Bureaucratic vs. Matrix Organizational Structures
An organization is defined as a collective composed of individuals or groups of individuals, with different functions or roles, working together towards common goals. It involves different individuals, different tasks, different techniques, and different processes. This diversity, if left unchecked or unregulated, could lead to chaos and disorder. Order is required. Thus, it is inevitable that every organization should have a framework or a structure in order to keep all these differences on track towards that common goal.
The organizational structure would then be used to establish a pattern within the organization on matters such as hierarchy, authority, division of work, and relationships and connections between and among the different functions. It is through this structure that the operations of the organizations are defined and subsequently carried out.
In this article, we explore 1) the basic principles of an organizational structure; 2) bureaucratic structures; 3) matrix structures; as well as 4) the comparison of bureaucratic vs. matrix structures.
BASIC PRINCIPLES OF AN ORGANIZATIONAL STRUCTURE
- Specialization – this is the division of work within the organization, according to the tasks or functions that the members or personnel specialize in. This special knowledge is then applied by the members towards the attainment of organizational goals.
– Horizontal specialization refers to the division of work according to the type of work at various levels within the organization, from top to bottom and vice versa.
– Vertical specialization refers to the division of work into departments.
- Coordination – all the units, with their respective specializations or special knowledge are combined into a cohesive whole in order to work towards the organizational goals. It is applied through the following:
– A single superior is in place in order to establish a unity of command. Orders are received from only one superior, and the members are answerable or required to report to that one superior.
– The scalar principle is applied, whereby the chain of command starts from the top to the bottom, in a straight line.
– The principle of responsibility and authority holds that employees are responsible for the accomplishment of their assigned tasks while recognizing that they are under someone’s authority.
– The organization is understood to have undergone departmentalization (functional, product, users/customers, territory/geographic location, process or equipment).
– There is a specific number of units or individuals under one management, in order to clearly define the scope of control.
- Decentralization and Centralization – This refers to how decision-making is assigned within the organization. If the decisions are left in the hands of top management, it is referred to as centralization. Decentralization, on the other hand, entails involvement of lower levels of management in the decision-making process.
- Line and Staff Relationships – There are two types of authority often seen in organizations.
- There are two parties involved – the superior (line employees) and the subordinate (staff employees). Accomplishment of goals is in the hands of the line employees, and they are provided support by the staff employees.
The concept seems simple enough: there is an organization, and it needs a structure. However, not all organizations are the same. Depending on the nature of the organization, there are appropriate types of organizational structure that could be put into place.
Today, we can classify the two most commonly used organizational structures into two: bureaucratic structures and matrix structures.
The most basic organizational structure is simple and centralized, which means it mostly found in small organizations, particularly companies that fall under the sole proprietorship category. More often than not, there are only two or three levels in the hierarchy (which also happens to be another term for bureaucracy), making centralization easy.
But growth and change is inevitable, and organizations have to be flexible to accommodate such changes. They could not rely on the simple centralized structure to keep working for them, especially when the organization becomes larger and its operations more complex or diversified. This is when the bureaucratic organizational structure was developed.
The bureaucratic structure is one of the several types of classical organizational structures. Unlike the simple and traditional structure, however, the bureaucratic structure is more applicable to larger organizations or organizations that have more complex operations.
A prime example of a bureaucratic organizational structure would have the PRESIDENT or top management on top, and below him would be the DEPARTMENT HEADS (second level) for Administrative, Research and Development, Manufacturing, and Sales and Marketing. On the third level would be the DIVISION HEADS. For example, in the Administrative Department, there are division heads for Personnel/Human Resources and for Billing and Collection. Under the Sales and Marketing, there would be a division head for the Distribution and another for the Sales.
Elements of a Bureaucratic Structure
There are two elements of a bureaucratic organizational structure that are deemed to be the most important. They are:
- Standard methods and procedures. Every bureaucratic organization must have standard procedures for the performance of work or the assigned tasks and responsibilities of its members.
- A level of control over the performance of said methods and procedures. The procedures are expected to be performed at a certain standard; therefore, there must be a high degree of control to ensure that these standards are observed and adhered to.
Features of a Bureaucratic Structure
The following features and characteristics are required in order for any bureaucratic structure to work.
