What is a matrix structure in an organization? Please explain.

Matrix organization, sometimes also called project organization or grid organization, is a type of organization structure where the whole organization is divided into separate according to two independent criteria. In a typical matrix organization, one of the department division is according to functional specialization. For example, a project organization may be organized in different technical departments such as mechanical engineering, electrical engineering, and civil engineering. In addition, project teams or departments are formed drawing required people from the technical departments. Typically, the employees may move from one project team to another as new projects are started but their parent technical department remains same.

In matrix organization each employee has a dual reporting relationship. An employee reports to the project manager for all maters relating to planning and executing project activities. The project manager also exercises administrative authority over the people in the team in matters such as sanction of leave. This ensures that the project activities are carried out smoothly in a coordinated way.

Employees also report for technical matters to their technical department heads. This ensures that the employees also receives adequate technical supervision and support from qualified people.