Matrix organisation

What it means

A matrix organisation is an organisational structure in which an employee reports both to the head of their functional department and to a project or product manager. An accountant may belong to the finance department and at the same time work on the project team implementing a new system.

The functional line is responsible for expertise, methods and people development, while the project line is responsible for the goals, deadlines and budget of a specific project. The combination makes better use of specialists, who are too few for every project to have its own, while maintaining professional quality.

Depending on which line has more authority, a matrix is described as weak, balanced or strong. In a strong matrix the project manager mostly decides; in a weak one the main authority stays with the functional departments and the project manager acts more as a coordinator.

How it works in practice

A matrix suits companies that run several projects or products at once and need to share experts, such as IT, finance or legal. It is typically used by consulting and technology firms, larger manufacturers and organisations with a project management office.

It needs clear rules to work: who sets priorities, who appraises performance, who approves leave and who decides in a conflict. A RACI matrix helps by stating for each task who is responsible, who approves, who must be consulted and who must be informed.

Capacity planning is essential. If both the functional head and the project manager count on the same person full-time, the result is overload and delays. A shared view of who is allocated to which project and regular priority meetings prevent such conflicts.

What to watch out for

The biggest risks are conflicting instructions and unclear accountability. An employee with two bosses who have different priorities is under pressure, and it easily happens that nobody is accountable for the result. Without rules, a matrix leads to slow decisions and frustration.

A matrix raises the demands on communication and management skills. For a small company it is often needlessly complex; a simple line structure with temporary project teams is enough. As the company grows, watch the span of control and adjust the structure gradually.