Matrix Organization
Structure
JAMES OWENS
The American University
Washington, D.C.
M a n y business school professors
prefer to teach the traditional modes
of organization structure (line, line/
staff, and the bureaucratic model),
which is both realistic and unrealistic.
It is realistic insofar as many smaller
organizations still rely mainly on
these traditional and simple struc-
tures, and all business students must,
as a minimum knowledge require-
ment for future career success, under-
stand these structures and how they
work. However, many teachers, while
explaining these traditional struc-
tures, tend to explain only vaguely the
modern “matrix” organization struc-
ture. Indeed, some teachers admit be-
ing quite uncomfortable with matrix
structure and are glad to get “past it”
quickly and superficially. Students
find the subject even more uncom-
fortable and bewildering. This strat-
egy is unrealistic insofar as most large
organizations today use some, if not
all, elements of a matrix structure;
students must have a clear grasp of
the matrix in order to cope and per-
form successfully.
THE NEED FOR A MATRIX
Logic of the Traditional Structure
The last century of intense analysis
of organization design and function
resulted in a generally accepted body
of knowledge known today as the
“principles of management.”’ Cen-
tral figures in the principles’ develop-
ment were the now classic pioneer or-
ganization theorists, Henri Fayol in
France and Frederick Taylor in Amer-
ica, among others. With the princi-
ples long tested by the late 1920s,
both in academic research and in
management practice, these concepts
became the core of management
science.
At the very foundation of all these
principles was the unquestioned logic
of line or line/staff organization
structure. It insisted on an absolute
single chain of command, clear lines
of authority and responsibility, strict
rules, policies and standard operating
procedures (SOP), and clear com-
mand and control at all levels in the
organizational hierarchy. The rig-
orous logic of traditional systems in-
sured that everyone knew, and was
directly accountable for, well-defined
duties and sharply specified areas of
command authority. Little ambiguity
was tolerated. Bad management re-
ferred to a fatal lack of logically de-
veloped structures (and systems of gen-
eral policies and specific rules) to han-
dle all operations of the organization.
Newly emerging matrix organiza-
tion design and structure violate all
these traditional principles. Thus, this
new trend bewilders and threatens
those who practice management as a
career and management teachers and
students in classrooms. In frustra-
tion, many just try to ignore it and
hope it will go away. They work on a
day-to-day basis with a crisis manage-
ment mindset and do not even try to
understand the whirlwind of confu-
sion blowing daily across their desks
and minds.
Inadequacies of the Traditional
Structure
The obvious question is why even
consider, much less actually use, an
organization design that violates all
known principles and creates utter
confusion in many organizations.
NOVEMBER 1988 61
The answer, inescapable in today’s
new business world, involves two new
and critical factors. Traditional line
and line/staff structures can no
longer cope with modern complex
task technology, especially the esca-
lating complexities of research and
development and the changing mar-
keting arrangements required to com-
pete and survive. Moreover, rapidly
changing social and legal environ-
ments aggravate the inadequacy of
the traditional structures. Despite the
ambiguities and frequently illogical
aspects of matrix structure, it has be-
come and will remain a necessary fact
of modern organizational life.
EVOLUTION OF THE MATRIX
An appropriate strategy for ex-
plaining the matrix to students is to
trace its evolution from traditional
modes, with emphasis on how it grew
naturally out of older line and line/
staff structures and why. The focus
here is not merely on historical dates
but on presenting a story, showing in
easily understood sequences how and
why an intelligent manager gradually
abandons line structure for a line/
staff arrangement, and later aban-
dons the line/staff structure for a
matrix.
The critical ingredient ensuring the
success of the teaching approach (Le.,
that every student does indeed emerge
with a clear understanding of the ma-
trix) is the use of a very simple model
organization. In the example that fol-
lows, a student acts as a company
president and thinks through some
organizational decisions. The deci-
