Greg Pye is the chief executive of a medium sized company that traditionally has been organized hierarchically according to function. After attending a management seminar, he decided to encourage inter-functional departmental co-operation by implementing a matrix structure in the organization. Greg agreed that a matrix organization and cross-functional team working would provide flexibility and enhanced performance to the organization. However, the company secretary drew Greg’s attention to some potential drawbacks. These include the possibility that people won’t know who they are meant to be reporting to, supervision will be difficult for their line manager who thinks they are working in their teams and team leaders will have no real authority over the team members. After speaking to the company secretary, Greg began to have second thoughts about the matrix structure. Greg decides to ask for a more considered view of restructuring the company. Required: Greg Pye has asked you to explain: The advantages of introducing a matrix structure

The Matrix structure allows cross functional activities to be undertaken whilst maintaining the function, skills and loyalties of departments. This type of structure is often associated with organisations which are product driven. The advantages of such a structure can be described as:
o improvement in communication which will be lateral as well as hierarchical
o improved quality of decision making throughout the organization
o direct contact between managers and employees replaces rules and bureaucracy
o management motivation is improved by greater involvement in decision making and control
o product driven rather than department driven and thus more aware of the market
o improved product knowledge by all the management
o improves quality of decision making, specially at times of change
o adaptive to local geographic conditions
o removes the problem of ‘management islands’ associated with the departmental specialisms inherent in the hierarchical structure
o managers are able to see and understand the whole picture
o reduction of stress on senior management
o provides flexibility across the organization
o allows training and greater involvement for junior management
o improved control through de-centralised functions such as product budgets and profit centres

These ideas may well be more appropriate to a smaller firm such as Greg Pyeís and are essential in an environment where there is constant adaption to markets and technology.