These are organizations that have come about as a result of coordination problems in highly complex industries such as aircraft manufacture, where functional and product types of structure have not been able to meet organizational demands for a variety of key activities and relationships arising from the required work processes.
A matrix structure combines a functional form of structure with a project-based structure and entails a dual rather than single chain of command. Every matrix contains three unique and critical roles.
i) Top manager who leads and balances the dual chain of command
ii) The matrix bosses (i.e. functional manager + project manager) who share subordinates
iii) The subordinate managers who report to two different matrix bosses
Dual authority comes about, for example, because a project has two bosses. i.e. the production director because he belongs to the production department and Project A director because he forms part of the team working on Project A, headed by Project A director. The same applies for the other subordinates.
ADVANTAGES OF A MATRIX ORGANIZATION STRUCTURE
1. It combines lateral and vertical lines of communication and authority. This combines the relative stability and efficiency of a hierarchical structure with the flexibility and informality of an organic form of structure.
2. It provides coordination necessary to satisfy dual environmental demands e.g. new product introduction and computerization of processes.
3. It leads to better control of project and greater security
4. It leads to better customer relations and higher employee morale
5. Lowers program costs and leads to higher profit margins
6. Project development time is shortened
7. Aids the developments of managers as they are given more responsibility
DISADVANTAGES OF A MATRIX ORGANIZATION STRUCTURE
1. Organization members experience dual authority which leads to ambiguity, frustration and confusion (It violates the unity of command principle) given by Fayol.
2. Conflicts may arise concerning the allocation of resources
3. Relative dilution of functional management responsibility
4. Divided loyalty on the part of members of project teams in relation to their own manager and functional superiors
5. Managers and other participants need good interpersonal skills – not always available
6. Extensive training is required
7. Conflict resolution becomes time consuming, so is the agreement on objectives and plans
8. May lead to power struggles a managers fight for services of a joint subordinate
9. Too much shifting of staff from project to project may hinder training of new employees