What Are the Pros and Cons of the Three Main Organizational Archetypes: Functional, Matrix/hybrid, Divisional?

ORGANIZATIONAL STRUCTURE

What are the pros and cons of the three main organizational archetypes: functional, matrix/hybrid, divisional?

Functional:

Pros: Each function is composed by members sharing similar technical background organized by different levels and reporting to one head manager. The creation of job descriptions and layers (after a process of delegation and the introduction of a managerial level) clarify organizational responsibility and an efficient allocation of different tasks. Moreover, with the introduction of support functions (staff administrators located at head office), the need of an accurate accountability is satisfied.

Cons: The lack of a holistic view on the products themselves and of an active response to the market needs, due to the excessive specialization. Therefore, disputes and different objectives arise among functions as well as a consisted slow-down in communication and decision-making, due to the increased layering.

Matrix:

Pros: The possibility to exploit the “best of both worlds”, the efficiency and technical sophistication of a functional organization integrated by an overall view on common priorities.

Cons: Competition between product leaders in having the highest competences devolved and resources allocated. The presence of 2 heads with ambiguous level of authority arises confusion and misalignments. Moreover, the growing complexity of each product requires the development of separated strategies.

Divisional:

Pros: An organization divided in business units based on products guarantees a rapid response to market changes, and the development of specific strategies and a greater flexibility, with the possibility to merely add or dismiss divisions. However, supporting functions (Administration, divided into Controlling, Personnel and Legal) are maintained common to each business units, reporting directly to the CEO’s office.