Matrix-Project Structure Organizational Design
Analyse Matrix-Project Structure as an Organizational Design.
According to Giusti et al., (2015), an organizational design is method that shows the dysfunctional characteristics of structure, work flow, procedures, and systems, and arranging them to reflect the present objectives of the business. Furthermore, the design also shows the plans the business has in place to ensure that the outlined goals are met. The organizational design is designed to improve the technical and work output of the workers in the business (Pinheiro & Stensaker, 2014). Managers of any business should always ensure that they have decided and created the best organizational design for their business to enable it prosper. There are many types of organizations but few designs bare fruits to the businesses. According to McEvily Soda and Tortoriello (2014) the following four designs have proven effective in many business setups, they are team structure, boundaryless structure, learning organizational structure, and matrix-project structure. However, the analysis herein narrows down and discusses team structure organizational design.
The analysis has discussed the organizational context of the design, its advantages, disadvantages, recommendations to overcome the disadvantages, and the conclusion of the analysis. Secondary method has been used to get secondary data for the analysis by searching the following key words; organizational design, team structure organizational design and advantages and disadvantages of team structure. The analysis has used BHP Billiton Limited and BHP Billiton Group, a multi-billion notable company based in Australia owned by Ken Mackenzie (Chairman) and Andrew Mackenzie (Chief Executive Officer). BHP Billiton Limited and BHP Billiton Group is mining company that deals with coal, iron, petroleum, gas, copper, uranium, and nickel.
Matrix-Project Structure is an organizational structure where the members of the firm are assembled by two distinct operational viewpoints or frames (He et al., 2015). The structure came to solve the issues in the large scale businesses which did not have defined structure to run the vast activities for example, mining industries and automotive industries. The older structures used by business people proved to be insufficient in solving managerial issues of large companies like BHP Billiton Limited and BHP Billiton Group . Large and big organizations can use the Matrix-Project Structure because versatile and complex nature (Meredith et al., 2016). Firms that have many branches across the globe can comfortably use the Matrix-Project Structure as their organizational design. According to Junni et al., (2015) the Matrix-Project Structure is more vigorous than other types of organizational structures especially for companies that want to expand their base to other regions. In the structure the information sharing and communication is easily across the boundaries. The structure allows the firm include specialized personnel to increase the quality of work and production. The figure below shows the matrix-project structure.
Evidence of Matrix-Project Structure at BHP Billiton Limited and BHP Billiton Group
Figure1. Shows Matrix-Project Structure (Strauss, 2018)
BHP Billiton Limited and BHP Billiton Group is a mining organization that has various branches worldwide, they are using the matrix-project structure in running their daily activities. Matrix-Project Structure, the company divides in two difference perceptions that is products and function. The horizontal line is for managing the products while the vertical line is for managing the function in Matrix-Project Structure (Hashemi, Karimi & Tavana, 2015). The grouping means that the functions of the firm for example, productions, research, finance and sales have their separate departments for each product being produced. BHP Billiton Limited and BHP Billiton Group, has 50 functional departments which include marketing, board, corporate functions, development functions, finance functions, general management functions human resource and many other functions which oversee the production departments. For example, the human resource’s function is to employs and recruits workers for the production group and the marketing department does all marketing activities to ensure that BHP products are sold in the market and profit made (Meredith et al., 2016).
BHP Billiton Limited and BHP Billiton Group organization is involved in the trading of coal, petroleum, copper, iron, gas, nickel, and uranium. Therefore each of these products is managed separately by different departments. Matrix-Project Structure does not follow the order of the hierarchy order of traditional hierarchy like other organizational structures. Rather the employees in the green boxes in figure 1 report to someone who the report to the head of the organization (Heldman, 2018). In the case of BHP Billiton Limited and BHP Billiton Group organization they report to the chief executive officer who then reports to the chairman of the firm.
As shown in figure one, in matrix structure, there are two divisions, that is the functional groups shown in blue line and the product groups shown in yellow line. The functional group deals will all the products (Albert, Reynolds & Turan, 2015). For example in BHP Billiton Limited and BHP Billiton Group organization, the marketing department oversee how the company’s products are selling in the market. The finance department on the other hand oversee how the products are generating revenue for the firm and if the sales outweigh the production costs. When studying figure 1, the dotted line do not show strong reporting relationships which means they are secondary. But the strong lines show that the reporting line is strong and departments reports directly to their seniors. In other words in matrix reporting, the employees report to both the project manager and the functional manager (Baldwin, 2016). An example from BHP Billiton Limited and BHP Billiton Group organization is where an employees working in the petroleum department will report to both the manager in charge of petroleum production and the human resource manager. However, all the managers reports to a single leader, the chief executive officer of the company (Bazerman & Sezer, 2016).
