Functional Vs. Matrix Organizational Structure

It's important that every organization establishes a formal structure that works for its goals and objectives. That way the organization can count on improved communication, better product development, enhanced customer service and more.

What is Organizational Structure?

An organizational structure officially decides the hierarchy within a business, showing who reports to whom. There are many types of organizational structure and two of the most popular are functional and matrix.

Functional

The functional structure pools employees based on the functions of certain jobs within the organization. For example, an organization might have an accounting department (accounting function), and sales department (sales function), etc. The advantages of functional structures are "being simple to understand with clear lines of command, specified tasks and responsibilities," according to Human Resource Management Guide.

Matrix

The matrix structure expands on the functional structure by assembling employees by both function and product offering. So an individual in a matrix structure may be working in product X sales department. The advantage of this structure is better communication between functional groups.

Small vs Big Companies

By their nature, small companies tend to have flatter hierarchies and more functional structures. Larger companies are more complex with multilayered matrixed hierarchies.

Bottom Line

Although organizational structures can evolve to meet changing business needs, it's imperative to have the right one for a given organization so it can operate at peak performance.

References

• Robbins, S.F., Judge, T.A. (2007). Organizational Behaviour. 12th edition. Pearson Education Inc., p. 551-557.
• HRM Guide Organizational Structure
• Functional and Project Organizations