Vertical, Horizontal, and Matrixed Organizations (And Why You Should Care)

First, a few definitions so you understand what I’m talking about.

Vertical Organizations

A “vertical” company is known for having a large staff of middle managers between the CEO and the front line. In a vertical company—which was most the most common business model in organizations for the much of the mid- to late-20th century—lines of authority branch outward from the top down like a tree’s roots. Individual vice-presidents direct the activities of the staff below them according to specific lines of business. Vertical organizations arose in the 1930s and 1940s in order to combat the tendency toward cronyism and nepotism in privately held businesses.

Advantages

The advantages of vertical structures are that they have defined chains of command and areas of responsibility; employees advance through ability and performance on familiar, known tasks; and the career path of someone looking to advance “through the ranks” is clearly understood. Also, the longer one stays in a vertical organization the more in-depth knowledge and expertise they gain over the course of time.

Disadvantages

The disadvantages of vertical structures are that they take longer to make decisions and information does not always filter upward to management or down to front-line personnel. The major problem with vertical organizations is that bureaucracy can become rampant as individual lines of business become isolated from each other, develop separate cultures and procedures, and sometimes seek to justify unprofitable lines of business. Or, one level of an organization can be in contact with another, but the “levels” above or below that contact are unaware of those conversations, resulting in lost communications or duplication of effort if someone else at a different level tries to initiate the same level communication. A final challenge with a vertical organization is that communications with other departments can sometimes be actively discouraged or seen as disloyalty below a “certain level”–the idea being all the information you should need to know to do your job is within your “stovepipe.”

A “vertical” organization chart might look something like this:

Vertical Organization

Horizontal Organizations

In response to the observed and perceived weaknesses of the vertical company, “horizontal” companies started popping up more often–especially in the Dot-com companies of the 1990s, where companies were too small to afford a large “vertical” organization. Horizontally oriented companies have relatively few layers of management between the CEO and front-line personnel. It is thought that with fewer individuals in the chain of command, decisions can be made more quickly. As a result of this new management thinking, middle managers in “vertical” organizations saw more layoffs. Much of this thinking was born out of our nation’s space program (see The Secret of Apollo if you’re really gung-ho to learn about systems management.)

Advantages

The goals of horizontal organizations are to speed up decision making; to allow for more management flexibility and cross-training as individuals work more closely with other areas; to eliminate bureaucracy because more people are talking to each other across vertical lines of business; and to increase a company’s flexibility when it comes to creating new products or reacting to new market conditions.

Disadvantages

The disadvantages of horizontal organization include workforce reductions that create a loss of experienced managers, who often make up the “institutional memory” of a company; the breaking up of specialized lines of business, thus reducing the company’s ability to innovate; and uncertain career paths for aspiring managers. There can also be a perception that an individual who works in a small, flat organization lacks necessary expertise in his or her particular specialty to truly excel because effort is diluted–the operative  example being a “jack of all trades, master of none.”

A “horizontal” organization chart looks something like this:

Horizontal OrganizationMatrixed Organizations

Morpheus-Red-or-Blue-Pill-the-matrix-1957140-500-568Ideally, matrixed organizations attempt to integrate and use the best of both horizontal and vertical structures. The idea is this: a (typically large) company keeps its specific lines of business expertise intact—finance, marketing, engineering, etc.—but brings together specialists from each vertical organization to work on temporary projects that develop new products, services, or even lines of business. A person working in such a structure would thus have vertical lines of accountability to the immediate line-of-business superiors and horizontal accountability to one’s project teammates.

Advantages

As stated above, matrix organizations would keep their vertical lines of business intact to maintain their core competencies while also farming out individuals within those specialties to develop new products and services. The other advantage that this type of organization has is that it has more regular and formal contact across disciplines.

Disadvantages

The primary challenges for individuals working in matrix organizations are accountability, authority, and perceived “loyalty.” If a manager is a project team lead or member, she or he must constantly balance which work takes precedence: project work or daily line-of-business work? Next, matrix structures can also impact employee loyalty: if individuals are more interested in doing project work than in doing the specialty work for which they were hired, they might be perceived as “disloyal” by their vertical line-of-business superior. Also, a line-of-business manager might not see their subordinate’s work if he or she is heavily involved in project work. There can be a corporate problem of being “out of sight, out of mind,” where a project worker misses opportunities for promotion within her/his vertical organization because of a focus on the project. If cooperation does not occur both horizontally and vertically, the company can easily be overrun by politics, as people break into fragmented camps: “Are you a ‘project’ person or are you an ‘institutional’ person?”

A “matrixed” organization chart looks something like this, with both horizontal and vertical accountability:

Matrixed OrganizationWhy All This Should Matter to You

Opportunities

Since 2000, many large organizations have taken on the matrix form of organization. One primary reason is networking: because computers allow us to be connected in more ways than ever before, individual workers expect their companies to behave the same way. More importantly, customers expect that.

