All of the following are advantages of functional departmentalization EXCEPT that

“In any story, if it’s a good story, there is that which is seen, and that which is hidden.” The opening line of the movie Operation Mincemeat prompts a moment of reflection, one that forces the audience to consider what else in their lives is unseen.

What about the “unseens” of your business? Values, culture, and organizational structure all largely influence your operations and your people. You know how values and company culture can transform a company; they dictate how things are done and can make or break your retention efforts. 

The impact of organizational structure is slightly harder to nail down, but leaders believe a strong structure provides clarity around roles and responsibilities, promotes collaboration, and equips employees with a sense of security about where they fit in the big picture.

While there’s no shortage of structures, a matrix organizational structure offers companies an alternative to the traditional top-down hierarchy. 

What is a Matrix Organizational Structure?

A matrix organizational structure is a cross-collaborative effort to position the right people in the right teams. The management style is also different and comes from two directions: functional and project.

A functional manager represents the traditional vertical structure based on department or job function. Examples of this role are marketing managers, sales managers, and human resource managers.

A project manager, on the other hand, oversees a cross-functional project team with representatives from each department. In this structure, a marketing specialist reports to their functional marketing manager as well as their project manager.

A basic matrix structure with functional and project managers. [Source]

Matrix organizational structures offer companies and their employees tangible advantages to the way they work, but also have some disadvantages to be aware of.

3 Advantages of a Matrix Organizational Structure

You may be a startup seeking the best organizational structure for your new company. Or your business may have just completed an acquisition and you’re redesigning your systems and structures. Or maybe you find your traditional organizational model isn’t meeting your needs. 

No matter your size or current situation, a matrix organizational structure offers countless advantages that can benefit your teams’ daily work. 

1. Flexibility Between Departments Results in Shared Knowledge 

Matrix organizations excel at bringing together the right people with the right skills. Think of it as the business version of the 1992 Dream Team: Experts from every functional area of a company come together to address a specific challenge, project, or goal.

Because you’re bringing together a group of people to tackle a specific project, assignments are never permanent. This kind of flexibility results in:

• Employee Skill Development: In the matrix structure, employees can move between projects or teams as needed. Doing so allows them to share their knowledge, expertise, and skills with a larger number of people than in traditional structures. Therefore, your people are always learning new skills and considering different viewpoints, leading to continuous employee development and better results. 
• Alignment Across Departments: You will reinforce alignment across departments with employees moving in and out of project teams. What’s more, your people will share their experiences within the company, and any potential misalignment issues will surface quickly. By creating a workplace that hangs its hat on organizational justice, you will align your company and create a place at which people want to work.
• Integration of HR and DEIB: Your People and DEIB teams should be at the figurative table for all large decisions, but sometimes that doesn’t happen. A matrix organizational structure prioritizes having the right stakeholders working on the project, which ensures the integration of employees whose expertise lies in people and diversity, equity, inclusion, and belonging. These viewpoints will help create a stronger project result and further align the company to its mission, vision, and values. 

We know what you’re thinking. How does this increased flexibility look in the real world? In short, matrix teams allow companies to quickly adapt. Some businesses, such as Starbucks, choose to focus their teams geographically to understand and meet the needs of customers in different regions around the world.

Other businesses organize their teams by specific strategic goals, such as improving the customer experience or driving business growth. However you slice it, having team members from various departments work hand-in-hand ensures a wealth of perspectives for the task at hand.

Then there’s Spotify, who dubbed their own version of the matrix structure “The Spotify Model.” As shown below, Tribes – made up of specialists and those passionate about the project – team up to focus on a project. Simply, this structure gives their teams more autonomy in how they work and removes barriers of formal processes. By doing so, Spotify believes its teams can work faster and better deliver on product and service-oriented goals.  

Project and functional elements of the Spotify model, an agile approach to a matrix organizational structure.

2. Open Communication Leads to Better-Informed Decisions

In a traditional functional structure, communication flows from the top-down. Oftentimes, these communications stay within their own department. It works, but alternate perspectives, stakeholders, or skill sets may be missing from the equation.

Alternatively, matrix structures require employees to communicate directly with both their functional and project supervisors. This multidirectional approach to communication ensures information is openly shared, not siloed.

With the cross-functional nature of matrix teams, leaders and teammates can more freely share what they know or information they have available, allowing leaders to make more informed decisions. 

For example, Sean, a customer success representative, is on a team whose project is identifying and correcting bugs within his company’s software. Because he not only reports to his project manager, but also to the VP of Customer Success, information is readily available across teams. Let’s say he gives details about this specific project to the VP of Customer Success. With this knowledge, the customer success team can help develop a communication strategy that would allow the company to easily share important information, like product releases and fixes, with their customer base.

In this instance, the matrix model is better positioning the company for success by including wrap-around services and support to the project at hand.

