Leadership Agility in a Matrix Organization

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Author: Nick Horney | Source: HCI | Published: December 31, 1969

The very thought of matrix structures makes some people sigh and roll their eyes. There’s no question that matrix organizations can be challenging to navigate. But with a good dose of leadership agility, you can make a matrix succeed.

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What is a Matrix?

To begin, a matrix is an organizational structure that shares power among two or more dimensions. It entails achieving a functional and product or process focus. Two desired outcomes occur in matrix structures:

  1. A simultaneous focus on multiple perspectives. A matrix makes a person or unit responsive to more than one group. This introduction of multiple perspectives can be expected to improve decision quality.
  2. More effective use of technical and specialized resources. Every organization has specialists who are needed by various business units. These experts are too expensive to duplicate across the organization. The matrix allows for sharing of human resources without having one unit own them.

There is a distinction between matrix and project structures.  Projects form around specific finite tasks, such as a construction project, whereas matrix structures tend to form around ongoing tasks, such as managing an engineering consulting firm or manufacturing a complex product (e.g., aerospace companies). Overall, these cross-functional organization forms have a great deal in common--an overlay on the traditional hierarchy, multiple lines of authority, and teams working on tasks for finite time periods.

A primary advantage of the cross-functional structure is that it solves an information processing problem. It creates lateral communications channels not available in the classical bureaucratic form of organization. At the same time, the cross-functional structure reduces the need for vertical communication by creating self-contained task teams focused on a specific, finite project. It improves communication among different departments and projects by forcing managers to maintain close contact with all organizational groups upon whose support they must rely for project success. This causes an emphasis on developing communication skills as a politically intelligent response for keeping the support of resource providers to ensure resource availability to the cross-functional group.

A related communication benefit of matrix is its ability to handle increased information loads over the more traditional functional structures. This, too, is due to the lateral layer of communications created by a matrix. The increased contact among departments allows information to "permeate" the organization, improving decision making and response time, which translates into an organization that can quickly and flexibly adapt to a dynamic situation.

Challenges of Leading in a Matrix Organization

In traditional structures, two classical principles of organization clearly stand out: (a) "Authority should equal responsibility" and (b) "Every subordinate should be assigned to a single boss." A matrix violates both of these deeply ingrained principles, creating problems for both the organization and its individual members. In a matrix, the boundaries of authority and responsibility are split or shared between functional and project managers. This characteristic creates ambiguity and conflict over areas such as resources, technical issues, salaries and promotions, and personnel assignments. If not managed, this ambiguity may result in power struggles as each side attempts to clarify and define its responsibility and accountability.

Structured Decision-Making Process

The most common authority conflicts are those between functional and project managers over project priorities, administrative procedures, technical perfection versus performance trade-offs, personnel resources, cost estimates, scheduling, and personalities. In a matrix, individuals find themselves working across various projects under different managers. This situation creates multiple reporting relationships (role conflict), conflicting and confusing expectations (role ambiguity), and excessive demands (role overload).

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Making the Move to Matrix a Success

The benefits of working in a matrix organizational structure are significant. They include:

  • The process/product big picture is identified and all employees feel connected
  • Cross-functional integration, coordination, and standardization are possible
  • Cross-functional learning is more easily facilitated

And for every benefit, there is a potential cost.  Potential problems in the shift to a matrix organizational structure include:

  • Confusion over accountability – who is accountable for what?
  • Existing organizational systems and/or existing skills do not support the matrix structure
  • Conflicts between the two dimensions over direction

In order to make the move to and operate effectively in a matrix, the leadership team should focus on developing key elements of Leadership Agility as illustrated in The AGILE Model®:

The Agile Model

Anticipate changes brought about from a matrix organization by aligning the leadership team.  Since many people grow up with two bosses (i.e., parents) the idea of reporting in two directions shouldn’t seem so foreign.  But, just as in families, problems arise when the two supervising bosses in the matrix don’t share the same goals or agree on outcomes, and the direct report (a child, in our example) is confused and left to negotiate between them.

