Division of labor was the foundation of traditional organizational structures. Employees had a single reporting line and would report to only one manager or ‘boss.’ However, as companies started expanding, multiple functional units emerged. The conventional hierarchical structure could not deal with the complexities as it created siloed departments.
If, let’s say, a project belonged to Department A and required competencies from Department B, the respective manager would hoard or hide the resources instead of freeing them up to take on the project. Thus, the project suffered from a resource crunch as there was no visibility into enterprise-wide resources due to restrictive boundaries. Moreover, it led to unnecessary hiring of the same competencies escalating costs.
Organizations evolved their managerial approach into matrixed structures to overcome this roadblock and allow seamless inter-departmental workforce distribution.
It offers a plethora of benefits, starting from proficient information exchange to enhanced work efficiency. However, the complex nature of the structure brought forward some challenges too.
This article explains the resource-related challenges that arise in a matrix organization and proven practices to overcome them.
1. What is a matrix organization structure?
A matrix organization is defined as one which has dual or multiple managerial responsibilities and accountability. In other words, it is regarded as the ‘multiple command and control managerial’ concept, where employees report to two or more managers.
Out of the two chains of command, one is along the functional lines, such as department or line managers, and the other is the project, product, or client lines.
Based on the Gallup survey, eighty-four percent of the US employees were matrixed to some extent.
A classic example can be a resource working on a web-designing project belonging to the marketing department. Here, the employee will report to the project manager to share the project’s progress and the marketing department head to explain the overall utilization, seek work request approvals, etc.
Based on the project manager’s authority, a matrix organization is divided into three categories,
2. What are the types of matrix organizations?
Every organization is unique, and so is its managerial structure. When they follow a matrix-based setup, either the project manager or functional manager gets the highest level of authority, or both are at the same level. It is important to note that no structure is better or inferior to the other; it is strictly industry specific.
Here is the rundown of the types of matrix organizations:
A. Weak matrix organization
When the balance of decisive power shifts from the project manager’s direction to the line managers, it forms a weak matrix organization. In this structure, the line managers control the project budget, and the project managers act as coordinators or expediters.
B. Balance matrix organization
As the name suggests, a balanced matrix organization provides decisive power to both project and line managers. Both of them will share the authority and have control over the project finances. Balanced matrix organizations are an ideal scenario but a seldom occurrence at workplaces.
C. Strong matrix organization
The project manager takes over the reins in a strong matrix organization. It usually happens when the organization procures a critical project, and the upper management deems it necessary for project managers to supervise every aspect of the project. The power obtained in their favor allows them to improve project performance.
Strong matrix organizations prove beneficial in construction projects where project managers are better equipped to make budgeting decisions.
Given the basics of matrix organizations, let’s dive deep into its pros and cons,
3. What are the benefits of matrix organization structure?
One of the primary reasons for adopting and evolving into a matrix organizational form is that the functions and competencies are siloed. As a result, these departments find it arduous to solve complex problems as they view it from one specific standpoint and fail to see the broader picture.
A matrix management structure resolved this issue by breaking down the disparities and collating the whole system. The following section highlights all the benefits offered by this particular structure:
A. Complete transparency and clarity on project objectives
In traditional organizational form, the exchange of information is only one-directional and function-specific. For example, if you work in the marketing department, you will report to only your department manager. Thus, communication will be restricted and flow from the higher-ups to the frontline employees. The lack of interaction between function-specific teams and project managers creates role- ambiguity.
Matrix structures resolve this issue by bringing interdisciplinary teams on the same page. Additionally, matrix team members have multiple reporting lines, allowing them to coalesce with functional and project managers. This practice ascertains information is only shared and not siloed. It enables project managers to clearly convey the goals and objectives, thus promoting a transparent work culture.
B. Enhanced knowledge sharing across verticals
Fostering an open work environment is the cornerstone of developing a matrix-based structure. Supposedly, you are working in your firm’s marketing department but contributing to a website development project. Your functional manager updates you about the recent trends in graphic designing and marketing that can enhance the user experience.
Since the departments do not have boundaries, you can convey this information to your project manager and the team. Together, you can work on developing a website incorporating these latest technology trends and elevate client satisfaction. This practice improved the quality of the end-product and enhanced the knowledge base of your team members coming from different verticals.
C. Maximize efficient utilization of resources
Resources are the most significant investment and success drivers of every organization. However, the growing skills demand and market uncertainties have led to a shortage of available talent. Therefore, managers must ensure that they tap into the maximum potential of their workforce and utilize them most intelligently.
