What is Matrix Management and Why is it Important?

- By Ajay Kumar |

September 5, 2023

Jump to Section
Jump to Section

Organizational structure plays an integral part in defining its growth, employee productivity, and overall efficiency. Hence, it’s imperative to build the right foundation to thrive in the business landscape.

However, businesses implemented a traditional hierarchical structure to solve modern-day complexities such as globalization, skills shortage, cost crunch, etc. This conventional approach didn’t prove beneficial as it was siloed and led to cost escalations, lowered efficiency, and so on.

This is why organizations evolved and adopted a matrixed structure that allowed interdepartmental collaboration and fostered a shared services model, thereby reducing unnecessary hiring costs, improving project delivery, etc.

Since it promotes sharing resources across matrix boundaries, this structure stands out for its adaptability and flexibility.

This blog explains the thought process behind the matrix structure, its importance, and the skills requirements of this new business model.

But first, let’s define matrix management.

1. What is matrix management?

Matrix management is an organizational strategy to implement a matrix structure wherein employees have multiple reporting lines. In other words, they report to more than one manager, unlike traditional hierarchical structures.

While employees report to the project manager for their functional responsibilities, they report to the department manager or line manager for their day-to-day operations, leave approvals, and performance appraisal. It is an ideal strategy for any company that works on multiple projects with similar or overlapping skill requirements.

Get Modern Resource Management Software

Now that we know the definition of matrix management, the following section explains the working of matrix organizations.

2. How does a matrix organization work?

A matrix organization is designed to support a shared-services model where resources can be deployed across various projects based on the skill set, irrespective of the department or team they belong to.

For instance, a graphic designer belonging to a design department is permitted to take up a role within another department running a web development project. In this case, the designer resource will be allocated to this project and reported to the concerned project manager.

It helps break down silos and foster cross-functional collaboration. Additionally, the shared resource pool reduces the costs of hiring new candidates with similar skills and optimizes overall resource utilization.

A prime matrix organizational structure example is PHILIPS, a renowned Dutch electrical giant which is one of the forerunners in implementing matrix organizational structure after World War II. Their structure was based on geographical area and worldwide product divisions. This means an employee will report to their regional manager (specific to their location) and the product divisional head (the product portfolio they are a part of). However, it has evolved over time to overcome the limitations.

Even though the functioning sounds fairly easy, the operational complexity increases when multiple projects running simultaneously demand the same competencies. Hence, the matrix structure requires specific roles and responsibilities to simplify this. Moreover, it’s important to understand the key aspects of matrix organizational structure to successfully implement it. Let’s take a look,

Effective Ways to Overcome Resourcing Challenges in Matrix Organizations

3. What differentiates matrix management from traditional hierarchies?

Matrix organizations differ significantly from traditional hierarchical structures in several key aspects. While traditional hierarchical structures have a clear chain of command and vertical reporting relationships, matrix structures introduce a more flexible and cross-functional approach to organizational management.

A. Reporting structure

In a typical matrix reporting structure, employees have multiple reporting lines. They report to a functional manager, who oversees their areas of expertise and career development, and a project or team manager, who is responsible for executing specific projects. This reporting structure allows for a greater level of collaboration, coordination, and integration across organizational boundaries.

B. Collaboration approach

Matrix structure emphasizes cross-functional collaboration. Employees from different functional areas are brought together to work on projects, initiatives, or teams. This enables the sharing of diverse knowledge, skills, and perspectives, fostering innovation and problem-solving. Traditional hierarchies, on the other hand, tend to be more siloed, with limited interaction and collaboration between functional departments.

9 Effective Ways to Empower Cross-Functional Teams

C. Flexibility

Matrix organizations are known for greater flexibility due to their shared services model. It enables them to quickly assemble cross-functional teams based on project needs and adjust resource allocation accordingly. This flexibility allows for a more agile response to changing market conditions, customer demands, and project requirements. Traditional hierarchies, by contrast, often have rigid structures that can hinder quick adaptation and responsiveness.

D. Decision-making process

In matrix management, decision-making is often shared among team members and managers. The collaborative nature of matrix structures encourages input and perspectives from various stakeholders. Therefore, the decision-making authority is decentralized, empowering employees to contribute to the process. On the other hand, traditional hierarchies tend to have a more top-down decision-making approach, with decisions flowing from higher-level managers down to lower-level resources.