According to Beattie et al., (2014), in Matrix-Project Structure, the workers in the organization are more accountable that the boss in this structure and the chain of command are two, the product and functional departments. Another thing to note in Matrix-Project Structure is that the role of managers is not fixed like other structures; here managers are fluid in their roles. Moreover, Matrix-Project Structure has not stated the balance between the powers of the functional and product mangers (Bègue et al., 2015). For example, the head of coal in BHP Billiton Limited and BHP Billiton Group and the head of marketing do not know their limits of power because the firm has not defined it to them.
As one of the veteran companies in Australia which have grown internationally, BHP Billiton Limited and BHP Billiton Group has make good use of the matrix structure to structure its organization (Cianci et al., 2014). As mentioned earlier in the paper BHP Billiton has many departments both functional and project departments which cannot be organized using other traditional structure but matrix structure. At the top of the structure is the chief executive officer Andrew Mackenzie followed by dozens of functional and project managers then the employees from both functional and project departments follow. Matrix structure allows the company to have specialization. BHP Billiton deals in many energy products which need many specialist. The specialist include engineers, marketers, advertisers, public ration officers, human recourse officers, and many other specialists hence the structure fit the firm.
Figure 1 shows an example of organization structure of BPH Billiton where the chief executive officer Andrew Mackenzie and below the CEO is the functional managers in blue boxes and in yellow boxes are the project managers of the firm. The green boxes represent the employees of BHP Billiton. When using the Matrix-Project Structure, the boss does not take every responsibility for the actions the managers and workers are the one responsible (Baldwin, 2016). For example, Chief Executive Officer Andrew Mackenzie is not entirely responsible for every action in the firm because he cannot walk through all the departments therefore, employees that include the managers are solely responsible for every action in their various department. The way power has been divided at BHP Billiton Limited and BHP Billiton Group is evident that they use matrix structure organizational method.
Matrix-Project Structure is very important especially to companies that engage in large businesses (Baldwin, 2016). First, the structure allows for wise decision making in the organization. In matrix structure many managers are included which means that they will share knowledge and come up with one decision which will be of high quality. It is evident at BPH Billiton because the company has been doing well since it changed its organizational structure to Matrix-Project Structure. Currently it is the second leading company in profits in Australia. The resources within the company can be shared by both the functional and product department hence leading to utilization of resources (Cianci et al., 2014). Another essential importance of the structure to the firm is that it accommodates all the members in the organization. BHP Billiton Limited and BHP Billiton Group is a big organization that needs a complex organizational structure like matrix structure so that individuals in the firm can be given roles accordingly.
Fourth, the structure allows specialization where every person in BHP has been assigned roles that they are good at which in turn improve the quality of the firm’s products in the market. Specialization also increases the knowledge depth of the employees in a certain departments. Specialization has made BHP Billiton one of the most successful businesses in Australia. The information flow within the employees and their leaders is also swift because they have representatives who represent them at the board level (Curtis et al., 2017). Another importance is that the functional departments coordinate the projects and the products (Bègue et al., 2015). Quality of production can also increase as the employees know that they responsible for their actions not their bosses.
Although the structure is good, it has some disadvantages, they include, first, conflicts may arise between the departments because the structure does not state the amount of power the functional and product managers (Albert, Reynolds & Turan, 2015). Second, there may arise communication problem between the departments and the employees. The structure is very complex, therefore, if the communication department of the organization has not put good communication channels and strategies then there may arise communication issues. Third, the structure has not specified the person responsible for evaluating performance because every manager has been given their role and the power between the managers has not been defined (Bègue et al., 2015).
The persons in the project department may not have time to learn from each other and develop their career because when the project is over, people may go their separate ways. The responsibilities are not permanent (Bazerman & Sezer, 2016). The company management may find it difficult to evaluate the production of individual employees because they are assigned to too many roles. Matrix-Project Organizational Structure is complex thus when managers are not knowledgeable quality of work may be affected.
Matrix structure is a very good organizational structure despite some disadvantages that comes with it. If proper solutions are found to eradicate the challenges then the structure may be more effective. The following are recommendation on how to curb the matrix structure’s shortcomings. First, the organization’s management should educate its staff on the structure and how it works to their knowledge on dealing with its complexity. Second, the firm’s management should clearly define the powers of all the managers to prevent conflicts. Third, good communication strategies should be put in place to improve communication. Lastly, the company should employ a specialist who evaluates the performance of all employees.
Conclusion
The success of any firm depends on the type of organization structure they have chosen. The structure also depends on the number of activities the company is engaged in. Matrix-Project Structure is an organizational structure where the members of the firm are assembled by two distinct operational viewpoints or frames. The structure is best suitable for organizations that have expanded and are engaged on various activities. For example, BHP Billiton Limited and BHP Billiton Group use the structure due to its numerous mining activities. Company owners should conduct research and see which structure suits them.
References
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