Matrix organizational structure – yes or no?

A matrix organizational structure is a workplace format in which employees report to two or more managers rather than one manager overseeing every aspect of a project. For example, an employee may have a primary manager they report to as well as one or more project managers they work under.

The start of the matrix organizational structure

The first natural organizational structure for a growing organization is split by function.

However, when a business gets above 50 employees, the organizational structure should be designed to align teams around projects, product groups, industry segments, and geographical regions. This is the start of what is commonly called a matrix organizational structure.  The diagram below is a simple example of what a matrix organization looks like.

matrix organizational structure

The pressure to create new business units usually comes from customers, says Verne Harnish in his book Scaling Up. Customers complain that they don’t know whom to call to get help. In addition, they feel overwhelmed by the communications that come from multiple business units.

The matrix organizational structure is useful when skills need to be shared across departments to complete a task. It also allows companies to utilize a wide range of talents and strengths.

The transition to a matrix organization

To navigate the organizational transition, the functional heads (e.g. manufacturing manager, sales manager, finance manager, etc.) who have been used to driving the business, need to adapt. They become more like advisors to the business unit or project leaders, rather than acting as their ‘bosses’.

In turn, the project or business unit leaders need to be strong, and lead as if they are individual CEOs.

The transition is hard

This transition is hardest for the traditional functional leaders. They need to switch their style from ‘telling’ to ‘selling’. Moreover, they should spend more time outside the organization, gathering best practices. And then share what they’ve learnt among the business unit or project leaders. Importantly, respect for the functional leaders’ decisions will have to be earned, not blankly accepted simply because of their position.

Who should head up business units or projects?

It is often a good idea to have some of the original functional leaders to head up projects or business units. For example, to head up the expansion to a new area or country, or lead the launch of a new product line. In this way, they can maintain direct operational control.

Futhermore, new functional heads, with specific domain expertise (sales, marketing, HR, etc.) are then recruited and will be more collaborative in working with the business unit or project leaders.

Matrix organizations are tricky

Matrix organizations are tricky. Leaders often feel there are ‘grey areas’ in the cross-over between functional areas and projects or business units.  You should seek expert advice and guidance (CoLAB can help). Otherwise business leaders can waste a lot of time debating about the structure, accountabilities and overhead allocations.

Setting clear accountabilities remains very important. Read more about accountability, responsibility and authority here.

CoLAB can help

CoLAB has a #bestpractical approach to assist leadership teams with their (matrix) organizations.

Set up an obligation-free 20-min call with our expert facilitator, Barend Cronjé, to discuss your challenges, and explore how CoLAB can help you. Click HERE.

The CoLAB group serves its’ clients through 3 specialist practices:

CoLAB Profit Improvement 

CoLAB Talent Placements 

CoLAB Project Delivery 

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