3.4 Matrix structure
We have seen that functional, product or service, and geographical structures all have disadvantages. In a matrix structure, each person has two reporting lines: (i) to the functional head; and (ii) to a project, product, service or region manager. These dual reporting lines are permanent. Advocates of matrix structures believe that they combine the advantages of both functional and product or service structures. Figure 7 is an example of a matrix structure.
In Figure 7, there is a Finance function and everyone in it will report to the Finance Director. However, each product (1, 2, 3, 4) will have its own independent finance team who also will report to the relevant product or service manager. Hence each group has two people to whom they report – a functional manager and a product/service manager.
There are, however, problems associated with a matrix structure. First, heads of reporting lines may need to meet regularly to decide how to apportion each person’s time. What happens if the Finance Director and the Service 1 manager disagree about what the Service 1 finance team should be doing? Staff may feel uncomfortable with the change and uncertainty implicit in a matrix structure. In practice, matrix structures can be very difficult to manage. Dual reporting can lead to conflict, confusion, and overlapping responsibilities. This can then result in loss of accountability.
There could be a number of people who are responsible if Service 1 budgets are delivered late. The person responsible could be the Finance Director who changed the format, or the Service 1 manager who would not agree a sales budget, or the Service 1 finance team who took advantage of the conflict between the Finance Director and the Service 1 manager to get more time to do the task. Matrix structures can suffer from low responsiveness, slow decision making and high levels of internal political conflict.
On the other hand, they can offer a way of forcing people to work flexibly across functional boundaries (which can result in some productivity benefits for the organisation and outweigh the potential disadvantages). Organisations such as Texas Instruments, Shell, NASA, NCR, ITT and Monsanto Chemical have attributed some of their success to the matrix structure, which, in their opinion, helped them respond rapidly to customers’ needs.