Matrix Business Structures - Essay Example

Matrix Organisation Structure The nature of business is changing rapidly, which is further demanding change in business models, reductions in costs and time, innovative products and services in order for organisations to sustain their growth and position. As a result of these changing demands, organisations are exploring opportunities or niches that will provide platform to achieve all or most of these objectives. Matrix organisational structures are also resultants of such demands. Organisations adopt the matrix structure when their business and operations require both functional and product or geographical focus simultaneously. In such structures, the functional departments such as finance, operations, HR, facilities etc assign cross functional responsibilities to individuals of respective functions (see fig.1). Davis and Lawrence (1977) had defined matrix as, ‘any organisation that employs a multiple command system that includes not only a multiple command structure but also related support mechanisms and an associated organisational culture and behaviour patterns’ (qtd. by Miner, 2007; p.254). Such structure is adopted by organisations involved in complex nature of business or operations. For example, armed forces, construction industries, management consulting firms etc adopt matrix organisational structures. Matrix organisational structures are said to have evolved many decades ago; and the most quotable example is the result of President John F Kennedy demand that stated, ‘a man on the moon within ten years’ (Norton, 2007; p.82). As shown in the figure, under each function, managers responsible for various functions simultaneously report to the functional head as well as a project manager. Each project manager is responsible for similar or specific activities carried out in each function. So, this is two-dimensional role for project managers as well as managers of specific function. It is generally opined that matrix structures are easier to be implemented in smaller organisations, but many large organisations have successfully adopted matrix organisational structures across the globe; few examples include Microsoft, Intel, BMW, Procter & Gamble (Galbraith, 2008). Galbraith asserts that matrix runs on social capital, personal networks and reasonable levels of trust (2008; p.209). Factors that impact success of matrix structure include organisational culture, leadership, communication, planning and coordination, and even HR practices. Huffmire and Holmes (2006) quote Intel as a perfect example stating, ‘Intel has a matrix organisation structure on top of a divisional on top of a functional organisation structure, yet it works, because Intel has a culture of excellent team work (p.64). Secondly, strong leadership at the top of matrix structure is extremely important because the most common issue that surfaces matrix structure include conflicting interests and approaches by equally competent and expert personnel. Leaders should be able to build trust and gain acceptance by all team members. Leaders’ knowledge and expertise are required for providing training and infrastructure to sustain the matrix. Leaders’ role is crucial in managing power distribution and goal and role clarity. Role of communication in matrix structure is at various levels such as formal and informal communication as well as cross-functional coordination. For example, BMW adopts cross-functional career development practices that facilitate movement of people upwards and lateral in order to improve their interpersonal network and informal communication (Galbraith, 2008). From planning and coordination perspective, matrix structures require alignment of goals of different functions with organisational goals. To achieve this, matrix organisations follow a joint goal setting processes and effective joint planning activities. In matrix organisations, all human resource practices foster team working culture, as seen in Goldman Sachs (Galbraith, 2008). Matrix organisational structure provide immense advantage to the organisations in terms of efficiency, turn around and quality. Firstly, knowledge and expertise involved in particular project or assignment will be greater than that in traditional management structure. Ready accessibility to equipment, technology and information as well as facilities makes the job easier for most of the members involved in the particular project. This structure also reduces cost to the company because of sharing of human resources between functions. Employee motivation and learning opportunities increase in matrix structures as they provide opportunity and room for better professional development. At an organisational level, better teamwork can be established by bringing people from different specialties or functions to work for common goal. The matrix structure provides more flexibility to adapt to changes quickly. Goals and objectives framed in matrix structures can bring a balance between competing demands from external customers or stakeholders. Roles and responsibilities assigned to individuals in these structures enhance ownership, commitment, and motivation (Gitman & McDaniel, 2008). Limitations of matrix structure have resulted in failure of this structure in many organisations. Firstly, multiple, or even dual-line reporting creates significant chaos and confusion in goals as well as responsibilities for the subordinates. Different goals and management styles can hinder managers’ as well as staff’s efficiency and motivation. Teamwork can be affected due to issues in achieving cohesion and gaps in communication and understanding. When matrix structure requires cross-border reporting and liaising, cultural differences hinder communication and understanding between people belonging to different national cultures. Hofstede’s (1980) cultural dimensions explain impact of cultural differences on different management aspects. For instance, matrix structure that is widely accepted in the United States may not be acceptable in countries like France due to high power distance culture (Pennings, 2001). At Hewlett-Packard the matrix structure was straightened out by the CEO, Mark Hurd, in order to give the business heads more control of their units and not blame others for lack of achievements or failures. Matrix structures have not been very successful within organisations unlike when implemented in consulting activities (Gitman & McDaniel, 2008). In conclusion, matrix structures provide strong functional and operational coordination between cross functional groups that can enhance operational efficiency and organisational performance if implemented with appropriate planning, coordination and communication by effective leadership. This structure can also cause significant confusion of roles and goals, create conflicts related to initiatives, interests and approaches, as well as create misunderstanding between people belonging to different groups/functions. Therefore, it is advisable to adopt matrix structures based on the need and nature of business. Need-based situations such as major organisational changes like mergers and acquisition or any other organisational change, expansion of business to new locations, new product lines etc would benefit from matrix structures. If implemented appropriately, matrix structures can improve organisational performance, employee motivation, cross-functional communication and coordination, and even become the cause for organisation’s competitive position in the market. References Galbraith, J.R. 2008. Designing matrix organisations that actually work: how IBM, Procter & Gamble, and others design for success. John Wiley and Sons, New Jersey. Gitman, L.J and McDaiel, C. 2008. The Future of Business: The essentials. 4TH Ed. Cengage Learning, OH, USA. (pp: 177-184). Huffmire, D.W and Holmes, J.D. 2006. Handbook of effective management: How to manage or supervise strategically. Libraries Unlimited, CT, USA. Miner, J.B. 2007. Organisational behavior: From theory to practice. M.E. Sharpe, New York. Norton, A. 2007. CIMA Official learning system integrated management. 4th ed. Butterworth- Heinemann,MA USA. Pennings, J.M. Structural Contingency Theory. In Drenth, P.J, Thierry, H and DeWolff, C.J’s A Handbook of work and organisational psychology. Psychology Press, UK. fig.1: Matrix Organisation Structure Adapted from Gitman & McDaniel, 2008. p.183 Read More