Kevan Hall, CEO of Global Integration, recently created an eight minute video outlining key disadvantages of a matrix organization. Following is the commentary from the video. We hope you enjoy it.
In this video, Disadvantages of a Matrix Organization, I will talk about some of the potential disadvantages of operating a matrix organization, and how to deal with them. The vast majority of large complex organizations today operate some form of matrix organization. This might be through formal dual reporting, or it might be through operating horizontal business processes and more integrated central functions. Whatever we call this more globally integrated and horizontal way of working – when run properly it delivers enormous business benefits in operating supply chains, serving global customers and generating synergies internally.
However, there are some predictable and preventable disadvantages in this more integrated way of working. Part of our job as leaders in a matrix organization is to deliver the benefits and prevent the problems.
Three of the major disadvantages are:
- an increase in the number of meetings
- delays to decision-making
- a lack of accountability
Let’s start with meetings. When companies introduce a more integrated organization, it is often an explicit objective to break the silos and increase the amount of communication and collaboration across the business. But be careful what you wish for! When we take the traditional vertical structures of function and geography and we add new horizontal processes and reporting lines, people and business issues become more connected. There are just more people involved in cooperation and decision making. It is not surprising, therefore, that a matrix usually results initially in a higher number of meetings and delays in making decisions. Matrix success lies in being both connected, and effective, not in having everybody involved in everything.
The third factor, a lack of accountability, usually masks a deeper challenge, that leaders are not confident in their ability to get things done when they don’t directly control the resources needed.
The key to addressing the first two challenges, an increase in the number of meetings and delays to decision-making is being much more selective and mindful about both who we involve in business issues and decisions and the processes we use.
In a simple face-to-face organization, the cost of involvement is relatively low. People tend to be invited to meetings to make them feel involved and to facilitate communication and buy-in rather than because they are essential to the business of the meeting. It is relatively simple and inexpensive to call a meeting, and so we often do it without thinking about whether there is a simpler way to get things done.
In a complex, global matrix, the synchronous (that is, same time, if not same place) style of working that requires meetings becomes relatively difficult and expensive to arrange. Asynchronous working or the use of small sub-teams is much more effective. Meetings are an enormous expense for large organizations, they are usually the primary driver of travel and it’s not unusual for 40% of managerial and professional time to be spent in meetings (of which about half is wasted). In many of our client organizations this represents hundreds of millions of dollars of waste every year.
Delays to decisions can slow down product launches, delay our response to competitive pressures and frustrate our people. In the area of accountability, we see a similar effect. Accountabilities overlap or are shared. If this is interpreted or implemented as a lack of accountability, then something is wrong. In fact in a matrix there should be more accountability as accountabilities overlap.
Senior leaders in particular often struggle with having accountability when they don’t have control over the resources they need to deliver those accountabilities. They have been used to an environment where they had more individual control. In a matrix they need to engage others and mobilize resources that they don’t own to get important things done.
Whilst initially this sounds difficult, it is in fact the whole point of the matrix! If we can achieve our objectives only using our own resources, and only using the people and budgets we control, then we can happily remain in our silos. Research has shown that this way of working is actually less productive.
In order to be comfortable with accountability without control, leaders need the skills to build alliances, influence without authority and get things done through others. It’s completely normal in complex organizations for people not to have control over all the resources they need to achieve their objectives. The trick here is to develop suitable overlapping accountabilities so that people feel accountable for the end to end delivery of the product or service, not just for hitting their own narrow local numbers.
In both of these cases there are two steps to a solution.
The first is to build new skills. Without the skills to run successful virtual meetings and an understanding of how to limit stakeholders and create involvement through other means, people are likely to continue to call meetings and to involve too many people in decisions.
Without the ability to influence without authority and an understanding of the importance of overlapping accountabilities, experienced managers may use accountability without control as an excuse to avoid ownership of business challenges.
However, developing skills is usually an individual thing, people come back from training workshops with a new personal mindset and skill set, but they come back into a way of working that is defined by the people around them. People have existing expectations about being invited to meetings, involved in issues and controlling resources.
So we also need to work directly on our collective ways of working – the habits, practices and routines that we use to get things done. Changing the way we run meetings, the way we structure goals and the way we use technology are all necessary for the implementation of these new ways of working.
Companies often spend tens or hundreds of millions of dollars on ERP and other systems implementation to support this vital change but then neglect the skill building and ways of working they need to go alongside it.
It’s useful to see this as a change or transformation project rather than just a skill building exercise. It’s a worthwhile investment as developing the skills and ways of working are critical to success in a more integrated organization.
If you’d like to find out more about how we help organizations build skills and transform their ways of working, please get in touch through our website.