A matrix organization, also known as matrix management, is an organization in which one or more forms of departmentalization are super-imposed on an existing one. In one example, product departments are superimposed on a functional departmentalization. This company’s product division is functionally organized, with departments for functions like production, engineering, and personnel. Superimposed over this functional departmentalization are three product groups. Each of these product groups has its own product manager, or project leader. One or more employees from each functional department (like production and engineering) is temporarily assigned to each project.
Combining customer and geographic organizations is another common matrix approach. For example, a bank may be organized geographically, with separate officers in charge of operations in each of several countries. At the same time, the bank has a customer structure superimposed over this geographic organization. Project heads for major bank customers lead teams comprised of bank employees from each country who concentrate on the local and worldwide financial interests of that customer. Bank employees in each country may report to both their country managers and their project managers. Some matrix organizations are more formal than others. Sometimes temporary project managers are assigned to provide coordination across functional departments for some project or customer. Other firms sometimes add a semi-permanent administrative structure (including, for instance, project employee appraisal forms) to help build the project teams’ authority). Matrix organizations have proved successful in a wide range of companies.
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