Big, global companies like Procter & Gamble, IBM, GE and American Express have matrix structures that enable leverage across areas of the organization. While they fell out of favor in the 90s, use of matrix structures has surged as companies look to adapt to more complex organizational structures.
Is this a simple case of what’s old is new again, or should you consider a matrix structure?
Pros of the Matrix
Many companies have long brought services such as IT, HR, purchasing and financial reporting together for improved efficiency. Companies are further integrating other functions to remove duplication of effort and capture greater economies of scale. For example, a company wants to move from project management within verticals to across verticals to leverage its project management team and best practices. Or a company wants the process and governance around how products are rolled out, regardless of vertical, to provide a consistent user experience.
- Allows knowledge to be leveraged across cross-functional teams due to the lateral structure
- Facilitates innovative solutions to technical problems via lateral communications
- Offers efficiencies in areas such as development, product management, project management, client relations and sales
- Enables an organization to pivot and focus on the most lucrative and critical business opportunities and needs as resources are not tied to a specific business unit
- Optimizes resources by coordinating experts whose skills may be badly needed but would not otherwise be affordable to every business unit
Cons of the Matrix
Increased connections via the matrix also increase complexity and ambiguity within organizations. A common problem associated with this structure is lack of clarity in terms of roles and responsibility – who owns what? McKinsey conducted a study with 300 senior executives and found that only 44 percent agreed their organization structure created clear accountabilities.
Process and Governance to Reduce Ambiguity
Companies must create process and governance to eliminate confusion and optimize execution. Vantrappen and Wirtz provide criteria for companies contemplating the move to a matrix structure in a Harvard Business Review article. They ask the following:
- A need for middle managers of different verticals to coordinate frequently, but informal meetings aren’t working?
- Good reasons to structure a collaborative vs. competitive working environment?
- A need to push decision-making downward rather than up where it’s stalling?
From my experience at FIS, I recommend the following guiding principles to maximize output and quality:
- Use solid, factual inputs and metrics to create the foundation of process and subsequent decision making. Avoid making decisions based on “feel” or conjecture.
- For each process, clarify in writing all responsibilities and expectations of each role in the organization. Meet to gain consensus across matrixed groups. Establishing accountability is critical to getting tasks done.
- Assign teams specific responsibilities with clearly articulated deliverables and timelines.
- Create a process that forces teams to regularly and publicly report status on deliverables. Status dashboards should measure progress towards established goals.
- Assign one owner to report progress. Many parties will create and participate in process and governance, but there should only be one owner who disseminates information to the team.
- Develop a cadence to discuss progress and address success and improvements.
- Give teams the authority to pivot as needed. Rarely do projects go 100 percent as planned. Adaptability is key to success.
The “matrix” has long been a scapegoat for teams and organizations not achieving goals. Highly performing teams will be successful regardless of organizational structure. One of the keys to success of these high-performing teams is their steadfast commitment to process and governance. These two concepts are an executive’s friend as they establish clarity, accountability, transparency and the ability to adapt and continuously improve.