Matrix Organization

Matrix organization implies a mixed organizational form in which traditional vertical hierarchy is overlaid by a horizontal structure consisting of projects, products, and business subsidiaries or geographical areas.

The key characteristic of a matrix organization is its multiple command structures whereby employees experience dual or multiple lines of authority, responsibility, and accountability that distinguish it from the traditional one-boss principle in classical organizational design.

Many writers build upon the seminal work of Jay R. Galbraith, who represents the matrix organization as a mixed form along the continuum of a range of organizational design alternatives between the pure functional form and the pure product form. On one end of this continuum is the traditional hierarchical structure along functional lines such as research and development, production, and marketing. On the other end of the continuum is the pure product organization that is set up under a product manager.

The matrix never applies to an entire organization. Matrix structures are mainly suitable for temporary projects that are scheduled to be completed within designated cost, time, and performance standards. Classical matrix design is specified by the choice of authority structure, integrating mechanisms such as teams, and by the formal information system. Matrix structures can be thought of as coordinative devices that ideally blend the program orientation of project staff with the specialty orientation of functional personnel in a synergistic relationship. Research and experience from companies that revert from matrix to traditional structures show that it is challenging and complex for organizations to adopt matrix structures, because processes and cultures must also be concordant with the matrix design.

Most organizations, especially contemporary multinational firms, exhibit some matrix overlays due to the complexity of the international business process. For example, in multinational companies, one variation of the matrix is the global matrix structure—a popular means of organizing documented in the global business strategy and international management literature. Multinational companies introduce global matrices to enable coordination and integration of geographically dispersed activities. Equal lines of authority for product groups and for geographic divisions are established to balance the benefits produced by geographic and product structures and to coordinate a mixture of product and geographic subunits. Geographic divisions [Page 885]focus on national responsiveness, and product divisions concentrate on finding global efficiencies, and ideally this approach is a means of achieving global coordination and local responsiveness.