“When implemented well, the ‘matrix organization’ does offer much of the best of both worlds. And all of us are going to have to learn how to utilize organization to prepare managers to increasingly deal with high levels of complexity and ambiguity in situations where they have to get results from people and components not under their direct control…”
These lines seem perfectly timely in today’s environment of volatility, uncertainty and flux, yet they actually appeared in General Electric’s Organization Planning Bulletin – back in September 1976.
Long before the advent of the internet, increasing globalization and digital disruption, the GE management team was right on the money when it predicted that “…a matrix is a complex, difficult, and sometimes frustrating form of organization to live with. It’s also, however, a bellwether of things to come.”
Fast-forward 40-plus years: 62 percent of global businesses and 74 percent of large corporations operate within a matrix structure according to recent figures from Deloitte. What’s the upshot for managers in a matrix? To start with, it means they’ll have more than one boss and overlapping responsibilities.
Unlike the top-down chain of command and clearly delineated areas in functionally structured firms, in matrix organizations, reporting relationships are set up as a grid. In this latticework framework, managers will have a solid-line report to their functional manager and dotted lines to different functions or divisions.
Over the last decades, markets have become more globalized, fast-moving and complex than GE’s management team could have imagined back in 1976. To stay in the game today, firms are forced to continually innovate and adapt their products and services, a paradigm shift that has inspired renewed interest in matrix structures.
Matrix frameworks enable companies to leverage the best talent across hierarchies and functions and in turn, respond faster and more effectively to changing market demands. They also foster cross-functional collaboration and enhance employee engagement organization-wide.
It’s not all rosy in the matrix, however. Poor execution in malfunctioning matrix structures can spark power struggles, interpersonal conflict and ambiguity, as employees try to juggle the divergent interests and directives of different bosses. Management silos and functional divides can crop up, which are exacerbated by multicultural differences and divergent business practices.
One thing is clear: the matrix isn’t going away anytime soon. Says Prof. Mike Rosenberg of IESE’s Department of Strategic Management, “As global markets become increasingly complex, the need for matrix organizations will only intensify. Global managers today need to be adept in aligning multiple interests, as well as navigating relationships across organizational lines, time, space and culture.”
To this end, building a deeper cultural awareness and understanding of structural roadblocks that hinder project execution is also key. Global executives who aspire to magnify their organizational impact are invited to join “Doing Business Globally: Leading in a Matrix Organization,” which will take place next March 26-29, 2019 in the Barcelona campus.