sions are outlined on a blackboard,
and the effects are analyzed.
Line Structure
Imagine that you wish to start up a
business of your own. Let’s say you
want to make and sell nails and screws.
Thus, right at the outset, you need to
hire experts ir, the following func-
tions: vice-presidents for manufac-
turing, marketing, finance, and per-
sonnel (see Figure 1). Managers of
Sections A and B make nails and
screws, respectively, in different
sizes, with production lines set up ac-
62 JOURNAL OF EDUCATION FOR BUSINESS
cordingly and in the most efficient
way possible. The structure is a sim-
ple, traditional line, with its great
strength being its single chain of com-
mand (along the solid lines in the
figure). Everyone has only one boss
who is the expert in the particular
function. Thus, for example, the
manager of Section A takes orders
from, and is accountable to, only one
command authority, namely, the
V . P . for manufacturing.
Study the lines in Figure 1. Note,
for example, that the V . P for person-
nel has no command authority over
A. There is no ambiguity in A’s or-
ganization role. He or she answers to
one boss only. And this aspect is the
strength of the line structure, whether
in our simple nail and screw company
or in the Roman army two thousand
years ago.
Addition of Staff to Line
The functional departments are
logical divisions of labor and expert
knowledge. A and B make decisions
within their fields of expertise, the
vice presidents make decisions in their
areas, etc. However, the logic often
collapses in actual practice, when, as
is typical, situations arise in which
demands overlap functional lines.
For example, early on a Monday
morning, you, as president, learn
from your very distressed V.P. for
personnel that Manager A, with au-
thorization from the V.P. for manu-
facturing, ordered three hours over-
time work the previous Saturday in
order t o minimize manufacturing
costs on a project almost completed.
There is no question that, from a
purely manufacturing viewpoint, it
was a good decision.
But, from your viewpoint of the
larger interests of the company as a
whole, and those of the personnel
area, the decision by the manufac-
turing managers was a bad one.
Why? Because such decisions often
include cross-departmental impacts,
unknown to the line managers mak-
ing the decisions.
In the hypothetical case here, the
manufacturing managers, interested
solely in maximizing technical effi-
ciency in the manufacturing process,
did not understand the decision’s im-
pact upon your company’s current
personnel problems, a top pricrity for
you, as president, and for your V.P.
for personnel. The problem i>#a cur-
rent, vigorous effort by a national
labor union to organize your ern-
ployees, by fomenting employee dis-
satisfaction to secure their vote for a
“union shop” in your company. The
arbitrary, late-Friday decision by the
manufacturing managers fanned the
fires of employee discontent and in-
creased their willingness to vote for
the union. When you hear about the
Saturday “overtime” disaster, you
are outraged, determined to stop
these dangerous decisions in the
future. So, you assemble all your
V.P.s and order the following: in the
future, before any line manager
makes a decision that might impact
personnel, he or she must consult
with the personnel experts.
As simple as this seems, ;he ad-
visory relationship now established
and shown by the dotted line in
Figure 2 is the essential element con-
stituting a line/staff structurt:. Note
the lines in Figure 2, which show the
new and growing influence of the
V.P. for personnel upon Manager
A’s decisions. (Expanding the exam-
ple, “dotted lines” are added in
Figure 2 to suggest the obvious
similar influence needed by experts in
the financial and marketing func-
tional areas of your companq’s total
operations.)
It is essential to study and fully
understand the practical meaning, in
day-to-day operations, of the hard,
solid command lines versus the (still)
advisory dotted-lines in Figure 2.
For the sake of simplicity, the
model shows only a few advisory
(dotted line) relationships in your
company. A real-world company, es-
pecially a large one, would contain
dozens or even hundreds 0’ them.
However, these advisory relation-
ships, sometimes optional but usually
compulsory for line managers, are
seldom actually drawn onto an organ-
ization chart. Instead, they are stipu-
lated into each line manager’s job de-
scription before decisions are made.
For example, in a large company, es-
FIGURE 1. Traditional Line Structure: Line and Staff