E. Project-based focus

Matrix management revolves around a project-based focus. Projects serve as the primary organizing principle, with teams formed to address specific goals and objectives. Employees bring their functional expertise to contribute to project success, allowing for a multi-disciplinary approach. In contrast, traditional hierarchies are typically organized based on functional departments, where employees focus primarily on their functional responsibilities rather than project-specific goals.

By understanding matrix structure, organizations can tap into the collective knowledge and skills of their workforce and effectively address complex challenges. Moving forward, let’s discuss the various roles and responsibilities within a matrix environment.

4. Roles and responsibilities within a matrix management structure

Although there are several roles involved in a matrix management structure, here are the most prominent ones.

A. Matrix employees and matrix teams

Individual contributors working in a matrix-based organization are called matrix employees. A group of matrix employees is known as a matrix team. As mentioned, matrix employees and their skill sets are leveraged by different departments to execute various projects. Therefore, they must report to their functional manager and the respective line managers. It is also expected that they upgrade their skillset from time to time and remain relevant to their current role so that they can easily get deployed in different projects.

B. Functional managers

In a formal structure of matrix organization, functional managers (another term used for project managers) are responsible for a particular function or project. During the project’s life cycle, they will require different types of resources to complete their delivery responsibilities. Accordingly, they reach out to the respective resource managers to onboard or release practitioners from time to time. Once resources are allocated to a functional unit, it is the responsibility of the functional manager to oversee their day-to-day activities. The resources have a dotted reporting line to the functional manager while deployed in that project.

C. Line managers

Every resource has a hardline reporting to a line manager or departmental manager within the matrix organization. These managers are responsible for carrying out activities such as performance appraisals, making salary corrections, building training and development plans, etc. However, they are not responsible for the everyday activities of their direct reports (DRs) but take performance feedback from the concerned functional managers to make any important decision. They are also referred to as people managers, and the reporting line between a manager and DR does not change that frequently. An employee within a matrix organization can also play the dual role of functional manager and line manager.

Since the functioning and basics of matrix management are clear, let’s understand its benefits.

resource forecasting guide project managers

5. Importance of matrix management

Matrix management helps organizations thrive in the current dynamic and agile workplace. It also allows them to leverage the existing workforce potential to the maximum.

Let’s understand its benefits in detail.

A. Facilitates effective utilization of resources

Since matrix management supports a shared services model, it allows employees to utilize their skills on diverse projects simultaneously and unleash their true potential. Let’s take an example for a better understanding. A highly skilled and expensive resource is working on Project A but is also required to work on Project C.

In this scenario, the same resource can be utilized for both projects based on their timeline and availability, maximizing their profitable utilization while reducing resourcing costs. Furthermore, if resources are under-utilized, resource managers can provide them with suitable work by allocating them to different projects (interdepartmentally). These practices ensure uniform workload distribution and effective utilization of the talent pool.

Significance of resource utilization

B. Enables multi-skill building at the workplace

When resources are multi-skilled, one can deploy them to various tasks with varying skill demands. Certain vacancies in a project can require one person to have different skills. That’s why matrix managers encourage multi-skill building opportunities and make them a part of their individual development plan (IDP).

For instance, let’s say that a graphic designer’s primary skill is Adobe Photoshop, and CorelDraw is a secondary skill. A pipeline project requires two designers equipped with CorelDraw skills. However, only one resource is available to take up the job. In this case, the resource manager can coordinate with the line manager to initiate a suitable training program and hone that designer’s CorelDraw skills. While it helps the resource manager mitigate skill gaps and fulfill project demands, it enables employees to diversify their portfolios.

C. Helps leverage cost-effective resources

As resources are expensive investments, creating the most appropriate team allows the matrix organization to prevent project budget overruns and ensures profitability.

A matrix organizational structure enables resource managers to go beyond regional boundaries and leverage cost-effective resources.

If a resource is beyond their span of control, they can coordinate with other resource managers and department heads to procure the best-fit resource at a much lesser cost. For instance, let’s assume a project is based in the US, where the resource cost is higher. A matrix structure here enables the resource manager to look for similarly skilled resources from a low-cost country and control project costs without compromising quality.

D. Enhances innovation and autonomy

A matrix organization fosters inter-departmental collaboration between resources from different functions and locations. This forms functional and culturally diverse teams. So, when subject matter experts of different domains work together, they bring their unique ideas, insights, and opinions to the table. It also empowers them to think out-of-the-box and boost innovation.

Further, matrix management goes beyond one level of authority and encourages the division of labor. So, when the project manager entrusts the specialized resources with their responsibilities, it fosters a sense of accountability. It also provides them with more space to be creative and innovative. All this cumulatively contributes to enhanced autonomy.

