Business organisational structure

A matrix organisational structure does not follow the traditional hierarchical model. In a matrix structure, staff and resources are shared across teams, projects and departments.

What is a matrix organisational structure?

A matrix structure combines two or more types of organisational structure. It organises reporting lines in a grid (or a matrix), rather than in a traditional hierarchy.

Employees usually report to two managers - a functional manager and a project manager. One reporting line will often take priority over the other. For example, staff may report first to their functional manager and then to the project manager.

Examples of matrix structure

There are different types of matrix structure. These are usually grouped into three main types, based on how much authority the project manager has:

• Weak or functional matrix - the functional manager keeps most of the authority and controls people and resources. The project manager has a limited role and mainly handles administration or coordination.
• Strong matrix - the project manager has most of the authority, controls the project budget and manages staff. The functional manager has a smaller role.
• Balanced matrix - the functional manager and the project manager share authority over staff and budget.

In large organisations, different types of matrix structure may be used at different levels. This is sometimes called a 'composite organisation'.

The advantages of a matrix organisational structure

The main advantage of the matrix structure is that it can:

• improve decision-making, since there are two chains of command
• help break down traditional 'silo' barriers
• improve communication across the business
• allow staff to apply their skills in different roles
• help share best practice and ideas across teams
• increase efficiencies due to sharing resources across departments

A matrix structure can help businesses respond more quickly to changing customer needs and speed up the development of new products. It is often most suitable for businesses operating in a fast-changing environment.

The disadvantages of a matrix organisational structure

A matrix structure may not suit businesses in more stable environments with fixed customer needs. Because it is complex and employees report to two managers, it can lead to:

• confusion about roles, responsibilities and priorities
• divided loyalties between project teams
• unclear accountability
• difficulties coordinating tasks or functions
• power struggles between managers
• higher overhead costs because there are multiple managers

Matrix organisational structure vs functional

A matrix structure often sits alongside a traditional functional structure. It is common in large organisations running several projects, where staff are moved to where they are needed. For smaller businesses with fewer resources, a functional structure may be more suitable.