What is a matrix organization?

A matrix organization is a business or entity where project managers are arranged in a horizontal hierarchy and department heads are arranged vertically, notes BusinessDictionary.com. This structure describes the relationships between employees and determines seniority.

The vertical and horizontal flow of authority creates a visual matrix when viewed in spreadsheet form. It ensures that authority flows in both directions, which creates more accountability within an organization. Although introducing a matrix organizational structure to a business can reap long-term rewards, it also requires significant adjustments during the initial deployment. It might lead to increased costs, confusion among employees and blurred job descriptions, notes Business Week.