What is Innovation Management, and Why is it Important

E. Promotes knowledge sharing across various functions

After understanding the functioning of matrix management, it is evident that it garners an open work environment. In other words, when interdepartmental resources coordinate to work on a project, it opens doors for knowledge-sharing.

For instance, let’s say your team is working on a website development project. It consists of web developers, graphic designers, content writers, etc. Since the website has a design component, the graphic designer can share the latest technology trends and insights with the web developer. The seamless collaboration will help them maintain a competitive edge and ensure that the project delivered is at par with quality standards.

F. Increases employee engagement and satisfaction

McKinsey’s survey reveals that matrix US employees are more engaged at work than their non-matrixed counterparts.

Undoubtedly, when resources get opportunities to work on multi-disciplinary projects and diversify their skill sets, it increases employee engagement and satisfaction levels. Additionally, the sense of autonomy motivates them to go beyond their responsibilities and contribute to the company’s growth.

Moreover, when employees feel that their opinions and insights are heard and valued, it propels them to excel in their performance. Furthermore, fostering an open work environment through a matrix structure facilitates easy collaboration. It enables employees to share knowledge or ideas freely, learn from each other, and grow together, enhancing their engagement and satisfaction further.

G. Fosters higher flexibility and adaptability

As the matrix structure provides the liberty of sharing resources between different departments, it promotes flexibility in the organization. Further, when matrixed resources work on various projects from different functions, they get an opportunity to thrive in a dynamic environment.

This extensive ability to work as per different processes and standards and team dynamics across an organization helps resources become more adaptable. Honing their adaptability skills also helps them become more agile and resilient to handle adverse situations such as market volatilities, changing market demands, etc.

Manage resources in agile project management

The following section throws light on the essential skills that every functional and line manager should possess to ensure effective matrix management.

6. Skills required to become a good matrix leader

A project or line manager steers the team to success. Hence, they must equip soft skills to ensure the team’s seamless functioning within a matrix structure.

This section enlists the most prominent ones:

A. Conflict resolution

When employees from different departments work together on a project, they bring multiple opinions to the table, often leading to conflicts and discrepancies. Therefore, every manager must master practical conflict resolution skills to settle these disagreements and maintain team synergy.

B. Collaboration and communication

In a matrix team structure, a project or functional manager is supposed to convey the roles and responsibilities to every team member and maintain transparency. Therefore, they need to have excellent communication skills. Furthermore, a matrix structure demands a seamless exchange of knowledge, necessary files, etc., between departments, making collaboration an incumbent skill set for managers.

Why Project Communication Skills are Important, and How to Master Them

C. Refined analytical skills

In a matrix organization, a project manager and a resource manager can face multiple issues that can affect a project. Some of them are uneven workload distribution, disengagement, lowered productivity, billable losses, schedule/budget overruns, etc. In order to course correct, managers should refine their analytical skills to make informed decisions, create a best-fit project and resource plan, and combat such challenges.

D. Influential power

Good influential power is essential to bring everyone on the same page, look at the big picture, and motivate them to work towards the shared common goal.

An efficient manager must lead by example and exhibit strong ethics to encourage others to follow suit.

E. Problem-solving approach

A problem-solving mindset is crucial to stay on top of issues and resolving them faster and more efficiently. Therefore, a positive mindset combined with a problem-solving approach is an essential skill for every functional and line manager.

10 Must-Have Project Management Skills for Successful Professionals
Therefore, the aforementioned matrix leadership skills are essential for managers to excel in a matrix system and facilitate business efficiency.

7. Best practices for successful implementation of matrix management

Implementing a matrix organizational structure requires careful planning and execution. To ensure success, firms should follow the best practices enlisted below:

A. Emphasize leadership commitment to transition

Leadership support and commitment play a vital role in the successful implementation of matrix management. Executives and top-level management need to actively promote its adoption to ensure a smooth transition and minimize resistance from employees.

They should provide clear direction, convey the strategic rationale behind the change, and actively participate in the matrix structure themselves. That’s because leadership support sets the tone for the entire organization and helps create a culture that embraces the principles of matrix management.

Fundamentals leadership project management

B. Structure and clearly define roles and responsibilities

Defining and structuring roles and responsibilities is essential in matrix management to avoid confusion and internal conflicts. It includes outlining the balance between functional roles and project-based responsibilities. Moreover, with better clarity of reporting lines and the nuances of each role, resources can have a greater understanding of the work scope and contribute more towards organizational goals.

