What Is Matrix Management and Why Is It Important?

July 13, 2022

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 requirement for this new business model.

Let’s get started,

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.

The following section explains the working of a matrix organization.

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 report to the concerned project manager.

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

A prime 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. Let’s take a look,

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3. 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

Individual contributors working in a matrix-based organization are called matrix employees. As mentioned, matrix employees and their skillsets 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 the current role so that they can easily get deployed in different projects.

B. Functional managers

Functional managers (another term used for project managers) are responsible for a particular function or a 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.
Project Resource Management An Ultimate Guide on How to Master it

4. 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, the 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.

Utilization of read more significance

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 bridge 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 to prevent project budget overruns 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 similar-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 functionally 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.

innovation management why 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 designing component, the graphic designer can share the latest 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 skillsets, it increases 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 help 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

It is evident that a matrix organizational structure benefits a company in several ways. The following section throws light on the essential skills that every functional and line manager should possess to ensure effective matrix management.

5. 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.

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

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 the managers.

Importance of project communication skills

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 resolve 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.

must-have project management skills professionals

6. 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.

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

7. The Glossary

the glossary

8. 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.

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