Making Matrix Organizational Design Work

Making Matrix Organizational Design Work

The matrix organizational design derives its name from resembling a table with elements included in both rows and columns. This type of organizational structure results in solid line and dotted line reporting relationships on organizational charts. The design was developed by the US National Aeronautics and Space Administration (NASA) for seeking better solutions in managing supplier relationships and providing managers with more decision-making authority. Organizations seek the same advantages from this organizational design today.

It makes sense that more matrix reporting structures exist in business today. With the goal of decentralization of resources to optimize productivity in mind, modern technology and access to global resources make this design more attractive to implement.

As Jay R. Galbraith points out in “The Future of Organizational Design” in the Journal of Organizational Design, technology is a big contributing factor for organizations to move to the matrix design. He points out, “These new digital devices can eliminate expensive supply chains, maximize customization, and minimize economies of scale.”

Almost every large organization has a matrix reporting relationship in some shape or form. Some reports state between 90-95% of Fortune 500 companies utilize this structure either by teams or projects. It may not be a question of which organization is making it work the best, but a question of which leaders are managing it most effectively within the organizations.

What are their secrets? The key elements of making the matrix work are broken down here into the three C’s.

 

1.Communication

In the March 2006 Harvard Business Review feature article, “How to Implement a New Strategy Without Disrupting Your Organization”, authors Robert S. Kaplan and David P. Norton stated, “An often fatal weakness of a matrix organization is the endless debates among business units, functional departments, and geographical regions about resource allocation.” This demonstrates the need for an effective communication plan.

The backbone of any effective organizational design or reporting structure is communication. It’s especially important to the success in a matrix environment in building trust among team members and other leaders.

Trust is created through transparent communication from the leader to the solid line and dotted line reporting relationships by developing and nurturing working relationships. To do this effectively, a matrix leader asks questions with the goal to truly seek out answers, even when it feels uncomfortable to explore issues outside of their comfort zone and expertise level. Fostering an open dialogue and soliciting input from team members builds trust for ongoing collaboration.

Communication within the matrix requires more follow up and strong listening skills. To save time, this may lead to the manager using shortcuts by assuming answers or canceling meetings. However, these shortcuts erode the primary goals of the matrix design.

Olivier Serrat mentions in his article “Heads, I Win. Tails, You Lose” from the March 2013 publication of Journal of Industrial and Relations, “Successful matrix (but also traditional) organizations take care to communicate a clear, consistent corporate vision and to define expectations; work to expand individual perspectives to co-opt ambitions, energies, and skills into the broader organizational agenda; increase congruence with corporate values.”

Communication must be encouraged from all team members by encouraging information sharing among cross functional groups. The leaders must continuously outline team communication expectations to keep the momentum driving forward. Over time, communication will grow from the transactional “need to know” information exchanges to transactional collaboration planning to benefit the entire organization.

 

2. Coordination

The matrix environment requires much more coordination than other reporting structures to make it work. Coordination must occur on multiple levels. The matrix can be confusing for employees who want to know how they fit in with the business goals and objectives. By connecting various functions together for a common purpose to encourage continuing team collaboration, the manager continues to remove barriers to the success of team members. It can also be confusing to managers that share employees. Both managers must agree to expectations to make the most out of a dotted line reporting relationship.

An example of strong coordination in a matrix reporting structure can be found in Procter and Gamble, according to Galbraith through their “Four Pillar Design” which focuses on customization and customer needs. Rachel Lomas from Global Integrations pointed out that Procter and Gamble was a forerunner of the design. She mentioned that they have “evolved their business processes to reflect a more horizontal way of cutting across the traditional vertical silos of function and geography.” Globalization caused the organization to look at ways to reduce costs while retaining efficient customer responsiveness. This led to a hybrid matrix structure where project teams are used when two or more functions share a common problem.

Meetings play a large role in coordinating planning decisions in a matrix environment. This doesn’t mean going around the table to check in on what everyone is working on. Coordinating work through meaningful meetings in a matrix reporting structure involves planning, inviting cross functional members to the table and seeking input on agenda items in advance. During these cross functional meetings, leaders must encourage the participation of all members.

 

3. Clarity

A challenge facing managers in a matrix reporting structure is the lack of clarity of defined roles. The goal is not to box the matrix in, however, roles and responsibilities should be outlined for all parties including team members and managers sharing employees.

A regular touch base meeting between sharing managers allows for objectives to be shared on an ongoing basis. This meeting should bring competing goals to light and streamline the reporting process to avoid placing the employee in the middle. Aligned goals and metrics will be used to measure employee performance.

Leading a matrix workforce is not based on expertise leadership. It’s about creating partnerships within the matrix. With the goal of partnership through collaboration in mind, clarity can be established by assigning roles for team members when working together. Managers can create learning and training opportunities to give the group more exposure to working with each other and establish real connections. Putting their own ego aside, leaders must lay the ground work to empower members to set goals and priorities for themselves.

