Organizational structures — Functional, Matrix, Cross-functional — What are the Pros & Cons?

Let's consider benefits and drawbacks of the main types of organizational structures:

• Functional — people are organized by their skills with direct line manager as a head of the unit. Cross-functional endeavors are rare, project managers are absent.
• Matrix — people are still organized by their competences and have a line manager, but most of the work is done within the projects led by dedicated project managers who assemble project team of different skills from different functional units.
• Cross-functional (or product)— people are organized around products or projects, for 100% of their time, teams are stable on long periods 3–6–12 months or longer.

Additional considerations about matrix and cross-functional structures.

Cross-functional (product)

• At the end of a long project, employees go to the bench. If they do not get a job in neighboring projects, they become demotivated and quit.
• Burnout due to the monotony of the project.
• Obsolescence of skills due to the same type of technology (PM may try to suggest a different technology to pilot).

Matrix

• It is easier to replace an ineffective employee with someone who is already immersed in technology.
• If not suitable for the type of personality, then employee may burnout due to uncertainty and conflicts.
• The process of justifying a project and assigning resources gradually becomes more bureaucratic.

Flat structure

This is not a specific structure type but a characteristic of any org. structure.

1. Suitable for the early years of a startup.
2. Level of responsibility and involvement of employees is higher.
3. Less bureaucracy → faster adaptation to environmental changes.
4. The speed of information transfer increases (not always).
5. Decisions are made by the participants in the process (decisions made fast, but are they solid?)
6. Needs employees with intrinsic motivation and ready for informal interactions.
7. Lack of feedback from “senior employees” (“Who is senior?”)
8. Difficulties in growing a team and scaling it.
9. Transparency may decrease if communication tools are not selected and used or there is no culture “If you don’t know, then go and ask.”
10. “Who is responsible for This?”
11. Professional growth is by desire and dependent on the need and tasks.
12. Lack of formal career growth.
13. A willingness to collectively hire employees, incl. offer salaries higher than their own (not everyone is ready for or capable of this).