Global Integration’s video: Breaking the Silos
For those reading on RSS or on a mobile phone, the following is an edited transcript:
How do companies use matrix management to break through traditional silo thinking and increase cross functional and cross geographic cooperation?
One reason that companies introduce a matrix organization is to overcome ‘silo mentality’. In a traditional organization ,these were called ‘vertical structures’ – functions such as R&D, HR or marketing that usually operated independently within countries.
These vertical silo organizations worked well at focusing work on functional and local priorities, and provided clear power and career structures. They worked pretty well in simpler country organizations, where work could be competed largely within the silos.
As the need for cross-functional and cross-country work (‘horizontal’ work) increases however these silos can get in the way of cooperation across the organization.
A silo is strong, sealed and hard to penetrate, designed to protect and store the contents. In a silo-based organization, the traditional power structure reinforces the importance of the silo: you climbed the career ladder within your silo, your silo manager decided on your pay and benefits, and your objective setting processes were all within the structure. In this kind of organization, it was tempting not to take account of anything that came from another silo.
However, when work starts to require cross-functional or international cooperation it is essential that people cooperate across these traditional vertical silos. Most organizations begin to address this by using ad hoc or virtual teams. We ask people in each of the silos to collaborate. However when reporting lines, objectives, rewards and careers are all decided within the silo, virtual team objectives receive much less priority and attention than the functional, or silo, ones.
Next, organizations introduce “dotted line” reporting to the virtual team leaders. With a dotted line there is a formal right for the virtual team leader to bet involved in objective setting, performance appraisal etc.. However, reality is that the “solid line” or main reporting line manager has the balance of power therefore is usually given priority.
If objectives can’t be met using informal or dotted line reporting then organizations tend to move towards some form of formal matrix organizational structure.
In a matrix, people will have two or more formal reporting lines of similar importance. A functional manager in a country, for example, may report both to their country General Manager and to the functional manager internationally. In this way, they have to take into account the needs of both in prioritizing their work. Both reporting lines have an input into objective setting and evaluation of performance.
By making individuals take both into account, and encouraging line and functional people to align their objectives more effectively, a matrix forces people to think outside their silos.
A number of organizations are also creating horizontal organizations such as supply chain or global accounts, where most or all of the power is aligned to the horizontal organization globally and the vertical structures and functions are much weaker. This can work where the needs of the work flow are truly global and are genuinely driving factors – but we risk producing horizontal rather than vertical silo thinking if we fail to balance the power of the horizontal and the vertical.
So, if you need to increase cooperation across silos, virtual teams or a matrix structure may help, but the real challenge is creating the right balance of power between the vertical and horizontal reporting lines.