Large organizations like Disney spent much of the last 20 years on Customer Relationship Management (though I forget what they call it internally now). CRM is the process of developing information streams that allow multiple parts of an organization to access customer information and use it to better meet the customer’s and the organization’s needs. One example of this CRM-type integration is the Disney Magic Band, which is actually a rather complex piece of hardware (and software). It allows guests to wear one tool on their wrist that serves as their theme park admission, hotel room key, and credit card for making merchandise and food purchases on their hotel account while staying at the resort. On the spooky side, once you’ve stayed at the hotel and visited the parks and made all those purchases, the next marketing letter or email you get from Disney is likely to work like Amazon.com and recommend similar purchases the next time you visit.

None of that could have happened without a matrixed organization to support it.

And of course along the way they needed technical communicators working alongside the Information Technology people and all the other related organizations (Marketing, Attractions, Resorts) to ensure that all their needs were met. I shudder to think of what the requirements document looked like for Magic Band, but I’ve seen it in action, and it does indeed work as advertised. What these tools mean for technical communicators is plenty of opportunity to work in cross-functional projects, which can last weeks, months, or years.

Another reason cross-functional teams are better (and more fun, in my opinion) to work for is that you’re interacting with more customers, more lines of business, and so are learning a lot more about how the whole organization works, which makes your knowledge much more valuable when you’re looking for the next job.

Lastly, project work helps you build your personal network within an organization much better than if you just stayed within one organization. You might know Finance inside and out, for example, but you might have no idea who works in Marketing, how Marketing does its business or how it affects what you do there. If only out of self-defense, I think project work would be beneficial to someone learning to be valuable to an organization, but I’ve been known to be wrong about such things.

Challenges

I’m not going to kid you: matrixed organizations have their challenges. For me, the biggest challenge was the number of meetings I had to attend. As a member of a “vertical” organization (say, the Communications department), you’re beholden to that organization’s schedule, standards, and meetings and are expected to comply with all three while in the project. Just because you’re “off on project work” doesn’t mean that your line-of-business boss doesn’t want to see you. S/he does, which means that your meeting schedule effectively doubles.

Loyalty and Conflicts of Management Interest

The “loyalty” question is always a puzzler to me, because to me accountability is pretty straightforward: I’m supposed to provide a good service as a communicator (representing the line-of-business organization) to a project team, regardless of who they are. My boss is in the communications department; my customer is in the project office.

In reality, “Loyalty” doesn’t become an issue until your line-of-business manager wants you to support something besides the project you’re working on at the moment while the project manager needs you for project work. In such situations, the best thing to do is bring the matter into the open, contact both managers, and let them sort it out between themselves. If necessary, higher managers get involved, and then someone comes back to you and wants to know how you can serve both masters anyway in a way that makes everyone happy. It’s a challenge, but to me the best way to demonstrate “loyalty” to the organization is not to show favorites–just let the chain of command sort it out once they realize the conflict.

If you’re a project manager in a matrixed organization, you might face the challenge of authority. That is, you might be a “Project Manager” on your project, but one of your attached line-of-business team members might be a subject matter expert who outranks you in the vertical chain of command (this is especially problematic in military or civilian government agencies, where “rank” is taken seriously). It’s usually good, when setting up a project charter, to lay out clear lines of authority, with a clear understanding that the line-of-business higher-ups will back up with words and deeds. For example, of the higher-ranking subject matter expert decides to do a line-of-business task rather than focus on his project work, the Project Manager needs to have the authority to keep him in line…or take it to his superiors if he refuses to cooperate. Not saying it always happens, just that it can.

Final Thoughts

As I’ve already noted, I preferred project work in a corporate setting. That suited my somewhat broad (someone once called them flighty) interests. If you’re a steady person who likes to become an expert on one topic and appreciates traditions and always understanding how and why things are done a particular way, there is always necessary work to be had in “vertical” or institutional organizations. Bills always need to get paid, operations always have to run smoothly, and products always need to come out working properly.  Within those ongoing processes, there is always a need for technical communicators to maintain the institutional memory of How Things Should Be Done and what it means when someone says a task must be done “the company way.” Regardless of your preferred type of work, it’s good to know what types are available and what structures exist to support them.

The point of this little essay is to help you understand a little bit more about how corporate entities are structured, how they can affect your work, and how you can best serve them. As always, the answer to the last item is, “Do good work, and someone will want to hire you.”

About Bart Leahy

Freelance Technical Writer, Science Cheerleader Event & Membership Directior, and an all-around nice guy. Here to help.
This entry was posted in meetings, Office Politics, philosophy. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s