Therefore, by clearly defining roles and responsibilities, matrix organizations can ensure that employees understand their accountabilities, reduce potential role conflicts, and foster better productivity within the matrix structure.

C. Develop effective communication strategies

Establishing effective communication strategies ensures that critical information flows freely across matrix boundaries. Therefore, matrix managers can leverage synchronous and asynchronous modalities to foster cross-functional team collaboration. Moreover, they can set up guidelines for each communication channel to reduce unnecessary meetings or miscommunication.

Open lines of communication between matrix teams and managers help in aligning team efforts with overall organizational goals. It also helps resolve conflicts and maintain a shared understanding of priorities. Therefore, clear communication channels promote better coordination within the matrix structure.

D. Offer comprehensive training to employees

To ensure a smooth transition to matrix management, organizations should provide comprehensive training to help employees and facilitate upskilling and multi-skill building. Such training programs equip resources with multiple competencies allowing them to expand their roles and responsibilities within the organizations.

Effective training modules improve employees’ work efficiency, productivity, and overall performance. Moreover, it allows matrix companies to achieve more with fewer resources. Therefore, by investing in employee development, organizations can build an agile workforce that can easily adapt to changing market conditions.

Retraining/upskilling to future-proof your workforce

E. Implement ongoing evaluation mechanisms

An ongoing evaluation mechanism can be key to the long-term success of matrix management. It helps firms regularly assess the effectiveness of the matrix structure and make necessary adjustments wherever needed. This can involve soliciting feedback from employees, measuring key performance indicators, and conducting regular reviews.

Moreover, evaluating the impact of the matrix structure allows organizations to address any issues that arise, refine processes, and ensure that the structure aligns with organizational goals. Continuous improvement efforts enable organizations to optimize the benefits of matrix management and enhance overall performance.

By adhering to these practices, organizations can navigate the challenges of matrix management and create a highly efficient work environment. Next, let’s understand how resource management software can help a matrix organization.

8. How can resource management software foster effective matrix management?

A comprehensive resource management software can help matrix organization function smoothly. It can help them overcome the complexities and challenges of such a structure.

Here’s how:

  • Enterprise-wide visibility- The tool provides 360-degree visibility, enabling matrix managers to identify and allocate competent resources to multiple projects across organizational boundaries.
  • Advanced filters- The advanced filters and skill matrix allow managers to oversee and manage a geographically dispersed workforce. It will enable them to sort and identify cost-effective global resources based on skills, competencies, and other parameters.
  • Competency matrix- The competency matrix allows managers to identify suitable candidates for training/upskilling, IDP, and succession planning.
  • Automated resource requisition workflow- The tool has an automated resource requisition system that can minimize power conflicts between different matrix managers. Additionally, it helps maintain an audit trail that keeps all the stakeholders in the loop, thereby promoting transparency.
  • Real-time BI reports- Reports, such as capacity vs. demand, forecast vs. actuals, project vacancy, and color-coded heatmaps, come in handy when monitoring various resource KPIs such as resource utilization, availability, etc.
  • Collaboration tool- The software has an in-built collaboration module that allows resources and managers to communicate and share project updates.
  • What-if analysis- What-if analysis functionality enables managers to prioritize profitable assignments in a multi-project environment. Thus, it helps prevent internal conflicts and power struggles.

In summary, these features and functionalities can assist matrix organizations in effectively managing their workforce across multiple projects, departments, and business functions.

9. Conclusion

The rise of globalization and ever-increasing resource and budget crunches have made it imperative for companies to go beyond their conventional management strategies and switch to a matrix structure.

Given the increasing complexities, matrix management is the future of the global business era and undoubtedly the key to sustainability and profitability. The benefits listed above will convince you to redefine your organizational structure into a matrix environment.

So, are you ready to adopt the matrix management strategy?

10. The Glossary


11. The SAVIOM Solution

SAVIOM is the market leader in helping multinational clients manage their resources efficiently and effectively. With over 20 years of experience, this Australian-based MNC has a global presence across 50 countries and has helped 100+ clients with their Workforce Planning Software. Saviom also provides tools for Enterprise Project Resource Management, Project Portfolio Management, and Professional Service Automation. Boost your remote team collaboration with Saviom.

Get resources to your inbox directly!

Recommended Articles

Book Your Free Customized Trial Today!

See how intuitive and effective our Resource Management Solution is by booking a free, custom-configured trial.

Press Esc to close
Press Esc to close
Press Esc to close