The leadership team will need to work to align itself behind one set of goals and outcomes.  Under the old functional structure, the leadership team goals could simply be a collection of unrelated goals of individual team members.  In a matrix organization, this collection is no longer possible.  The goals of the leadership team will need to be an integrated whole, with all members aligned with each goal. The good news is that the debates among team members to arrive at this integration typically result in better decisions than if there had been no debate.

To assist in this alignment, the leadership team should participate in a series of sessions to roll out the new strategy, introduce the new structure and organizational roles, and define the responsibilities of managers in their roles as members of the leadership team.

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Generate confidence through goal alignment.  Alignment is important so that managers and employees don’t receive mixed messages, particularly around goals and priorities.  To align an organization, you have to have something to align to.  Alignment begins with purpose—why does your organization exist and whom does it serve?

To support the process of generating confidence, the leadership team must be aligned in its practice of managing conflict within the organization.  It is critical that senior management push project-related disputes back to the peer managers to resolve.  The former CEO of one of the largest organizations to successfully implement a matrix organization is remembered for telling his managers that they could escalate a problem to him once, they could escalate it to him twice, but that if they escalated it three times, he would probably know it’s time to replace them.  If problems are not resolved at the level closest to the work, the matrix will be defeated.

Initiate action by installing management processes and reporting systems to support the matrix.  A management process is any that is used to get work done.  It is used to manage a technical process or business process.  Basic management processes include goal setting, decision making, avoiding problems (risk assessment), problem solving, opportunity analysis and implementation.  More advanced processes include project management, process management, strategic planning and innovation.  The value in standard management processes is that once someone learns the step-by-step method in problem solving, it can be applied with any group of people.  Goal setting is the process by which you plan to achieve your purpose.  In the matrix organization, once process/product goals have been established they are decomposed into functional goals.  Going to the theory underlying the matrix structure, the focus in goal setting is to optimize the whole rather than optimize the parts that make up the whole.  Installing common management processes will support the success of the work being done in the matrix organization.

In addition, a matrix relationship creates dual accountability.  The organization needs to have reporting systems that allow performance information to be aggregated and desegregated along all the dimensions of the matrix.  This may require only a few modifications to the current system or it may necessitate the development of an entirely new system.

Liberate thinking of leaders by introducing performance management and reward systems that reflect the multiple foci of the organization.    Just as the roles of the leadership team have changed, so have those of managers within the matrix organization.  Role descriptions will need to be written and discussed, and where needed, additional training provided.  In addition to the steps to redefine roles, accountability will also need to be redefined.  The formal performance management and reward systems must support the relationship of the multiple dimensions within the matrix.

Evaluate results by measuring how effectively Leadership Agility has be developed in all leaders within the matrix organization.  The skills and experience of the leadership team, other managers, and the workforce will impact how quickly and successfully the organization can implement a matrix organizational structure.  Where needed for the leadership team, training should focus on developing accountability, influence and conflict resolution skills.  They need to feel comfortable in letting go of decision-making authority and so may need training in how to coach others in decision making.  For others, three skills are needed:

  • Communication, including informing others, consulting, gathering perspectives and presenting issues.
  • Conflict resolution, including legitimizing conflict, working with conflict resolution processes, and determining when to escalate issues.
  • Influence, including negotiating win-win solutions, building trust through understanding of other viewpoints, and creating buy-in for initiative

For more information, check out this whitepaper, which has additional thoughts regarding the topic of leadership agility and collaboration in matrix organizations.

Leaders in HR and talent management have an increasingly relevant opportunity to be agile leaders, and developing a service mindset is one place to start. I’ll be joining other HR professionals at the 2016 Human Capital Summit in New Orleans, March 29-30. The theme of that conference is “Agile Talent Strategies for Managing Change and Shifting Priorities,” and I’d love to see you there. Click here for more about the conference.