Matrix Organizational Structure

A Matrix Organizational Structure is a reporting structure in a business where it is set up like a grid instead of the traditional organizational hierarchy.

What is Matrix Organizational Structure?

A Matrix Organizational Structure is one of the most complex reporting structures that a company can utilize. Basically, it’s where the reporting structures are set up as a grid instead of in the traditional hierarchy. Each employee has dual reporting relationships to both a product manager and a functional manager. These two chains of command, one along client, product or project lines and the other along functional lines. The structure may vary somewhat.

In some instances, the “project” manager may be only a coordinating role while in others the “project” manager is a robust managerial position. Balance is sought between the functional and project managers. The theory is that the combination of these two extreme sides helps the company achieve the ability to adapt quickly, be ready more easily, and have higher efficiency.

The result of these “efficiencies” allows the company to respond sooner to demands by customers or the market and serves to, therefore, decrease lead times to produce something new. If a company values this ability to act and react quickly (for example if the organization operates in a dynamic environment), then the Matrix organizational structure is great choice to implement. If you can visualize, authority flowing like water through a typical hierarchy goes from the top down. In a Matrix Organizational structure, the authority of a “project” manager flows to the sides, while the functional manager authority flows vertically downwards.

The authorities flow both sideways and downward. The complexity is that employees may not report to the same managers all of the time. Individual employees may have many managers to whom they report. Further confusing the issue, some employees from one section may be reporting to one boss while everyone else in the section may report to someone else.

The beauty of it is that brings together all departments, employees, and manager to work together to finish a project, product, or goal. Skills and information, much like authority, also flows horizontally. This type of structure works well for huge projects, for large product development programs, and for bringing differing functional disciplines together to work toward success.

Day to day “reporting” happens from employees to the project manager whose authority flows across departments horizontally. On more global issues, the employee reports on their performance to the head of their department within their department. Implementing a matrix organization requires change management for all administrative mechanisms, culture, and behavior. The staff all report to functional managers who can help with the prioritization of projects, skills and review the work for the employee. Product managers set the direction on products offered by the company.

One of the most difficult things to get used to when changing from another kind of reporting structure to a Matrix organization is that instead of aligning staff along functional geographic or product management manages it all. Employees report to both functional managers and product managers.


  • Clear Objectives —Objectives will not only be clear but will also be balanced with the objectives of the functional aspects of the organization.
  • Integrated Projects —Importantly, there is an actual mechanism for integration of across functional lines.
  • Efficiency in Resource Management —timesaving deployment of company resources.
  • Efficiency in Staff Management- since staff can be used and shared between projects.
  • Efficiency in Facility Management - all of the hardware (computers, desks, rooms, etc..) are shared between or among projects.
  • Information Flow — dissemination of information is very effective since there is both vertical and horizontal flow.
  • Horizontal flow- Information that flows from functional unit to functional unit.
  • Vertical flow- Information that flows from project to project, and to other points of management.
  • Retention of Disciplinary Teams — Groups of functional specialists and experts are preserved even though projects come and go.
  • High Morale — Morale difficulties happen with less frequency because the employees in the matrix get the experience of regularly working on successful projects.
  • Development of Project Managers — The matrix structure is a terrific proving ground for potential project managers because high potential employees can be picked out in the matrix culture. 
  • Project Shutdown —Project termination is not the disturbing occurrence that it is in a project organization.


  • More than one Boss — The main drawback is that the employees on the project are working for two chiefs.
  • Complexity — The superimposition of a functional organization on a project organization is the creation of a matrix organization. This adds all the complexity of both organizations and adds even more.
  • Troubles Controlling and Monitoring — Multiple managers and employees involved and increased numbers of people that must be kept abreast of changes and progress.
  • Complex Information Flow — This is an issue because of the quantity of employees and organizational units involved.
  • Cross Checking Information- All managers must ensure that they have touched base with each other for any important decisions in their areas of responsibility.
  • The Slow Reaction — The many different people that have to be consulted, keeps response at a slower pace.
  • Negotiations- Project managers don’t have singular authority, and so considerable negotiation is necessary.
  • Conflicting Priorities — Due to the complexity of a matrixed organization and no less than two lines of authority there is a lot of opportunity for conflicting direction and priorities. Each project manager obviously thinks their priorities should be everyone’s priorities. And each functional manager thinks that their priorities is his own business.
  • Management Goals — There is a natural effort in offsetting the objectives and goals of functional and project management. Maintenance of the balance between the goals of functional and project management must be assured by management.
  • Potential for Conflict — When there are two managers competing for resources, there is substantial opportunity for conflict. Project work makes conflict not only probable but inevitable. The goal is to keep it constructive.
  • Conflict Effects on Management —Stress and conflict are natural in a matrixed organization, therefore, close attention must be given to the selection of individuals who will function as either functional and project managers. These managers must have a great tolerance for conflict and difficult situations.

