrix structures are commonly linked with project management and project organization. Reviewing past uses of the term, Ford and Randolph in 1992 summarized the matrix as “cross-functional overlays that create multiple lines of authority and that place people in teams to work on tasks for finite periods of time” (p. 272).

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