Making sense of matrix structures

by 16 Mar 2010

Many organisations adopt the matrix structure in order to benefit from multiple geographies, product lines, customer sectors and services, however, the majority of businesses fail to realise the simplest of ef ficiencies and economies of scale that they set out to achieve through a matrix structure.

However, a recent report, released by Hay Group, has found that most organisations fail to adopt the required behaviours necessary as collaboration is more important than competition in matrix structures.

“Cooperation must replace the command and control management styles that are deeply embedded in many enterprises. And every part of the matrix must be represented on the top team, with the CEO actively supporting the matrix by holding people accountable for making the structure work,” the Cracking the Matrix Code report recommended.

Hay Group’s research on Fortune’s World’s Most Admired Com panies shows that most make the matrix work to their advantage, and the report makes note of world-class businesses, like Cisco, 3M, Mi crosoft, Procter & Gamble, which are considered matrix pioneers.

“The matrix should not be feared or shunned and can achieve so much more than economies of scale. Once understood and cracked, the rewards can be substantial,” the report said.

Many companies find it almost impossible to make the matrix work, the report found, partly because they do not encourage collaborative behaviour, but also because of the existence of gaps within the ma trix for which no one is responsible.

Furthermore, identifying and managing the white space makes all the difference when cracking the matrix code, and the report noted that success is determined by addressing conflicts in the white space and turning them to the organisation’s advantage.

The Cracking the Matrix Code report solution for making the matrix work is:

1. Redefine success for leaders

2. Focus on behaviours

3. Address key financial systems

4. Create ‘do-able’ jobs

5. Reward and recognise for the right things - consistently

6. Use a strategic scorecard, the successor to Kaplan and Norton’s balanced scorecard

“Large, multi-country, multi-product enterprises are almost certain to operate a matrix structure to some degree,” the report said.

“Those that are flexible in implementation, collaborative in behaviours, explicit in communications and that align rewards accordingly crack the matrix code. The rewards are considerable, not least in greater revenues, margins and sustainable growth, delivered through the synergies achieved.”

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