Matrix form of organisation

Matrix form of organisation – a matrix organizational structure is a company structure in which the reporting relationships are set up as a grid, or matrix, rather than in the traditional hierarchy. In other words, employees have dual reporting relationships – generally to both a functional manager and a product manager.

Example

In the 1970s, Philips, a Dutch multinational electronics company, set up matrix management with its managers reporting to both a geographical manager and a product division manager. Many other large corporations, including Caterpillar Tractor, Hughes Aircraft, and Texas Instruments, also set up reporting along both functional and project lines around that time.

matrix organization is a hybrid organizational structure that combines two chains of command. Employees report to their line manager (also known as functional manager) on their routine tasks and simultaneously report to the project manager on specific project tasks. Such approach allows balancing employees’ time and knowledge between routine tasks and project work. However, a matrix organizational structure has both advantages and disadvantages. The main advantages of this structure are efficiency, strong project focus, easier post-project transition and flexible use of organizational resources.

Matrix form of organisation Matrix form of organisation Matrix form of organisation Marketing Operations Finance Human resour-cing
Matrix form of organisation Matrix form of organisation Matrix form of organisation Marketing manager Operations manager Finance
manager
HR
manager
Project A –Teamleader – marketing Marketing team (A) Operations team (A) Finance team (A) HR Team (A)
Project B –Teamleader – operations Marketing team (B) Operations team (B) Finance team (B) HR Team (B)
Project C – Teamleader – finance Marketing team (C) Operations team (C) Finance team (C) HR Team (C)
Project D – Teamleader – HR Marketing team (D) Operations team (D) Finance team (D) HR Team (D)
Something else -   IFRS 2 How to easily determine the grant date

Matrix structures have advantages and disadvantages.

Advantages

  • Can help to break down traditional department barriers, improving communication across the entire organisation
  • Can allow individuals to use particular skills within a variety of contexts
  • Avoid the need for several departments to meet regularly, so reducing costs and improving coordination
  • Likely to result in greater motivation amongst the team members
  • Encourages cross-fertilisation of ideas across departments – e.g. helping to share good practice and ideas
  • A good way of sharing resources across departments – which can make a project more cost-effective

Disadvantages

  • Members of project teams may have divided loyalties as they report to two line managers. Equally, this scenario can put project team members under a heavy pressure of work.
  • There may not be a clear line of accountability for project teams given the complex nature of matrix structures.
  • Difficult to coordinate
  • It takes time for matrix team members to get used to working in this kind of structure
  • Team members may neglect their functional responsibilities

It is important to remember that a matrix structure often sites alongside a traditional functional structure – it is not necessarily a replacement.

Matrix structure organisation

 

Why Use a Matrix Organizational Structure?

The matrix organizational structure is an answer to the problem of managing large and complex projects. When working on a large project, a highly hierarchical structure can be an obstacle in the path of moving that process forward successfully.

Instead of trying to find a workaround to a situation that might not have a viable solution, a matrix organization structure provides a new system that can more properly address the complexities of large projects.

Something else -   Disclosure of operating segments

The problem of having the function and skills fragmented in an organization makes it more difficult to handle large projects successfully. It’s harder with this type of top-down organizational structure to have a holistic view. The perspective at the top is distorted, while a matrix organizational structure can see a problem from a closer standpoint and have varied approaches of solving it.

The matrix organizational structure is more catholic in that it acts as if there is not a single best way to organize a project. It sees alternatives rather than one established way forward.

Matrix form of organisation

Matrix form of organisation

Annualreporting provides financial reporting narratives using IFRS keywords and terminology for free to students and others interested in financial reporting. The information provided on this website is for general information and educational purposes only and should not be used as a substitute for professional advice. Use at your own risk. Annualreporting is an independent website and it is not affiliated with, endorsed by, or in any other way associated with the IFRS Foundation. For official information concerning IFRS Standards, visit IFRS.org or the local representative in your jurisdiction.

Something else -   Verifiability

Leave a comment