Social Networks : Functional, Project and Matrix Structures

Charles Albano founded Adaptive Leadership in 1993 after retiring from a full civilian career with the US Army.

During his government service he served as Director of the Army's Northeast US Regional Training Center responsible for developing Federal executives in an eleven state region. He was Chairman of the Management Development Department at Fort Monmouth, New Jersey, responsible for the design and conduct of in-house supervisor and manager development courses. Afterwards he served as Chief of the Organizational Consulting Office of the US Army Communications - Electronics Command.

During his career with the US Army developing managers and conducting internal organization development (OD) consulting, he introduced innovative programs in quality circles, productivity management, corporate values, participate management, leadership development, and creativity enhancement.

He has been teaching part-time in MBA programs for various universities for over fifteen years.


In this two-part article I would like to review three well known major organizational structures:

  • Functional Structure
  • Product or Project Structure
  • Matrix Structure

In Part One, I will point out the logic and the appropriateness of the first two structures, their presumed benefits along with the strengths, weaknesses and limitations each has encountered in the real world over time.

In Part Two, I will focus on the human aspects of working in a matrix-structured organization to include how the structure tends to impact people's interactions, attitudes, and feelings. I will also discuss how in my experience managers perceive working in the matrix.

Some say the Matrix type of organizational structure came into existence as a corrective response to the shortcomings of both the "Functional" and "Product or Project" structures. It was part of a long and still active search for a more perfect structure, one that still aspires to greater efficiency and effectiveness with respect to how people interact in accomplishing work.

Though the Functional type of organizational structure (probably the oldest of the three basic forms) has notable strengths, we know today that no form is perfect. Far from it - if anything, organizational design is still a "black art." It takes some time before the limitations and weaknesses of any organizational form are fully recognized. The search for "a more perfect union" of people, technology, and tasks remains a very active pursuit in business, industry and government.

Functional structure

Among the generally acknowledged strengths of the so-called Functional Structure are the following:

Depth of competence achieved by virtue of grouping specialists in a given discipline/function together.

A shared professional identity among the organizational members within the varied functional offices, each of which tends to pursue its own mission from its own perspective. These offices, for example being, "Sales" "Marketing" "Finance" "Production Engineering" "Logistics" "Manufacturing" "Quality Control" "Legal," "Logistics," "R&D," "HR," "Information Technology," "Competitive Intelligence," "Planning," and so on.

A grounded sense of comfort people enjoy in being in the company of others reared in the same discipline, trained to perceive the "world" the same way, to offer services and solve problems from within familiar operational paradigms peculiar to their respective professions.

Competence in depth, in theory at least, in that sizeable collections of professionals can fill in for each other during absences.

A longer career ladder, that is, more opportunities for internal growth, vertical career advancement. From an employee's perspective that is a good thing. But for some time now organizational "pyramids" have been reduced in number of levels, spans of control broadened to reduce overhead. "Pancakes" have come to replace the tall pyramids of the past, and with that we have seen a significant reduction in the advancement opportunities of employees.

A specialized competence through coaching, mentoring, and training provided by others more experienced.

A logical and convenient way to group talent, organize workers, offer an incentive to attract, retain, develop and advance personnel and more efficiently manage their contributions.

Those are some of the advantages typically cited for the Functional approach to organizing. And there is truth in them. But, on the downside, for every cited strength there is a weakness, and sometimes the weakness is a direct outgrowth of the strength itself. Let me clarify.

While functional grouping of professionals offers depth of insight, it does little to broaden their perspectives. The result is tunnel vision, stovepipe thinking, a general inability to see the big picture. This is all too common, and it is a serious matter in a work world characterized by complexity and begging for integration.

Another potential liability stems from a tendency to de-emphasize horizontal communication and coordination in favor of an over-reliance on the vertical chain of command. Decisions pile up at the top levels of functional offices because subordinates may be unwilling or unable to bridge the inevitable differences that arise across professional disciplines. Problem solving is diminished.

Decision making is slowed down, and finger pointing replaces accountability and ownership of results. Functional executives find themselves hard put to feed all the "monkeys" brought to them by their respective employees.  Empowerment is weakened and cross-functional, cross-disciplinary teamwork suffers.

So, while the Functional structure is touted in the literature for its "efficiency," in my observation the claim is as likely to be untrue. There is a tendency to throw matters over the fence for another functional office to resolve.

The Situation

In sum, it is fair to say that such structures may be seen as more or less "efficient" only when the products or services they provide the public are standardized and based on routine, relatively simple, repetitive business processes. This is mass processing.

