Case Study-DHL Bangladesh

Advantages associated with having a matrix structure in an Organization

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Abstract

1. More cost effective solutions for manpower optimization

There are a number of organizational mechanisms which are unavailable under a one-

dimensional organization. Even if the mechanisms are available, they may be too costly to

utilize.

Under a matrix structure, there is always a ‘budget breaking’ (Raviv, 1979) advantage

available. For example: If a bank has three units, one of which is specialized in cash

management, second in trade financing and third one in data processing (Hunter), then under

a matrix structure, the bank can improve the overall service quality by coordinating the

various units amongst themselves. Such kind of coordination also promotes mutual learning

and in turn results in tremendous quality control and cost savings for the organization as a

whole.

2. Better dispute resolution

In case of a matrix structure, the higher management function as arbiters when any kind of

conflict arises between the lower managers. The presence of higher level managers speeds-up

the process of dispute resolution along the chain. Moreover, as the lower level managers also

have an authority above to report, this prevents them from acting opportunistically (Roberts,

1990).

In case of a dispute involving root level employees, there is an immediate manager who

knows the actual case very well, which is not possible if the manager is high up in the

hierarchy. This also allows for better resolution of conflicts.