Making Matrix Organizational Design Work

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The matrix organizational design derives its name from resembling a table with elements included in both rows and columns.  This type of organizational structure results in solid line and dotted line reporting relationships on organizational charts.  The design was developed by the US National Aeronautics and Space Administration (NASA) for seeking better solutions in managing supplier relationships and providing managers with more decision-making authority.  Organizations seek the same advantages from this organizational design today.

It makes sense that more matrix reporting structures exist in business today.  With the goal of decentralization of resources to optimize productivity in mind, modern technology and access to global resources make this design more attractive to implement.

As Jay R. Galbraith points out in “The Future of Organizational Design” in the Journal of Organizational Design, technology is a big contributing factor for organizations to move to the matrix design.  He points out, “These new digital devices can eliminate expensive supply chains, maximize customization, and minimize economies of scale.”

Almost every large organization has a matrix reporting relationship in some shape or form.  Some reports state between 90-95% of Fortune 500 companies utilize this structure either by teams or projects.   It may not be a question of which organization is making it work the best, but a question of which leaders are managing it most effectively within the organizations.

What are their secrets?  The key elements of making the matrix work are broken down here into the three C’s.

  1. Communication

In the March 2006 Harvard Business Review feature article, “How to Implement a New Strategy Without Disrupting Your Organization”, authors Robert S. Kaplan and David P. Norton stated, “An often fatal weakness of a matrix organization is the endless debates among business units, functional departments, and geographical regions about resource allocation.”  This demonstrates the need for an effective communication plan.

The backbone of any effective organizational design or reporting structure is communication.  It’s especially important to the success in a matrix environment in building trust among team members and other leaders.

Trust is created through transparent communication from the leader to the solid line and dotted line reporting relationships by developing and nurturing working relationships.  To do this effectively, a matrix leader asks questions with the goal to truly seek out answers, even when it feels uncomfortable to explore issues outside of their comfort zone and expertise level.   Fostering an open dialogue and soliciting input from team members builds trust for ongoing collaboration.

Communication within the matrix requires more follow up and strong listening skills.  To save time, this may lead to the manager using shortcuts by assuming answers or canceling meetings.  However, these shortcuts erode the primary goals of the matrix design.

Olivier Serrat mentions in his article “Heads, I Win.  Tails, You Lose” from the March 2013 publication of Journal of Industrial and Relations, “Successful matrix (but also traditional) organizations take care to communicate a clear, consistent corporate vision and to define expectations; work to expand individual perspectives to co-opt ambitions, energies, and skills into the broader organizational agenda; increase congruence with corporate values.”

Communication must be encouraged from all team members by encouraging information sharing among cross functional groups.  The leaders must continuously outline team communication expectations to keep the momentum driving forward.    Over time, communication will grow from the transactional “need to know” information exchanges to transactional collaboration planning to benefit the entire organization.

2. Coordination

The matrix environment requires much more coordination than other reporting structures to make it work.  Coordination must occur on multiple levels.  The matrix can be confusing for employees who want to know how they fit in with the business goals and objectives.  By connecting various functions together for a common purpose to encourage continuing team collaboration, the manager continues to remove barriers to the success of team members.  It can also be confusing to managers that share employees.  Both managers must agree to expectations to make the most out of a dotted line reporting relationship.

An example of strong coordination in a matrix reporting structure can be found in Procter and Gamble, according to Galbraith through their “Four Pillar Design” which focuses on customization and customer needs.  Rachel Lomas from Global Integrations pointed out that Procter and Gamble was a forerunner of the design.  She mentioned that they have “evolved their business processes to reflect a more horizontal way of cutting across the traditional vertical silos of function and geography.”   Globalization caused the organization to look at ways to reduce costs while retaining efficient customer responsiveness.  This led to a hybrid matrix structure where project teams are used when two or more functions share a common problem.

Meetings play a large role in coordinating planning decisions in a matrix environment.  This doesn’t mean going around the table to check in on what everyone is working on.  Coordinating work through meaningful meetings in a matrix reporting structure involves planning, inviting cross functional members to the table and seeking input on agenda items in advance.  During these cross functional meetings, leaders must encourage the participation of all members.

3. Clarity

A challenge facing managers in a matrix reporting structure is the lack of clarity of defined roles.  The goal is not to box the matrix in, however, roles and responsibilities should be outlined for all parties including team members and managers sharing employees.

A regular touch base meeting between sharing managers allows for objectives to be shared on an ongoing basis.  This meeting should bring competing goals to light and streamline the reporting process to avoid placing the employee in the middle.   Aligned goals and metrics will be used to measure employee performance.

Leading a matrix workforce is not based on expertise leadership.  It’s about creating partnerships within the matrix.  With the goal of partnership through collaboration in mind, clarity can be established by assigning roles for team members when working together.  Managers can create learning and training opportunities to give the group more exposure to working with each other and establish real connections.  Putting their own ego aside, leaders must lay the ground work to empower members to set goals and priorities for themselves.

Serrat went on to describe the importance of moving towards collaboration in the matrix design.  “And so, in general, silos do not exist because something was intentionally done: they come about because something was left undone, that is, the provision of compelling motives, means, and opportunities for personnel to come together.  The idea, then, should be to replace competition with collaboration.”

Early on in the reporting relationship of cross functional teams, managers which share employee must discuss the expectations of each other.  Addressing key concerns such as deciding which manager will be responsible for the performance evaluation and how each manager contributes to the professional development of the employee and assignment of tasks will assist in the efficiency and effectiveness of cross functional reporting relationships.

Furthermore, Lomas mentioned, “Align people systems such as objective setting, key metrics, incentives and career development with the multiple dimensions of the matrix to lift people out of their traditional silos.  Many organization fails to do this quickly enough which causes confusion.”  This is where transformation within the matrix occurs.

Putting the 3 C’s Into Action

Although it’s easy for a leader to get tangled up in the matrix environment, it provides several advantages to these leaders when the three C’s are implemented.  The expertise provided by these cross functional reports make the team as a whole stronger when relationships are nurtured properly.  When looking for the next set of leaders, more options abound, giving managers the ability to coach more employees up.  Mentorship opportunities can be established to bridge gaps for the next set of potential leaders.

Managing reporting structures in a matrix design offers potential rewards for the careers of these leaders.  It demonstrates a significant step in career progress as these leaders gain credibility with new business units and departments.  This can propel both career and business goals by working with diverse managers and leaders.

Most managers operate within some type of matrix every day.  Instead of getting overcome by the complexities of the matrix, a manager can use it to their advantage.  This is done by looking at the matrix differently: an opportunity.   Those leaders who do see the matrix as an opportunity are able to transform their business units and the entire organization.

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Louis Carter
Louis Carter is CEO and founder of Best Practice Institute, social/organizational psychologist, executive coach and author of more than 11 books on leadership and management including his newest book just released by McGraw Hill: In Great Company: How to Spark Peak Performance by Creating an Emotionally Connected Workplace. He has lectured globally in the U.S., Middle East, and Asia on his work and research in organization and leadership development and is an executive coach and advisor to CEOs and C-levels of mid-sized to Fortune 500 organizations. He was named one of Global Gurus Top Organizational Culture Gurus in the world and was chosen to be one of 100 coaches to be in the MG100 (Marshall Goldsmith) out of 14,000 people as one of the top 100 coaches in the world .