- In any bureaucratic structure, employees or members of an organization have specialized tasks or functions that only they can perform, primarily due to their respective training and expertise. Thus, more often than not, employment in an organization that uses this type of structure is based on technical qualifications.
- A bureaucracy utilizes a hierarchical model, with tiers clearly defining the authority, responsibilities and functions at each level.
- Division of labor is strong in this type of structure, with almost all the tasks broken down into component parts, with the corresponding individuals assigned to perform them.
- A bureaucracy cannot be performed without having a set of formal rules or standard operating procedures (SOP) firmly in place. These rules clearly state or set forth the tasks that each level of the organization should perform.
- Strong boundaries and sense of identity.
Advantages of a Bureaucratic Structure
Everyone in the organization knows their place. They know their position, the scope of their authority, their responsibility, and what they should and should not do, because everything has already been defined from the beginning.
Efficient performance of tasks
This is down to the fact that the tasks are performed by trained personnel or individuals that have special training or knowledge with respect to the task at hand. The inevitable sharing of resources will also contribute to the performance of tasks in a more efficient and productive manner.
High standards of quality control of organizational outputs
Since the structure allows management to be able to closely monitor outcomes, the organization will be able to have standard products or services and quality control.
Organizational stability is maintained
Thanks to the fact that the organization functions like a well-oiled machine, following a set of formal rules and clearly defined authority and responsibility, the organization will be able to maintain a stable footing.
Disadvantages of a Bureaucratic Structure
Sometimes, the advantages could also breed the disadvantages, and that is also seen in a bureaucratic structure.
Individuals are limited to performing the tasks that they specialize in
This means they cannot “flex their muscles” and learn or perform beyond the scope of their skills, knowledge, training and expertise.
Individuals tend to have a limited view
Since individuals are solely focused on performing their own tasks, they will have a limited view without knowledge of how it affects the other parts of the organization. They would be unable to recognize or realize that there is a problem outside their scope of expertise or specialization.
Division between the top and bottom tiers of the hierarchy
Lower level employees will hesitate to react to some decisions made by higher management for fear of shaking up the hierarchy. At the same time, the upper levels are likely to not realize if there are problems going on the lower levels.
Low morale and dissatisfaction with their work
Employees are more than likely to have low morale and dissatisfaction with their work after having to perform tasks repetitively. They are expected to perform specialized tasks, so that is basically all they do and all that is expected of them. Rarely, if ever, do they get to do something outside their scope of specialization.
The matrix organizational structure is merely one of the several modern organization designs that came about in recent years in order to accommodate the constantly changing landscape of business and organizations. In this specific type of structure, two types of structures are combined into a single, cohesive structure, resulting in a dual-authority system.
The most common form of this type of structure is in an organization where managers, employees and groups are departmentalized based on their functions and on the products of their respective departments. This combined functional and product grouping would then allow the organization to reap the benefits or the advantages of both types.
A simple example of a matrix organization structure would be an electronics company. There are several departments based on functions, namely Research & Development (R&D), Finance, Sales and Marketing, Manufacturing, and Distribution. However, there are also three product lines: Television, Cameras, and Mobile Phones. All the departments are involved with these product lines, so coordination between and among all of them.
Basic Matrix Management Models
According to Kenneth Knight, there are three basic matrix management models.
- Coordination. In the electronics company example mentioned above, application of this model would have the employees from the departments working together in a cross-departmental manner, without leaving their respective departments.
- Overlay. In the example, an employee from the Finance Department will also become a member of the Sales and Marketing Department. This effectively makes him answerable to two managers or department heads: the Finance manager and the Sales and Marketing manager.
- Secondment. This is the more “mobile” model. An employee from the Finance department could move to the Sales department for a specific project. Once it’s done, he moves back to Finance.
Features of a Matrix Organizational Structure
A matrix organizational structure is characterized by the following:
- Instead of a linear management structure, it utilizes dual-reporting relationships. Individuals, regardless of which part of the organization they belong to, will have to report to different departments in order to complete a task or a project.
- Collaboration is one key feature in matrix structures, especially in settings where work teams are formed, drawing individuals from different parts of the organization, for the accomplishment of a specific project.
Advantages of a Matrix Structure
Many are opting to adapt the matrix organizational structure because it is deemed to be the most beneficial to them. Here are the advantages of this type of structure.