The shared services model of matrix organizations allows managers to allocate these resources to diverse projects.
Let’s consider the previous example of a marketing associate working on a website development project. Similarly, resources do not have to work on projects limited to their department. Instead, with an open work environment and uninterrupted communication, they can be distributed to cross-departmental projects.
D. Higher employee engagement and morale
According to a Gallup poll, employees of a matrixed organization are more engaged than their non-matrixed counterparts.
Employee engagement is the involvement in, and enthusiasm for work and occurs when employees’ interests and growth are addressed. When organizations are matrixed, the resources get the opportunity to contribute to a diverse portfolio of projects. It allows them to utilize their competencies in different ways and credit more skills to their existing personnel.
At the same time, employees have the liberty to collaborate and exchange knowledge with their cross-departmental colleagues. All this collectively offers them a sense of belonging, and they feel more driven to contribute to organizational success.
E. Access to diverse skills and perspectives
Matrixed structure promotes employees to go beyond their functional boundaries and explore multi-faceted projects. For example, let’s say a marketing associate has content writing as their secondary skill set, and a project requires ten content writers. Then, if there is a resource crunch, resource managers can initiate a training program to hone their writing skills.
This approach allows resources to diversify their skillset and portfolio. Furthermore, when cross-disciplinary employees come together to work on a project, they bring multiple perspectives and ideas to the table. Finally, it enables quick problem-solving as different mindsets have varied approaches to resolve the same issue.
F. Leverage cost-effective global resources across matrix boundaries
One of the most critical project constraints for project-led businesses is the project budget, directly affecting profitability. Since resources are significant investments, managers have to create the right resource mix to prevent budget overruns. This task is arduous in traditional hierarchical structures due to siloed departments.
However, matrix organizations eliminate geographical and departmental boundaries. As a result, resource managers have complete visibility of employees based at different locations, their skills, charge out rate, etc. Thus, they can schedule a resource with the same expertise from a low-cost site to maintain the project’s financial health. It will help reduce the project costs while ensuring its quality.
These are some of the benefits matrix structure has in store for businesses. However, it comes with its setbacks.
4. What are the resourcing challenges in a matrix organization?
Since matrix organizations are complex and have multiple reporting lines, issues like lack of clarity in managerial dominance, roles and responsibilities can surface. As a result, it can disrupt the overall functioning and cause internal conflicts.
Here is a curated list of some of the downsides:
A. Managerial conflicts competing for the same resources
A shared-services model can benefit the firm but also lead to a chaotic, less-conducive environment. For example, consider a scenario where two projects demand the same critical resource. As a result, both project managers will prioritize their assignments and request the resource manager to allocate them accordingly. Similarly, a conflicting situation can develop between functional and project managers.
These discrepancies can create ambiguity in deciding which direction should the managerial power shift. Moreover, whenever the resources and people are shared across projects, there will always be a likelihood of competition. Thus, it creates an imbalance and destroys the whole meaning of matrix structures.
B. The unclear demarcation between employee’s functional and project roles
Gallup’s research suggests that, though matrixed employees are more engaged than non-matrixed ones, they’re less clear about expectations at work.
This lack of clarity stems from dual or multiple authority. For example, employees are often uncertain about who is their immediate reporting manager. Moreover, an imbalance in power also blurs the lines of priority work. In simple terms, the resources will not know if they should prioritize their project or functional work.
Adding to this ordeal are the communication gap and role ambiguity that permeate the system. When multiple leaders and managers often regulate a large interdepartmental team, they fail to communicate the goals and expectations. As a result, it puts the resources in an awkward spot as they can’t gauge the impact of their work in the bigger picture.
C. Confusions in project priorities and resource allocations
In a matrix organization, resource managers receive multiple resource requests, and more often than not, these projects demand a similar-skilled workforce. Thus, the ‘first come, first serve’ basis of fulfilling these demands becomes obsolete. To avoid any disparities, resource managers have to assess the project priority and allocate resources diligently.
As simple as it sounds, every project and functional manager deems their work high-priority, making the resource manager’s job more difficult. The conflicting precedence leads to confusion and slows down the decision-making power of managers as they fail to decide which project should be assigned first.
D. Complexities involved in controlling and monitoring
Controlling and monitoring resource utilization and productivity is one of the major responsibilities of resource managers. In a conventional work structure, it is relatively simple to keep a check on your resources’ work rate, allocations, etc. That’s because there is only one reporting manager, and they also have only one function to supervise and regulate.
