There are many ways in which organizations reporting lines can be structured. Matrix organization is an organization which basically employs matrix management in its core structure. However, students must not confuse matrix organizations with matrix management as organizations can have matrix management system in place even if the organizational structure is not matrix based.
The distinctive feature of matrix organization is that it holds two different reporting structures at one time. Firstly, they have the same hierarchical structure as mentioned in traditional organizations where power is concentrated at one place at different levels or departments. We usually call it a functional hierarchy structure.
In addition to traditional functional departmentalization, management has the power to draw specialists from different departments to form up a new management point, which in modern day we call “Team”. Usually these teams are created in relation to certain projects and thus are disbanded once the project is complete.
This is a hybrid of task based structure and functions based structure.
Functions based structure uses the functions organizations perform. And under each functions there are different managerial levels. Every employee falls under a particular function and will stay there and has limited interaction with the employees belonging to other functions with same authority. Thus communication and interaction stays inside boundary defined by the function itself and is mostly Upwards for communicating results and downwards for instructions and orders. Have a look at the following figure to understand how functional structure is implemented where downward arrows shows the different levels of authority.
Whereas under Task based structure different employees who are specialists in different fields come together to execute one job. As every person holds special skills thus enjoys same level of authority with other members connected with the same task. As authority level is same thus instead of communicating results or getting instructions we have suggestions and recommendations. Have a look at the following figure to understand how Task based structure is implemented where arrow shows the same level of authority enjoyed by every member.
Important point to understand is that under task based or horizontal structure every person has equal level of authority where as under traditional vertical or functions based structure there are different levels of authority.
Now as we said that Matrix structure is a hybrid of Task based structure and Functions based structure therefore if we combine the above two structures (this is what hybrid means i.e. combination of two or more) we will get this kind of columnar as well as row structure. And as rows and columns together make a table thus a name Matrix.
Combining the above provided functional and task based structure diagrams we will get the following Matrix structure which comprises both traditional layered approach and modern flat approach.
Using such organizational structure, managers are given more flexibility as they can override established reporting structure as and when needed which was not possible under traditional functional approach as traditional approach group people according to different functions of an organization instead of the tasks performed by organization.
Therefore, matrix structure achieves more flexibility of combining relevant people inside an organization without violating the traditional vertical structure or in simple words “one boss structure”.