Where does a matrix organization add value?

A matrix organization structure does increase complexity and so we should only use it where it adds sufficient value to overcome these additional costs.

Many organizations initially take the matrix too far down into the organization. This video is about identifying specifically where the matrix adds value, and where it does not.

We have identified three key groups within any large, complex organization.

First are the global group – the small number of leaders at the very top of the organization who head up major business units, regions and functions. These individuals tend to report directly to the CEO. They do not have multiple bosses themselves.

Even in the most international organizations they will be a very small number of people.

Second are the locally loyal the people who have purely or very largely local jobs. These people work in factories, shops, offices, local salesforces and service centres.

Even in highly integrated global organizations, these people are usually the vast majority of our employees – typically 85% or more of people. Though organizations with a high proportion of professional or managerial staff may have a lower percentage of the locally loyal

These are jobs where the matrix really has little relevance and only introduces complexity. Coordination of their work can be achieved through shared workflow or systems or virtual teamwork and doesn’t require the complexity of multiple bosses.

Try to insulate this group from the complexity of the matrix

In between sit the matrixed middle, the people in the center of the organization who bridge the gap between the global group and the locally loyal. Typically, no more than 10% to 15% of your employees, this group is critical to the success of your matrix.

In deciding how far to go with your matrix structure the key question is ‘where does this complexity add value rather than just cost and confusion?’

We normally recommend that dual reporting lines are only applied to the matrix middle group and we recommend limiting the matrix to two or three reporting levels below the global group members. This of course is a rule of thumb, and the final design will be a function of your business realities.

Other people may still be involved in ‘matrix working’ across the functions and geographies in virtual and matrix teams and projects.

We can then focus on building the skills, confidence and capabilities of people in the global group and the matrix middle to make the matrix successful, a much more manageable task than retraining the whole organization.

Have you taken your matrix too far down the organization?

Find out more about the challenges of matrix management in both new and more mature matrix structures in our free webinar