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.
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.
Types of matrix management
A matrix organization structure enhances flexibility and collaboration across various departments and projects within firms. There are different types of matrix structures based on the degree of authority and influence between the functional/line and the project managers.
Let’s understand them in detail.
A weak matrix structure is similar to the traditional hierarchical work environment, wherein the line manager has the highest level of authority, and the project manager has limited control. The line managers oversee the entire project and make most decisions regarding the budget, resources, task delegation, etc. Conversely, the project manager assumes a restricted role, that of a coordinator or expeditor.
The balanced matrix strikes a middle ground between weak and strong matrix structures. In this arrangement, both the line and project managers share authority and power relatively equally. They collaborate to make decisions regarding resources, project goals, and team members, balancing the project’s needs with the organization’s functional objectives.
In a strong matrix, the project manager has higher authority and control over the resources compared to the line/functional manager. In addition to that, they have significant decision-making power and control over resource allocation, task distribution, etc. Further, they function as the primary supervisor for employees, while the line managers take on a more secondary role.
Now that we know the definition of matrix management and its types, the following section explains the working of matrix organizations.
How does a matrix organization work?
A matrix organization structure supports 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 organization structure example is PHILIPS, a renowned Dutch electrical giant that 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 straightforward, the operational complexity increases when multiple projects simultaneously demand the same competencies. Hence, the matrix organization structure requires specific roles and responsibilities to simplify this. Moreover, it’s important to understand the key aspects of matrix organizational structure to implement it successfully. Let’s take a look.
What differentiates matrix management from traditional hierarchies?
Matrix organizations differ significantly from traditional hierarchical structures in several vital 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.
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, responsible for executing specific projects. This reporting structure allows for a greater level of collaboration, coordination, and integration across organizational boundaries.
Matrix organization 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.
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.
In a matrix environment, decision-making is often shared among team members and managers. The collaborative nature of the matrix organization structure 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.
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.
Within a matrix environment, team members participate in diverse tasks across projects, increasing the opportunity for cross-functional collaboration and acquiring a broader skill set. Moreover, working alongside colleagues from various backgrounds promotes the exchange of knowledge, expertise, perspectives, etc., enhancing their versatility and adaptability, thus preparing the workforce for the future. On the contrary, traditional hierarchies follow a specialized approach to skill development where employees hone their skills within a specific area, with limited exposure to tasks beyond their defined roles.
Accountability and responsibility
Matrix management emphasizes shared accountability and responsibility. In a matrix structure, individuals often report to both a functional manager and a project manager, resulting in a dual reporting relationship. This shared responsibility encourages collaboration and ensures that employees are accountable to both their functional area and the project they’re working on. In contrast, traditional hierarchies typically involve a more straightforward reporting structure where employees report primarily to one manager.
Adaptability to Change
Matrix organization structures tend to be more adaptable to change compared to traditional hierarchies. The teams can be assembled and disassembled quickly to respond to changing project needs or market demands. This flexibility allows for a more dynamic response to changes in the business environment. Conversely, traditional hierarchies, with their more rigid structures, might struggle to adapt swiftly to changes due to their fixed departmental setups and reporting lines.
By understanding matrix structure, organizations can tap into their workforce’s collective knowledge and skills to address complex challenges effectively. Moving forward, let’s discuss the various roles and responsibilities within a matrix environment.
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.
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 skills from time to time and remain relevant to their current role so that they can easily get deployed in different projects.
In a formal matrix organization structure, 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.
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 daily activities of their direct reports (DRs) but take performance feedback from the concerned functional managers to make critical decisions. They are also referred to as people managers, and the reporting line between a manager and a 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.
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.
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.
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.
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.
Enhances innovation and autonomy
A matrix organization fosters inter-departmental collaboration between resources from different functions and locations. These form 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.
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.
Increases employee engagement and satisfaction
McKinsey’s survey reveals 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.
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.
Encourages conflict resolution through collaboration
By fostering an environment that values diverse perspectives and supports open communication, a matrix organization encourages conflict resolution. In this structure, individuals from different departments or teams collaborate on projects, bringing together varied expertise and viewpoints. When conflicts arise, the diverse backgrounds and skill sets create an opportunity for constructive dialogue and problem-solving.
Further, collaboration between departments necessitates frequent interactions, cultivating a sense of shared ownership over project outcomes. This also builds trust and transparency, enabling the matrix team to address conflicts constructively. Ultimately, this contributes to a positive organizational culture that values teamwork and cooperation.
The following section throws light on the essential skills that every functional and line manager should possess to ensure effective matrix management.
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:
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.
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.
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.
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.
A problem-solving mindset is crucial to staying on top of issues and resolving them faster and more efficiently. Therefore, a positive mindset combined with a problem-solving approach is essential for every functional and line manager.
Therefore, the aforementioned matrix leadership skills are essential for managers to excel in a matrix system and facilitate business efficiency.
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:
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 must actively promote its adoption to ensure a smooth transition and minimize employee resistance.
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.
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.
Establish SMART objectives & goals
Setting SMART (Specific (S), Measurable (M), Achievable (A), Relevant (R), and Time-bound (T)) objectives and goals in matrix management is vital for aligning diverse teams and ensuring clarity in tasks. Each objective and goal must be clearly defined, measurable, and achievable within a specific timeframe. This enables team members to understand their roles and contributions to the overall project/organizational goals, irrespective of their functional area.
It also promotes focus and direction, allowing individuals to track progress and make necessary adjustments to meet those goals. Further, this practice enhances accountability and motivates teams to work collaboratively towards common targets. By breaking down larger objectives into smaller, manageable tasks, matrix teams gain a sense of accomplishment as they achieve milestones. This method enhances productivity, fostering a culture of achievement and improvement within the matrix organizational structure.
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 guidelines for each communication channel to reduce unnecessary meetings or miscommunication.
Open lines of communication between matrix teams and managers help align 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 organization structure.
Offer comprehensive training to employees
To ensure a smooth transition to matrix management, organizations should provide comprehensive training to help employees and facilitate retraining/upskilling and multi-skill building. Such training programs equip resources with multiple competencies, allowing them to expand their organizational roles and responsibilities.
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 adapts easily to changing market conditions.
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.
Foster a culture of collaboration & teamwork
To create a successful matrix organizational structure, it is pivotal for firms to promote a culture of collaboration and teamwork. It involves creating an environment where diverse teams feel empowered to share ideas, communicate openly, and work collectively toward project goals. For this, they can provide tools that facilitate seamless communication, helping team members from different departments stay connected.
Further, firms can establish various team-building initiatives to strengthen relationships between the matrix team members, fostering a positive work environment. Moreover, a culture of collaboration encourages mutual respect and trust among team members.
Empower employees with necessary authority & autonomy
In a matrix organization structure, granting employees authority and autonomy empowers them to take charge of their roles and responsibilities. It enhances individual accountability and ownership, enabling employees to showcase their skills and creativity, leading to a more engaged and motivated workforce.
Further, when individuals feel trusted, it elevates their morale, leading to an increased commitment to achieving organizational goals. Moreover, it reduces the need for micro-management, allowing managers sufficient time to focus on strategic activities and contribute effectively to the firm’s success.
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.
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.
- 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 to effectively manage resources across multiple projects, departments, and business functions.
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?
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.