Faster and more efficient flow of information
Exchange of information is done in a speedier and more free-flowing manner due to the closer cooperation between and among the employees and the departments. Data-sharing is encouraged in this type of structure, flowing vertically and horizontally, so everyone gets access to the information they need.
Response to change is faster
One result of the faster flow and exchange of information is the improved rate of response to changes and other unforeseen circumstances. It is even more remarkable since it involves two or more departments within an organization.
More efficient use of resources
Resources are utilized in a more efficient and cost-effective manner. Each department does not have to spend on tools, equipment and manpower, since they can source them from other departments.
Personal and professional growth and development of managers
This type of structure tends to produce more specialized workers and more proficient managers, brought about by the sharing of information and the experience they obtain from being part of various projects, even those that are outside of their original departments.
Improved sense of commitment and dedication to their jobs
Members of the organization will have more than a glimpse of the role they play in the grand scheme of things. Knowledge of how important or indispensable they are in the organization will boost their morale and motivate them to continue contributing to the attainment of the organizational goals and objectives.
Disadvantages of a Matrix Structure
Combining two organizational structures into the matrix type solves a lot of problems. However, it could also give rise to different ones. It is not without its disadvantages, which are discussed below:
Confusion on authority and responsibility is rampant
The dual-authority system introduced causes confusion regarding the jurisdiction and scopes of responsibility and accountability to be ambiguous. The lines on the chain of command are blurry, further confusing the employees since they do not have a clear idea on who is in charge or in control.
Another offshoot of this is the actual loss or lack of control of the managers even within their own departments or jurisdictions, since their employees would not know where to attach their loyalties to, or who to report to.
There is a high possibility of conflicts within the organization
The vague lines of authority will naturally give rise to conflicts and power struggles, especially if they are left unchecked by higher authorities or top management. It is no longer a rare sight to see disagreements arising from one manager telling one employee to do one thing and then another manager giving a different set of instructions that contradict that of the first one.
This problem is not limited to management levels, since it could also trickle down to the work force. Since decision-making is confined within respective groups, cliques, factions and informal groupings are likely to be formed.
Higher initial and setup costs
In this type of organization, more personnel would be required, especially in the early stages of the organization. Thus, it requires more outlay on labor and overhead. The reporting requirements in matrix organizations tend to have more complexities, and this translates to higher expenditures.
High instances of worker dissatisfaction
Conflicts tend to awaken in employees or workers feelings of dissatisfaction and dismay. As a result, they would try to seek for employment elsewhere, and the organization would be left in a bind, looking for manpower to replace the ones who left. This high turnover rate could also lead to the organization having a bad reputation in terms of its human resource management.
BUREAUCRATIC VS. MATRIX STRUCTURES – WHICH IS BETTER?
It is hard to say that this or that structure is the better option without taking into account several factors.
- Nature of operations of the organization. Organizations that have unique operations or operate at a fast pace are better off using the matrix structure because of its flexibility and adaptability.
- Size and scale of the organization. Matrix is said to be the more suitable structure for large organizations.
- Task specializations involved. You will find that the bureaucratic structure is best applied in organizations with complex tasks. Simple businesses will mesh better with a matrix structure.
- Level of standardization sought. If the organization aims to maintain high degrees of standardization, a bureaucratic structure is the way to go, since matrix organizations rarely, if ever, follow standard operating procedures. Often, they do not even have a set of formal rules or standards to follow.
- Centralization vs. Decentralization. In a bureaucracy, centralization is high, leaving the decision-making to the top management levels. If the organization does not care for this and actually encourages decision-making in all levels, the matrix structure is most applicable.
- If you are after simplicity in the structure, a bureaucracy is the preferred option, since it has a tall structure, with authority retained at the top. In a flat structure like that of a matrix organization, authority is more spread out.
Both the bureaucratic and the matrix structures of organizations have their strengths and weaknesses. It is only a matter of looking at the organization and its goals in order to arrive at a decision on which model is more appropriate. Of course, it does not stop at making that choice on which organizational structure to adapt. The implementation of the chosen structure would also play an important role. Making the choice is only half the battle; putting it in place and making it work is where the real work begins.
Welcome to the 22nd episode of our podcast with John Lee Dumas from EOFire! You can download the …