Implementation of Matrix Organization Structure

Question: Discuss about the Implementation of Matrix Organization Structure. Answer: Introduction: Centralization as a form of organizational structure operates in a manner where all the rights and powers are placed in the hands of the top management level. All the decision making and planning activities are left to the top most authorities. This policy was practiced in earlier days in all organizations with an aim of retaining all the powers within central organization. They controlled all the activities of the low level and middle management. This kind of organization ensures that personal leadership and coordination are easily seen as well as easy distribution of work among workers (Chang and Harrington 1427) However such a structure diminishes the subordinate employees roles within the organization due to the concentration of responsibility and authority in the head office. The junior staff is left to only follow commands from the top managers and not even allowed to actively participate in the decision making processes. There is a possibility of excessively overworking the ju nior staff thus resulting in poor decision making. There is too much bureaucracy within such an organization (Chang and Harrington 46: 1428). Advantages of centralization There is consistence in policies with greater control and procedures that are standardized. Decision making is quicker and the financial control is tight. The customers know what to expect since the branches are identical. The local managers which in most cases are not involved in the running of the organization may be having better knowledge of the customer need. Motivation of local managers is easily affected and there is likely to be inappropriate decision making at local level. This kind of organization involves the assignment of responsibilities and authorities to the low level or middle management by the top level management. Decision making powers are delegated to the departments, divisions units or centre managers. Its therefore an addition over delegation of authority (Radner 1111). With increased competition most managers currently are taking the decision regarding for any delegation of authorities and responsibilities to their subordinates. This gives functional level managers a chance to perform better and freedom to work. Responsibilities are also shared by the high level managers resulting in quick decision making thus saving on time. Its good for business expansion. For nay decentralization process to be effective there is need for open and free communication within the organization (Van Zandt 128). Local managers are empowered and the local knowledge benefits sales within an organization. Promotions are also targeted effectively. Day to day communication with the head office is reduced. The business becomes more flexible as the various managers are able to respond to customer demands faster. Such structure also improves performance and motivation. Disadvantages of decentralization Local managers may fail to see the bigger picture of the organization and some customers may prefer uniformity of branches. Considering their advantages and disadvantages some people tend to think that centralization is better while others may be in favor of decentralization. In old days most business activities were centralized but due to increased competition that requires quick decision making many organizations have opted for decentralization structure (Yang, Huang and Wu 258). However absolute centralization or decentralization is not possible and therefore most organizations are presently equipped with both features. Full decentralization is often an indicator of lack of control over the activities of the subordinates while complete centralization cannot be practical because it means all the decisions are entirely made by the top management (Chang and Harrington 1429). This calls for a balance between these two. My current business operates under a matrix structure which is a combination of both the divisional and functional structures. It brings different skilled workers from various parts of the organization to work together as a team (Kuprenas 51). The reporting relationships are usually set up as a grid or matrix with employees having dual reporting relationships to both a functional and product manager (Laslo and Goldberg 151). Advantages of matrix structure Its adaptable to dynamic environment where there can be frequent changes in the business world. It ensures maximum use of resources because many projects can be handled at a time. It promotes participative management where people work together in a project as a team (Laslo and Goldberg 15). It encourages delegation of duties thus giving sufficient time to top management. It also promotes excellence and inter disciplinary specialization because it involves experts from many disciplines this ensures quality performance and output. It encourages team work development because it involves many members in achieving common objectives (Bartlett and Ghoshal 6). It is a costly structure because it maximizes administrative costs such as paper works and information costs. Its likely to violate unity of command because subordinates have to follow instructions from more than one superior. It faces problems of overspecialization because it involves many experts who meet to discuss unrelated subject matter thus delaying decision making in some cases. Because it demands high levels of interpersonal skills then it faces difficulties in striking a balance. It encourages feeling of insecurity among employees if they are not guaranteed other projects at the completion of one. There is lack of wide coordination due to time limit factor. Lack of commitment is also experienced because many specialists are only appointed in the project for a limited period of time (Davis and Lawrence 139). Woks cited Bartlett, C and Ghoshal, S. Matrix Management Harvard Business Review, 1990 Chang, M. H., Harrington Jr, J. E.Centralization vs. Decentralization in a Multi- unit Organization: A Computational Model of a Retail Chain as a Multi-agent Adaptive System", Management Science, 2000. Davis, S.M. and Lawrence, P.R. Problems of matrix organisations. Harvard Business Review, 1978. Kuprenas, J.A. Implementation of a matrix organization structure. International Journal of Project Management, 2003. Laslo, Z. and Goldberg, A.I. Matrix structures and performance: The search for optimal adjustment to organisational objectives. IEEE Transactions on Engineering Management, 2001. Radner, R.. The Organization of Decentralized Information Processing", Econometrica, 1993. Van Zandt, T. Decentralized Information Processing in the Theory of Organizations", Contemporary Economic Development Reviewed, 1999. Yang, L., Huang, C. and Wu, K. The association among project managers leadership style, team work and project success. International Journal of Project Management, 2011.