However, the layers in a matrix organization bring forward this challenge for both resource and project managers. Since the employees are dispersed across the enterprise and work on multiple projects, managers find controlling and monitoring their metrics arduous. That’s also because communicating with every employee about their work status becomes tedious.
E. Frequently overloading resources cause employee burnout
From an employee’s perspective, being a part of a layered structure can be challenging. They are committed to multiple projects and have to do justice to each. Moreover, they have to maintain harmony with different teams and several managers, which requires significant adjustments. All this can create unnecessary distress amongst them.
Moreover, resource managers divide the critical resources’ schedule between several projects to balance the conflicting priorities. It can overload the particular employee, cause stress as they struggle to prioritize, and eventually lead to burnout. The pressure caused due to constantly shifting dynamics and mental fatigue because of excessive work can also result in prolonged absences and unplanned attrition.
F. Difficulty in reviewing employee performance
Performance review and appraisal systems at old-school work structures are more direct as one functional manager provides feedback about the employees’ overall achievements, work rate, etc. However, as the organizations diversified and evolved into matrixed forms, the whole process became more time-consuming and complex.
For instance, if the people manager has to conduct the annual performance appraisal, they have to start collating reviews from different project managers for a specific employee. However, there is no guarantee that the feedback will be uniform and just. That’s because some managers can provide a biased review due to internal discrepancies, favoritism, etc. All these factors can create a major roadblock in reviewing the employees’ performance.
5. Role of resource management in overcoming these challenges
Technology is an enabler and has facilitated organizations to go beyond geographical peripheries and still function smoothly. Among the many tools and software available, resource management is instrumental in enabling firms to utilize their talent most intelligently across matrix boundaries.
The advanced features allow you to:
A. Ascertain competent resource allocation with unmatched visibility
First and foremost, it provides unmatched visibility of enterprise-wide resources and maintains a single version of the truth. Resource managers can identify competent resources and allocate them to suitable projects for a definite timeline using advanced filters.
B. Minimize budget overrun by allocating low-cost global resources
In this case, let’s say an employee is based out of India, and the resource manager is planning a USA project with a similar demand. To control the project costs, the resource manager can simply book this employee for the USA project.
This way, managers can leverage cost-effective global resources across matrix boundaries and minimize project expenses.
C. Foresee and optimize utilization to prevent burnout
As mentioned earlier, the complexities of matrix organization can cause employee burnout. To mitigate this, resource managers can foresee resource utilization and optimize the resource schedule before it goes beyond the threshold. They can use techniques like resource leveling or smoothing to achieve the same.
D. Avoid internal conflicts with automated resource requisition
The automated resource requisition system paired with standard prioritization practices, can minimize power conflicts between different managers. In addition, it maintains an audit trail that keeps everyone, including the stakeholders, in the loop, thereby promoting transparency.
E. Enable quick decision-making with data-driven insights
Most importantly, the tool offers real-time insights into all the necessary metrics, such as resource availability, utilization, capacity vs. demand, people on the bench, etc. using Business Intelligence. Managers can leverage this data and make quick data-driven decisions to maintain the resource health index. For instance, they can predict the capacity vs. demand gap in advance and implement the right resourcing treatment to bridge it before the project begins.
Additionally, they can minimize the bench time by training or re-skilling the benched resources to align their skills with future project demands. These features will eventually allow managers to prevent over/underutilization, maximize productive utilization, and reduce project resourcing costs.
6. Tips for effective matrix management
In addition to the benefits and best practices of matrix management, here are some additional tips that can help you maintain synergy between the authorities:
- Share equal authoritative power between project and line managers to form a balanced structure or allow the upper management to decide who will play a more directive role based on different scenarios. It helps minimize discrepancies.
- Maintain a dialogue with the resources to convey the goals and expectations with utmost clarity and negate role ambiguity.
- Create an effective escalation matrix for conflict resolution.
- Implement a modern resource management tool to resolve complexities and efficiently manage resources across matrix boundaries.
- Standardize project prioritization to eliminate confusion in resource allocations.
- Encourage multi-skilling to increase overall productive utilization.
- Replace the traditional appraisal system with a comprehensive approach involving 360-degree feedback, continuous improvement, learning, etc.
- Organize training and form individual development programs to prepare the workforce to take on multi-faceted projects.
- Formulate work policies to ensure the smooth functioning of the system with no power conflicts.
- Implement a rotational policy within the organization. A resource must be out-rotated and given a new opportunity in case he/she spends more than a certain period in a specific role.
7. The Glossary
8. The SAVIOM Solution
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