But when their product lines and services face "hyper-competition" where speed, creativity and flexibility are key to survival, these traditional bureaucratic structures prove muscle bound by their own over-elaborated work processes. They are too slow to adapt and are taken aback by rapid technological and competitive change.

Let me emphasize, though, that many formal and informal arrangements have evolved in companies that seek to compensate for the weaknesses cited, and they have been fuelled by a lot of sincere effort and commitment over the years. Cross-disciplinary groups, inter-organizational problem solving teams have been established along with boundary spanning liaison and coordinating committees. Planning groups have been set up to span organizational lines. Job rotations have been utilized to broaden both worker and manager perspectives and to instill a deeper knowledge and appreciation of the missions, functions, problems, goals, and incentives of the other departments.

All that is good, and I believe these things have been helpful. And, of course,  quality management movement has long stressed organization-wide integration and teamwork and has contributed to moving organizations in that direction. Value engineering and suggestion programs have helped as well.

Still, the essential difficulties faced involve adaptation, integration and responsiveness, and these seem to be inherent problems in this type of structure. There are many instances where "fixes" have turned out to be nothing more than "band aids" leaving no lasting solution to these dilemmas. Clearly there are times when restructuring may be the only viable alternative.

Product or Project Structure

In the Product or Project structure, specialists from various disciplines, instead of being scattered across a number of separate and distinct functional offices are gathered into offices by logic of product lines, or customer type, or the very nature of the project. Sometimes a Project Office disbands when its mission achieved.

But Product oriented offices have a much longer tenure. Literature supportive of Product or Project oriented structures cites the following virtues:

Specialists from varied disciplines now report to a common manager accountable for planning, organizing, directing and controlling their work efforts. Therefore, that manager is much better positioned to assure integration.

In this structure visibility is greater. There is now a single point of contact for external customers needing assistance.

Clearer lines of accountability and responsibility accrue to the benefit of the firm's customers and other stakeholders.

Being multi-disciplinary, this form of structure offers every worker a broader perspective on operations, making for development a work force consisting of more broadly knowledgeable professionals (generalists.)

And, by the same token, managers in this structure also have to be generalists, and that means they are being better groomed by virtue of experience to become General Managers.

It is a good training ground for future leaders who must have a grasp of the big picture. Individuals get to rub elbows with peers from different disciplines, learn more about their work and their approaches. This makes for heightened learning, an essential component of job enrichment.

There is far smoother and more efficient project evolution when R&D, production engineering, logistics, field testing, maintenance, marketing and finance, and other functions talk together, early on and continuously.

Gains include product quality, reduced cycle times, improved service, and far better positioning to recognize opportunities to capitalize on cost savings all along the value chain. Contrast this with the Functional organization structure known for "things falling through the cracks," where it is said, "the right hand doesn't know what the left hand is doing."

Conflicts among key specialists can be resolved within the office by a (common) manager. Decisions can be made much more rapidly than in the functionally structured organization where bridges must be built, and many compromises and concurrences hammered out on matters of cost, safety, schedule, technical decisions, and procedural options.

External contractor, supplier, customer, stockholder, and other vital constituency relationships can be much more responsively meshed.

I have interviewed managers who have served in both Functional and Product Management positions. They confirmed that the role differences are dramatic. They generally reported more personal satisfaction in the Product/Project structure arising from a sense of having had the authority and the control over the resources to "make things happen."

Managers like having control over results. They felt frustrated in a structure in which they had to go, "hat in hand" to another Functional office peer for cooperation. Now as Product or Project Managers, they saw their jobs as more interesting and more challenging and more suited to preparing them to assume positions of greater managerial responsibility.

Having said all that, it must be admitted that this form of structure, like all others, also has its shortfalls.

Product offices have to compete among themselves to gain essential resources from higher management.

A new product idea may not get a hearing if by its nature it doesn't belong logically in an existing product office.

The in-depth specialized technical competence found under the Functional Structure is lacking by comparison.

The firm may find that staffing each of a number of Product offices with similar representation by disciplines is too redundant with HR costs prohibitively expensive.

The Matrix

I have heard it said many times in technical circles that, "If we didn't have the Matrix, we would have had to invent it." In Part Two I will explore the meaning of that remark and reflect on why others might regard that creation as a Frankenstein.


Ó Charles Albano, 2004. All rights reserved.

View the next article in the series Project Management & The Matrix

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