Serrat went on to describe the importance of moving towards collaboration in the matrix design. “And so, in general, silos do not exist because something was intentionally done: they come about because something was left undone, that is, the provision of compelling motives, means, and opportunities for personnel to come together. The idea, then, should be to replace competition with collaboration.”

Early on in the reporting relationship of cross functional teams, managers which share employee must discuss the expectations of each other. Addressing key concerns such as deciding which manager will be responsible for the performance evaluation and how each manager contributes to the professional development of the employee and assignment of tasks will assist in the efficiency and effectiveness of cross functional reporting relationships.

Furthermore, Lomas mentioned, “Align people systems such as objective setting, key metrics, incentives and career development with the multiple dimensions of the matrix to lift people out of their traditional silos. Many organization fails to do this quickly enough which causes confusion.” This is where transformation within the matrix occurs.

 

Putting the 3 C’s Into Action

Although it’s easy for a leader to get tangled up in the matrix environment, it provides several advantages to these leaders when the three C’s are implemented. The expertise provided by these cross functional reports make the team as a whole stronger when relationships are nurtured properly. When looking for the next set of leaders, more options abound, giving managers the ability to coach more employees up. Mentorship opportunities can be established to bridge gaps for the next set of potential leaders.

Managing reporting structures in a matrix design offers potential rewards for the careers of these leaders. It demonstrates a significant step in career progress as these leaders gain credibility with new business units and departments. This can propel both career and business goals by working with diverse managers and leaders.

Most managers operate within some type of matrix every day. Instead of getting overcome by the complexities of the matrix, a manager can use it to their advantage. This is done by looking at the matrix differently: an opportunity. Those leaders who do see the matrix as an opportunity are able to transform their business units and the entire organization.

3 Key Factors Drive Culture Success in Mergers and Acquisitions

3 Key Factors Drive Culture Success in Mergers and Acquisitions

There are many reasons organizations set out for a merger or acquisition. It’s a business tool to grow the bottom line by obtaining key processes, achieving economies of scale, or realizing quick growth.

Time and time again, research demonstrates the importance of cultural integration to merger and acquisition success. With over 30% of mergers failing simply because of incompatible cultures, why does this often become an overlooked piece to the success of a merger or acquisition?

Mergers and acquisitions can be long, drawn out processes. Additionally, it can be difficult to obtain information about a company’s culture during the due diligence process. After the final paperwork is filed, it’s easy for top leaders to focus on leveraging the new business advantages to grow revenue instead of integrating the cultures. However, if culture integration is pushed aside, often the organization’s future success is pushed aside too. In order to not lose sight of the people side of a merger or acquisition, here are the three key factors to remember for a successful culture integration.

Mapping the Integration Process

Defining what the organization will look like when the culture is fully integrated is the first step towards mapping out the process. Filling in the details by outlining how the organization will get there is the next step.

Brian Mazar, a Certified Business Intermediary, and owner of American Fortune Mergers and Acquisitions LLC, sees the mapping process a critical step in setting the tone for cultural integration. “Companies must avoid placing the acquired company in a passive position during this process. As a co-pilot they have the ability to set the integration up for success”, he said.

An integration or transition team dedicated solely to culture provides the necessary building of relationships between the organizations to operate as one. This team has an important role, so careful consideration must be taken when making these assignments and should consist of recognized and trusted leaders from both organizations. A great example of this is found following the Disney and Pixar merger. Each company chose key change agents to create a transition team. This team proved as the key driver of an aligned organization.

Go slow to go fast. Part of mapping the integration process is being realistic with timelines. Many organizations focus on culture integration within the first 30 days of a merger or acquisition. However, truly aligning the culture within the new organization may last six months or more.

Develop the Right Communications Strategy

Various communication strategies have been proven to be successful in merging cultures. Examples of strategies that can be used are town hall meetings, focus groups, email and intranet communications. Even when addressing a large audience, individual concerns need to be addressed to gain trust from both organizations. Knowing the audience and how the organization has communicated with them in the past is important in making future decisions.

Throughout the Adidas and Reebok merger of 2005, Adidas believed in frequent communications to all employees along with monthly pulse surveys. These pulse surveys revealed the core issues the core issues concerning these employees. The surveys were followed up on and these issues were explicitly addressed either with the individual or through a group where the concern existed among several employees. Allowing employees to express anxiety in a safe environment and then following up on those concerns proved successful tactic for this merger.

During the town hall style meetings following the Procter & Gamble and Gillette merger, emphasis was placed on the best of both companies. The actions of Procter & Gamble following these communications demonstrated they were committed to learning from the newly acquired organization.

Although there is not one right way to approach the communication strategy, the key is to communicate to the employees. These communications provide the opportunity to redefine corporate values and reconcile differences between the two organizations. In addition, when competitors join forces in a merger, the tone of these communications must convey unity, not competition.

Chris Edmonds from the Purposeful Culture Group works with companies during the merger and acquisition process on cultural integration. In order to move the culture forward and truly transform the merger and acquisition process, he suggests developing an organizational constitution. He further went on to say, “A company must see the merger and acquisition as an opportunity to be explicit with their desired culture, not just announcing their desired culture. They must define it in observable, tangible and measurable terms. If a company wants a purposeful, positive and productive culture across all business unites, it must be specified.”

