I’ve worked with a couple of clients recently who have the same challenge, different parts of their organization pursuing different matrix organization design models which then prove hard to match up and manage across the interfaces.
One was a very large services organisation, each business unit and function had been given responsibility for developing their own version of the matrix structure. Unfortunately, there was very little central coordination or even consistent principles in the design (except for need to cut headcount). The organization does not seem to have any central organization development expertise, and as a result each entity developed their matrix organization without much regard to the others – maybe this was a clue about why they needed more horizontal integration in their business generally!
I was working with one of the service functions and when they started to understand the plans of the business units they were supporting, they realized they would need significantly more people to support these more complex entities, not less.
With another large packaged consumer goods organization, the different matrices were also being developed pretty much in isolation and then required a tremendous amount of effort to manage the interfaces between each of these different matrix organizations. Because the principles behind the organization design were not consistent, each interface had to be navigated individually.
Regular readers will know that I am not a believer that even a good organization structure will resolve all of your problems, however, it’s clear that a badly designed structure does make things much more difficult.
The essence of the matrix is joined up thinking horizontally across the business. A key objective of the matrix for most organisations is to break the silos and liberate resources that can then be shared across the organization.
It is hardly in the spirit of this initiative to then give each separate business entity the ability to design their own organization structures in isolation, the risk is we just create new silos and perpetuate the mindset of looking internally to the business unit or function, rather than across the business as a whole.
I don’t mean by this that there should be one centralised monolithic organization design department that mandates everything. However, I do think there needs to be some consistent principles in play including a clear objective for the design. I also think there needs to be some kind of steering group or other body that negotiates the interfaces between the business entities, often based around key horizontal business processes.
I accept that the model in use in service functions (often some combination of business partner, specialist and service centre) will be different from those in other major business processes such as the supply chain. This is normal. However, I do think there needs to be consistency in the major horizontal business processes that drive value across the organization.
The essence of the matrix is a joined up approach to creating value horizontally across the traditional vertical silos of geography and function – that needs to start with organization design.