3. Cross-Collaboration Boosts Employee Engagement and Morale

In a matrix organizational structure, employees move between projects or teams as needed. This naturally leads to your people sharing knowledge, expertise, and skills. Besides aligning departments, cross-collaboration results in:

• Higher Employee Engagement: Employee engagement leads to a slew of benefits, such as an increase in productivity and a decrease in turnover. And with a potential 70% of people working remotely by 2025, it’s important to create a culture that promotes teamwork and cross-functionality so people feel connected, no matter where they’re located. 
• Consistent Employee Growth: When your people habitually switch teams, they are not only exposed to new areas of expertise, but also consistently create new working relationships. These soft skills are important; in fact, 73% of business leaders believe they’re more important than job-specific skills. 
• Increased Team Performance and Profitability: A team of people with different areas of expertise and perspectives sets your project up for success. Furthermore, it helps employees feel valued for their knowledge and skills, and when that happens they’re more likely to feel connected and perform better, leading to a 21% increase in profitability. 

3 Disadvantages of a Matrix Organizational Structure 

Like any structure, a matrix organizational structure is not without its challenges (warning: they all involve the role of the manager). Companies that recognize these challenges upfront and plan to address them can help minimize the negative impact.

1. Overlapping Teams = Lack of Clarity Around Roles and Responsibilities

A complex reporting structure can cause confusion around roles and responsibilities. For example, managers may go back and forth on who is responsible for the professional development of individual employees.

Team members can also experience confusion. While moving to new teams may present employees with exciting challenges to tackle, this shift also presents a new set of work dynamics, such as workload distribution, task ownership, and knowledge sharing. 

Pair that with an employee’s commitment to their functional department, and it’s easy to see how employees may exist in a near-constant state of stress when it comes to their primary responsibilities.

Thus, clear roles and responsibilities are crucial. McKinsey’s Organizational Health Index argues that clear, accountable roles are a top driver of overall organizational health. High role clarity is also linked to increased performance, engagement, and satisfaction.

Never fear – companies can navigate role complexity and ambiguity by establishing clear accountability. For example, org chart software allows leadership and employees alike to visualize their reporting structure. Moreover, the right platform can even deliver drill-down capabilities that allow employees to view manager or team-member profiles, which include their title, skill sets, and responsibilities.

ChartHop’s org chart takes you directly to employee’s profile pages, giving greater visibility into your team’s makeup and structure. 

2. Multiple Managers = Potential Conflict 

Functional and project managers are bound to have conflicting goals or priorities, and that conflict trickles down to team dynamics.

A regional sales manager, for example, might have very clear sales growth goals for an upcoming quarter. However, a project manager might not be prioritizing those goals in their team’s current project. As they engage in discussions over where efforts should be directed, the team is left in a limbo state, unable to definitively move forward until a resolution is reached.

Conflict can also arise through challenges for authority and deciding which manager has the final say on a decision. Say a project team built a new software feature or a customer engagement campaign. Which manager has final say on the execution? The project manager might view it as one of their responsibilities, but maybe the director of product or a customer success manager believes the decision is theirs.

In order to mitigate this potential issue, your managers must strike a balance if they wish to continue supporting your organization’s mission and goals. One way to do so is implementing training and education programs to ensure managers receive the tools and knowledge to navigate the complexities of a matrix structure.

For example, AGCO, an agricultural machinery company, supports its matrix structure by offering specialized training that emphasizes communication between managers. Additionally, all managers take a course on the complexities of the matrix structure. This training covers required management and leadership skills to help coordinate decision-making processes and develop problem solving skills.

Ultimately, if you choose to utilize a matrix structure, you should establish expectations and clear manager roles to reduce any conflict among people and teams. 

3. More Information = Slower Decision-Making 

In this case, too many cooks in the kitchen doesn’t result in an overload of pepper in the soup. Instead, the result is slower decision-making. This is because multiple managers weighing in on a task or issue can mean a longer time to resolution or execution, especially if your managers disagree on the best course of action.

As mentioned above, the lack of clarity regarding authority, or overlapping authority, can delay decision-making efforts. While managers may go back and forth over a desire to own the decision, it’s also likely managers do not wish to own a decision for fear of potential fallout. Either would delay execution.

Additionally, the complex nature of a matrix organization means it might take longer for teams to reach consensus regarding next steps. With information moving freely between teams, it can be difficult to ensure everyone is on the same page about the current state of a project.

Companies can prevent these kinds of roadblocks by adopting clear decision-making processes and frameworks. When managers and teams are on the same page about how to approach a decision, the team can move from the decision to implementation phase at a faster pace. Establishing who owns the final decision or the decision-making process before the work begins can save the team from major delays toward the end of their work or project.

Is a Matrix Organizational Structure Right For You?

Matrix organizational structures have taken a backseat to other, more popular structures in the last decade. Yet, as the future of work sees more companies adopting remote, hybrid, or distributed workforce practices, collaborative, transparent, and flexible structures will play a key role in a company’s success.

Knowing that a matrix structure’s flexibility supports agile teams, promotes engagement, and values cross-collaboration, it’s time to pinpoint if your organization struggles in these areas. If so, transitioning to a matrix structure may be a strong shift moving forward.

Interested in learning other “unseens” that can help your People team thrive? Our webinar dives into a first-hand look at what it takes.

Watch the webinar here

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