Whatever happened to the matrix organization? About thirty years ago, this form of management became very popular, with companies such as Citibank, Dow-Corning, Nestle, Xerox, IBM, HP and ABB in the forefront of its implementation. The two-boss structure that was the essence of the matrix organization was seen as addressing the challenge of balancing functional units and other organizational groupings (e.g., geography, customer groups, product groups, technology, etc.). Thus, for example, the head of Marketing for a country organization would report both to the country general manager as well as to a regional or global Marketing leader.
While it may have been a fad to some, organizations saw the matrix as a way to resolve the classic structural issue of centralization or decentralization of resources to optimize productivity. However, the matrix organization required a different way of leading and managing – and many companies simply did not lay the necessary groundwork to ensure the success of the matrix. Company after company started to abandon the matrix organization, with even management gurus like Tom Peters decrying its complexity. Other more “advanced” and more complex forms of organizing (e.g., networks) started to emerge to the point where a leading expert, Jay Galbraith, stated that the balanced matrix is becoming rare: “The disappearance of the matrix is due, in part, to the trend toward more cross-border integration … Also, newer forms are being adapted where the matrix would have been used in the past.”
Yet, in informal discussions with colleagues and from an analysis of the organizational structures of global companies today, it seems like the matrix form is alive and well in today’s organizations – albeit having evolved from its early days. Why? Perhaps there is no bigger driver for the re-emergence of the matrix than organizations’ increasing use of teams – virtual, project, cross-functional and global – to improve speed of delivery, customer responsiveness, cost concerns and productivity. A dramatic example of this is Cisco, which announced recently a different kind of re-organization. As reported in the Wall Street Journal (August 6, 2009), Cisco’s CEO, John Chambers, wants to see the company move into more than two dozen new businesses, from consumer camcorders to giant TV screens for stadiums.
In order to manage these initiatives, Chambers has replaced Cisco’s top-down decision making with committees of executives from across the company. Some teams provide strategic advice and evaluate the progress of these projects. In total, Cisco now has 59 internal standing committees.
Indeed, teams in organizations today are staffed by individuals from different functional areas, different geographies, and even with individuals outside the company (e.g., vendors). Leaders of such teams may come from a business or function but they report to an executive from a different business or, in some cases, to one of the company’s top executives. In one organization, the executive committee charged a senior executive with assembling a team to address the efficiency and effectiveness of its staff functions globally. The leader of the team was a Senior Vice President who, in his role as team leader reported directly to the CEO even though functionally he reported to the CIO.
The impetus for these kinds of teams that are so pervasive in organizations today is similar to what drove many to create the matrix form in the first place – a business need to be more nimble and to move quickly, to get people with different disciplines to work effectively together, and to get around the issues of hierarchy. However, many of the issues faced by those companies that started and abandoned the matrix form are still relevant for and need to be addressed by companies today.
For those companies with teams in a matrix structure, what lessons can they learn about making matrix management work?
- Define roles and responsibilities up front. In a matrix, as well as with many of today’s teams, there are at least two sets of roles that are important to define: the matrix leader who is reporting to at least two bosses (one is the functional boss – the boss to whom he/she ordinarily reports to, and the other is the matrix boss), and the two bosses themselves. In some cases, the matrix leader may have a “day job” as well as being responsible for leading a matrix team. It is important to make sure that the two bosses agree on their roles and responsibilities vis-à-vis the matrix team, especially around decision-making authority. This is best done through a facilitated discussion and with the use of a RACI (Who is responsible? Who is accountable? Who should be consulted? Who will implement?) chart – a very useful tool for clarifying roles and responsibilities.
- Agree on performance goals and metrics. This can be done at the beginning of the year, during the objective-setting process, or when the team is first formed, as part of its charter. The matrix team leader should draft a set of objectives and metrics and make sure that this is negotiated with and agreed to by both of his or her bosses.
- Establish ground rules or operating agreements on resource allocation and communication. Who will be responsible for approving and overseeing the budget for the matrix team – the functional boss to whom the matrix leader reports or the boss of the matrix team? When additional resources are needed (financial or human), who will be responsible? What are the expectations with regard to the matrix leader’s communication with the two bosses, as well as between the two bosses? The two bosses, along with the matrix leader, should work out some agreements in advance to avoid confusion and conflicts later on.
- Determine how evaluations and rewards are going to be decided. Who will evaluate the performance of the team and the leader, and how will rewards be decided? Again, the two bosses need to agree on a process and create some simple mechanisms. In another organization I worked with, the functional boss was responsible conducting the performance review with the matrix leader, but made sure that he or she sat down and got input from the matrix boss. In another organization, the actual performance review was conducted jointly by the two bosses – via video conference, since one boss was based in Europe.
An important foundational element in matrix organizations and teams today is that of trust. As Steven Covey and others have pointed out, trust is central to many organizations today. You can see that with matrix organizations and teams especially, building that sense of trust is the oil that will make this form of organization run smoothly and be successful. A careful investment of time and effort early on to build this trust through the four actions above will pay significant dividends later.