Organisational behaviour

Matrix management

A matrix is an organisational structure through which people report to two or more bosses.

A matrix is a type of organizational structure in which employees report to two or more supervisors. For example, at Unilever, the manager in charge of ice cream sales in France may report to both the head of the ice cream business in London and the national manager in charge of all of Unilever's operations in France. Most large corporations employ some form of matrix, generally with multiple dimensions. For individuals who work in matrix management, there are numerous problems.

When to use it

● To organize your company such that it can function efficiently in a complex world.
● To help managers comprehend their frequently conflicting responsibilities.
● To adjust your organization to new circumstances.

Origins

The earliest known matrix structure was implemented by aircraft manufacturer McDonnell in the early 1950s as a means of balancing the demands for quick delivery of specific projects (such as a US government aircraft order) with high degrees of functional specialisation for each activity. Teams of employees worked for two supervisors under this structure: one project boss and one functional boss.

Other matrix structures quickly followed. During the 1970s, multinational corporations like IBM, Dow Chemical, and Digital Equipment developed global matrix structures with reporting lines to strategic business unit leaders on one side and country heads on the other. Professional services organizations like Citibank and McKinsey created matrix arrangements with their service lines on one side and their city- or country-based resource pools on the other.

However, matrix designs are difficult to deploy since they tend to impede decision-making, and in the 1980s, many companies returned to simpler arrangements with a single major line of reporting. However, in the 1990s, the matrix resurfaced, partially as a result of the need to manage numerous objectives, and partly as a result of high-profile corporations (such as the Swiss/Swedish engineering giant ABB) adopting this form. While many critics of the matrix structure persist, it is a "necessary evil" for huge corporations working in complex business contexts.

What it is

The boxes and lines on an organization chart represent formal relationships in a matrix structure. Matrix management refers to the complete style of working that revolves around the matrix structure, including the many systems for monitoring and evaluating performance, sharing information, and assigning resources, as well as the informal behavior of employees inside such a structure. Almost all large companies operate in a complex business environment, with multiple pressures pulling them in different directions. Consider a worldwide food company as an example. One set of requirements pushes it toward 'global integration,' which entails organizing its manufacturing and research and development activities around its primary product categories. Another set of requirements pushes it toward 'local responsiveness,' which entails considering consumer needs on a country-by-country basis.

When confronted with these competing needs, the company can choose to focus on just one of them, allowing it to build a simplified hierarchical structure with just one boss. Alternatively, the firm can choose to focus on both at the same time, which is accomplished by constructing a matrix structure that allows the firm to balance its conflicting priorities. It can, however, hinder decision-making because if a manager's two employers hold opposing viewpoints, they must resolve their disagreements before the manager can act.

Some companies have a 'balanced' matrix structure, in which both the manager's and the manager's superiors have equal power and responsibilities. This method, however, often leads to a significant number of meetings to address conflicts. As a result, most companies have adopted a 'unbalanced' matrix, in which a manager reports to one boss on a'solid-line' and one or more additional bosses on a 'dotted-line' basis. The dotted-line supervisors do not have formal power over the manager in question; instead, they provide counsel and information, as well as assist in the coordination of activities.

This unbalanced kind of matrix is used by some companies to coordinate activities over four or five dimensions. A manager at IBM, for example, would have a solid-line reporting link with the head of a business unit, such as consulting, and then dotted-line ties with a national head (e.g. USA), a functional head (e.g. sales), and someone responsible for a'vertical' client sector (e.g. pharmaceuticals).

How to use it

There are a number of well-known benefits and drawbacks of matrix management. Among the benefits are: ● distributing work efficiently across the company;

● breaking down organizational barriers;

● flexibly adapting to external demands;

● enhancing the managerial abilities Among the drawbacks are:

● having several employers, which can be frustrating and confusing;

● managers are growing overworked;

● senior executives devoting a significant amount of time to internal meetings;

● decision making becoming very slow.

Firms must pay close attention to the formal and informal mechanisms that support the matrix to overcome these disadvantages. As previously said, one good method is to intentionally make the matrix unbalanced so that it is evident where the primary reporting line is. This means that if the two bosses disagree on a proposal, one of them has the authority to overrule it, which helps to speed up decision-making.

Another aspect of making matrix management work is making sure the accompanying systems are functional. A well-designed IT system, for example, that gives frequent updates to everyone on production quantities or sales figures guarantees that choices are made based on high-quality data. Similarly, incentive schemes are frequently designed to reward senior managers for the whole performance of the company rather than just one element. In both circumstances, this minimizes the likelihood of managers making decisions in favour of their 'pet' interests.

The third component of making matrix management work is to pay attention to the company's informal culture. It's often suggested that you should try to build a "matrix in the mind of the manager" so that, regardless of the formal structure, every manager acts in the firm's overall interests rather than the narrow perspective of their business unit or role. There are several ways to improve this informal culture, such as developing training programs and events where managers from various departments get to know one another better, or transferring managers from one job to another so that they acquire a sense of how the entire company operates.

Top practical tip

The first step in working with a matrix structure is to ensure that you understand how it operates. Is the matrix balanced, with two equal bosses? Is it an uneven matrix with one reporting line dominating? With this knowledge, you'll be in a better position to make decisions about what work to prioritize and who to ask permission from when starting a new project. If you're unsure, go with your gut. The more budget a matrix dimension has, the more powerful it is.

Top pitfall

Every organizational system has flaws, and those flaws tend to compound over time. A balanced matrix structure will become highly slow-moving and bureaucratic over time. Unbalanced matrixes tend to offer too much influence to a few people at the detriment of others, which is bad for the company as a whole. Allowing the old structure to last for an extended period of time is the biggest hazard.