Create Collaborative Teams

Early on, it’s normal for actions between teams to be transactional in nature. Works gets handed off or passed along with little question or interaction. As time progresses, however, the goal is to transform these handoff interactions into meaningful working relationships.

Barriers to the team’s success must be removed to create collaborative relationships. These barriers could be the added challenge of global culture integration or could be as simple as not having a proper introduction between new coworkers. To foster information sharing and a collaborative working environment, cross-cultural training may be needed. This training should address communication, decision making, and teamwork styles. Regardless if the merger acquisition was local or global, employee networks and mentorships are a great way to break down barriers in employees working effectively together.

An example of creating a collaborative team following a difficult acquisition involves CEMEX and RMC. To address an underperforming plant operation in England, the company assigned a team from both organizations to turn it around. This team worked through cultural barriers and developed processes for other teams to follow. The success of this integrated team was shared throughout the organization and it laid the groundwork for more collaborative assignments.

Realizing the Full Potential

Businesses will continue to merge together. Companies will continue acquiring new organizations. The ultimate goal is to gain the benefits from both organizations to function as one. It is imperative for a business to understand the people consequences of these transactions and build collaborative teams to transform the future. This is accomplished by building trust and transparency through a thought out process and approaching the integration as an opportunity to establish the desired culture.

Understanding and accepting the human emotions during this change allows companies to set a successful path to cultural integration. Edmonds states that this may run counter-intuitive for most managers who never had to manage the quality of workplace relationships. However, when leaders simply focus on financial gains or determining winners and losers from the merger and acquisition process the company risks losing key talent, the true value in any organization. Balancing the tangible and intangible assets in mergers and acquisitions allows for unlimited potential and return on investment. With so much potential gain, a business would be foolish to not invest the time, energy and resources by implementing these three factors to a successful cultural integration.

Love is the New Workplace Currency

Love is the New Workplace Currency

Over the past few years, finding loyal employees who also produce beyond everyone’s expectations, has been a hot topic amongst talent professionals and senior executives. The reason you’re seeking this answer is pretty straightforward– you want self-motivated, productive employees who stay and produce more because they choose to do so. Not to be misconstrued with traditional engagement surveys, we sought to solve for the production variable when employees are presented with a myriad of options to choose from regarding willingness to give and provide more results for their organizations. And, we found the #1 reason why people produce more for their companies, is love.

We surveyed over 175 companies across the US, Middle East/Northern Africa, and SouthEast Asia. We drilled down into what love of company really means to them in order to create a model for a Most Loved Workplace.

Our results were conclusive across geographies, organization size and industries. People who work in a most loved environment are 94% more likely to perform better and provide results, with 59% saying they are four times more likely.

Love is the New Workplace Currency 1

Perks, compensation, and friendship at work end up at the lowest end of the results that prove you love your workplace. In fact, commonly discussed impacts like compensation, benefits and perks have very little impact on employees “loving” their workplace. So does having friends at work, which has been central to past studies from other institutes. Our respondents were very clear what causes them to “Love” their workplace, and it’s about Respect.

Love is the New Workplace Currency 2

To help aid in the process, we created an audit which consists of different categories of what makes people truly love their company including a deeper dive into respect, and other key factors. The categories are the following:

1. People: This category includes statements designed to measure feelings employees have toward their coworkers and bosses, how they evaluate teamwork and collaboration at their workplace, and communication flows and feedback.

2. Ethics: This category includes statements designed to measure if the employee feels that the company lives the values she espouses along with general perceived honesty, integrity, ethics, and if other employees are reliable and held accountable for their actions.

3. Respect and Appreciation: This category includes statements designed to measure if the employee feels respected and appreciated at his workplace along with statements that measure perceived trust and if they feel listened to.

4. Positive Future: This category includes statements designed to measure if the employee thinks of the workplace as a positive environment that fosters innovation and openness along with a general positive attitude toward the future.

5. Achievement: This category includes statements designed to measure if the employee thinks of her workplace as a place that values effort and hard work, a workplace where processes are in place, where the employees can focus on the customer and work toward shared goals.

The resultant data shows that getting respect drives a most loved workplace, and this translates to better performance, team cohesiveness, and reduced turnover. While some companies focus on compensation, benefits and perks to “buy” employee loyalty, or touting their company is a great place to find friends, this study finds that a culture of respect for employees is the great equalizer. Respect is the new currency, one any business can supply in unlimited amounts if it so chooses.

If you are interested in our new Most Loved Workplace study and assessment, click here to receive our latest research. You may also hear my presentation with Qualtrics here.

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Team and Company Alignment Are Critical Components ofLarge-Scale Change

94% of employees that love their workspace and are aligned with its values are 2-4 times more likely to perform more and recommend their company

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CEO & Founder of Best Practice Institute

Retain your best employees, increase productivity, and create a community that fosters peak performance.

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