President

I Vice President Vice President Vice President Vice President

Personnel Manufacturing Marketing

I L
I I

I
Sales Advertising
pecially a huge bureaucratic one, the
Saturday overtime decision impacts
not only personnel concerns (as in our
case here) but also finance-What is
the effect of time-and-a-half wage
rates on gross and net margins?
marketing-How much product of
various kinds can we sell or store effi-
ciently? and other departments.2
Line Managers vs. Expert Staff
It is necessary to pause here to
analyze the issue of line versus
linelstaff versus matrix structures.
The essence of it is the unavoidable
need for two kinds of power and in-
fluence in decision making, which
conflict and contradict each other,
forcing an ever-continuing compro-
mise (or “trade-off”) as to how much
one will prevail over the other. The
conflict is between the need for a
single chain of command for effective
use of power and influence and the
growing need also for effective in-
fluence of expert knowledge and staff
expertise before decisions are made.
The conflicting dynamics of this in-
herent contradiction are already ap-
parent in your company’s dilemma
about the Saturday overtime, where
you had to order line managers to ac-
cept more influence from the V.P. for
personnel in their decisions. This con-
tradiction means, of course, that the
more influence and power that you
grant to the staff (personnel), the less
influence and power you are allowing
your line managers. Naturally, line
and staff both strive for total power
in order to avoid cumbersome restric-
tions upon their individual interests.
In short, even in your small company,
we have a “built-in” conflict.
That is why it is absurd to talk of
one single ideal and perfect organiza-
tion structure. Every structure is, by
necessity, an uneasy and imperfect
compromise between the traditional
logic of single chain of command and
limitations upon the command line by
expert staff people required t o cope
with the ever-increasing complexity
and change in our modern business
environment. Is this conflict really
necessary? Yes, it is inevitable. T o see
why, let’s return to your company
and your worries about avoiding a
union takeover of your employees, (which they can and d o ignore) in-
which would radically damage your stead of commands they must obey.
relationship with them. So, finally, common sense and
your need to control the dangers of a
Growing Influence of Staff
union threat demand that you give
your staff expert (the V.P. for per-
When your V.P. for personnel
sonnel) command “line” authority
warned you about the dangers in-
over the manufacturing managers,
volved in the overtime decision made
that is, specifically, to command, not
by your manufacturing managers,
common sense forced you to order just advise.
these line managers to consult with
the personnel experts before making Establishment of a Matrix
any decisions. This new set of rela-
You have just established the essen-
tial element of a matrix organization
structure, the overlapping of two or
more chains of line command. The
Naturally, line and advisory “dotted line,” in Figure 2,
staff both want between the V.P. for personnel and
autonomy in order to the manager of Section A is now a
solid, hard, command line (see Figure
avoid restrictions on 3). In effect, Manager A now has two
their own interests. bosses, and there is no longer a single
chain of command. When, as will
surely happen, similar conflicts arise
tionships, the “dotted lines” in involving marketing, finance, the
Figure 2, established the essential ele- legal department, and others, many
ment of your new linelstaff organiza- other dotted lines in Figure 3 will
tion structure. The essence of it is thatbecome solid command lines. So, this
line managers make command deci- is how a 4 why a matrix structure
sions, whereas staff experts advise. becomes JTC’ 1 upon you, despite
Now a fascinating series of realities your reluctance to abandon a tradi-
will alter the nature of this influence tional single chain of command.
of your staff into increasing power
and authority. Here’s what happens Problems of Living and Working in
the following week. Facing the same a Matrix
late-Friday situation as before, your
manufacturing managers want to Apart from sophisticated theory
order another Saturday overtime and jargon, careful analysis of the
work period, and, as ordered, first model here and the real-world dilem-
consult the V.P. for personnel for ad- mas threatening your company shows
vice. The V.P. explains the dangers clearly how and why you are forced
involved and pleads with them not to t o abandon linelstaff structure for
d o it, even though he has no real matrix arrangements. And so you
authority to prevent their decision. now face the problems that are
Having “dutifully” consulted the typical in any matrix structure.
personnel expert, the manufacturing For example, what does Manager
managers ignore the advice and in- A do if the V.P. for manufacturing
itiate Saturday overtime again. This insists on Saturday overtime while the
encourages the increasing anger of V.P. for personnel forbids it? No
employees about their ruined week- matter what A does, A is in the in-
ends and increases interest in a union! tolerable position of being forced to
When you fault your V.P. for per- violate one or the other line com-
sonnel, even threatening job termina- mands. Since this is an untenable
tion, you hear (quite rightly) about position, A must confront the bosses
his lack of any command authority with the dilemma for them to settle.
over these line managers, and that, Note now, in a matrix, that the solu-
without it, he can only give advice tions in such decision making are a
NOVEMBER 1988 65
FIGURE 4. Revised Organization Structure: Matrix Organization