How to Overcome the Disadvantages of a Matrix Organization Structure

Cooperation must be of utmost importance between the functional and project manager, in order to avoid conflict and confusion. In addition, strong and well-defined communication between all management and employees is critical. Along with, gaining support from all stakeholders. Employees must receive the vision, goals, and objectives from these managers. Power and authority must be evenly balanced between the functional and project manager. Conflict must be privately and quickly resolved between the functional and project manager. Documentation and clear communication serve to avoid confusion about responsibilities and roles. 

Type of Matrix Organization Structure

  1. Strong Matrix Structure – majority of power is held by project manager, who controls the project budget, has a full-time role, and employs an administrative staff. This particular structure has many characteristics in common with a projectized organization.
  2. Balanced Matrix Structure- In this form, the organization the functional and project managers are balanced in both power and authority. Project managers have a full-time role and a part time administrative staff. Both managers have control of the budget for the project.
  3. Weak Matrix Structure- When the project manager has limited authority and power. The project manager will have more like a coordinator.

Why the Matrix?

The Matrix Organization Structure was developed out of the requirement to answer a need. Organizational forms needed to be able to manage the complexity of limited resources, problems, projects, and very complex large programs. The added complexity could not be addressed by the conventional hierarchical organizations. Solving the unique problems required in a complex amount of information to be processed. The skills and functions being because of the difficulty in the ability to view the total system. 

Growth of the Matrix

The matrix was a natural evolution in management thinking because it works especially well if the program was large, if the government was the customer, and if the a customer was willing to pay for the additional expenses. It was first formulized in the U.S. aerospace and defense industry, where it evolved during especially large and complex 1950s and 1960s projects. As stated earlier this was a natural evolution in the thinking of management. In these years the term matrix was applied to the organizational structure. It also allows for more projects to be completed in-house rather than by outside vendors or counsel.

The Project/Functional Interface

Balancing power is the little-known secret of a matrix that is successfully functioning. Natural conflict in an interface provides a conduit to communication. Since the goals and objectives of functional and project management are different, this conflict allows for opportunity for interface. The key to success is the decision making across organizational lines.

Cooperation helps with every aspect of matrix situation but particularly with the discourse between the project and functional management of the projects. No decisions can be made in a vacuum, only looking at either the functional or project side of a project. One-sided decisions by either functional or project manage can only lead to increasing the opportunity for conflict and potential slowing down of projects. Arbitrary decisions should be avoided at all costs.

The definition of management success of the years used to be that in order to get things done you have to accomplish it through others, comes into play in the matrix organization. There is a clearly defined interface importance between the three prongs of project management, functional management and with top management. If these three entities can successfully build a great working relationship then most problems with be resolved and perhaps without the need to involve the highest levels of management.

Managers must be in communication with one another on a daily and even potentially more often than once a day. All of the managerial relationships are two ended arrows, which indicates that the respect and relationships go both ways, and therefore it becomes an adequate organization. Constant support, cooperation, and consultation are all really necessary on the part of the functional and project managers.

So, an extra adequate organization has the colleague relationships as double-ended arrows, indicating that the relationships are two-way streets of communication and respect. Constant support, cooperation, and consultation are all important and necessary on the part of all managers. If these managers are actively nurtured and promoted by the highest level of management, then all managers will be likely to work well together in cooperation and helpfulness.

Difficulties that sometimes occur between the project and functional interfaces are lessened if the differences between the roles of the traditional functional manager and the project manager are amortized.

In this way, the method of soothing potential for conflict in a matrixed organization helps get the projects done effectively and efficiently. This way the team can be concerned with solving problems instead of worrying about the position and political strength of which individual employee solves it. Role definition is not emphasized, but instead, the problem-solving and teamwork of the organization is emphasized. Functional and project management actively work to achieve the harmony necessary to accomplish the goals of the team even consider the conflicting roles and objectives.

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