President

Legal Department

7
Vice President
Pentagon Programs/
Projects

IVice President Vice President Vice President Vice President

Personnel Finance 11 Manufacturing Marketing

L Sales Advertising

I
I
1 Employee Safety I

Manager Nails

Manager Screws
matter of effective interpersonal rela-
tionships. Evidence supporting
various options is discussed and
priorities established.
MATRIX STRUCTURE AND
PROJECT MANAGEMENT
Why is a matrix called a matrix?
Because a typical matrix organization
chart looks like a grid (or mathe-
matical matrix, as in Figure 4) with
functional department chains of in-
fluence shown in vertical lines and
project (product or program) depart-
ment influence shown by horizontal
lines. To illustrate, let’s imagine that
your nail and screw company just re-
ceived a huge order from the Pen-
tagon.
The Pentagon order is an enor-
mous opportunity but creates equally
huge problems. The Pentagon peo-
ple, in their government contract, in-
sist that you meet all deadlines for
delivery of nails and screws, that all
products meet exact specifications as
to size and quality, and that the nail
program is even more critical than the
screw program. Thus you, as presi-
dent, are forced again to change your
organization structure, as in Figure 4.
Note the new executive position, V.P.
for Pentagon Programs/Projects, and
the new managers in charge of the
two programs (nails and screws), and
note that, because of the higher “criti-
cal” priority of the nails program, the
manager of the screws program re-
ports directly to the manager of the
nails program. (More commonly, both
of these managers report directly to
68 JOURNAL OF EDUCATION FOR BUSINESS
the Programs/Proj ects manager who
must then set priorities.)
Note, also, that because of the
urgency of the Pentagon program,
you have elected to grant program
managers line command authority
over the functional people, such as
Manufacturing Manager A, creating
a matrix structure.
Now, for example, as critical dead-
lines in the Pentagon programs ap-
proach (and might be missed in the
routine manufacturing operations),
the Pentagon program managers do
not have to beg for help from the
manufacturing managers. The pro-
gram managers can now, by line com-
mand authority, order that their job
be done.
Because, as in Figure 4, the lines
end up looking like a mathematical
criss-cross matrix, organization theo-
rists named such arrangements a
“matrix” structure. However, the
matrix appearance is not the essence
of a true matrix. The essence of a
matrix structure is the overlapping
lines of command authority.
Again, although the solid lines are
not drawn in Figure 4, the line com-
mand relationship exists. It probably
will not be long before the weak and
merely advisory “dotted” lines (in
Figure 3) become solid command
lines as you are forced by emerging
realities to give both the V.P. for
finance and the V.P. for marketing
the command authority they need to
accomplish objectives you need. And
you can be sure that you will soon
have to give your Legal and Safety
departments authority, in the form of
a veto when necessary, to protect you
from legal disaster in a court liability
suit and/or responsibility for an
employee’s serious injury or death.‘
And there will be many other com-
mand, rather than merely advisory,
lines to add to Figure 4 as changing
circumstances demand.
In conclusion, your choice of a
matrix structure (including its viola-
tions of traditional logic and conse-
quent potential chaos) may not be
what you first desired, but, like so
many other complex choices in
human life, it is just necessary.
NOTES
I . For decades, most managemmi text-
books were entitled Principles of Management.
The prestigious AACSB (American .4ssembl.v
of Collegiate Schools of Business) still en-
forces, as its fundamental set of cr teria for
evaluations of business schools, the “BOK”
(Body of Knowledge). This, among others, is
the reason why some business schools (Har-
vard’s, for example) ignore or shun AACSE
accreditation.
2 . In strict terms, there are just three fun-
damental (distinct) kinds of orgariizational
structure and design (line, line/staff, and
matrix). Bureaucracy is not a different kind of
structure. It is simply any one, or a combina-
tion, of the three fundamental structures,
though in huge size, as in federal go’iernment
agencies and giant corporations. “Project,”
“product” or “program” management struc-
tures are, as we will see, variations on the
matrix theme.
3. It is interesting to note that, since the
tragic NASA shuttle disaster in January 1986,
NASA managers responsible for sa’ety now
have virtual command control over ‘ go” and
“no-go” decisions, which they lackec prior to
the shuttle disaster. For the same reasons,
security officers in intelligence agencies, such
as the CIA and the Naval Intelligence Center,
have gained similar command authority fol-
lowing the monumental damage done, to U.S.
military operations by Soviet spies and their
American helpers infiltrating such sensitive
government agencies.