Management Consulting

Why Doesn’t It Work?

Insights into Matrix Management of an Organization
Written by: Yaron Blumenthal

Application of the matrix organizational structure is essential because it

enables rapid response and flexibility which enhances survivability in a
changing commercial environment. This concept is already well-known in
many organizations, but difficulties with its application prevent them from
reaping all the benefits that matrix management offers.

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The complexity of multi-dimensional management

In the dynamic and changing world of business in which organizational agility
constitutes a competitive advantage, matrix management maintains a
respectable position alongside the more familiar hierarchical management. Many
organizations correctly identified the need for a multi-dimensional organizational
structure (even if it is not the classic matrix structure) that will enable them to
respond to the complexity of the business environment. The logic behind this
type of organizational structure is simple: functioning in a complex environment
requires a complex organizational structure. The multi-dimensional
organizational structure provides more flexibility than the rigid hierarchical
organization structure, thereby enabling the organization to survive better in an
increasingly sophisticated business world.

However, the successful implementation of the matrix structure depends on the

organization’s ability to deal with internal complexity that is an integral part of the
organization. Many organizations that have adopted matrix management
principles pay a price – the perceived clarity of work processes is affected,
tension arises as a result of multiple interactions between the organization units,
and function-based conflicts surface at organization activity level. Thus, instead
of enjoying the advantages of the new structure, some organizations must invest
additional resources to maintain the structure in order to achieve the promised
benefits.
In my work as a consultant, I have experienced the difficulties that exist at the
matrix meeting points, i.e. those points where different organizational units must
function in cooperation with each other, such as sales and delivery; business
development and R&D, etc. Existential dilemmas such as cooperation versus
competition become very real at those meeting points, and in some cases
patterns of abstinence evolve causing isolation and withdrawal on the part of
each organizational unit as it focuses inwards on its own small world.

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The Manager and the Matrix

The desire for order and clarity is embedded in the DNA for human behavior and
its pinnacle in this modern age is the attempt to compartmentalize the world
around us in clear and anticipated patterns of action. This attempt has been
partially successful and has enabled us to recognize the limitations of order and
certainty. We are moving from the modern to the post-modern, a shift that is also
occurring in the organizational field. While the hierarchical structure represents
order and the clear definition of position and status, the matrix structure is based
on limited order adapted ad-hoc to a given situation.

It therefore seems that the main difficulty in implementing matrix management

lies in the tension generated in places where managers try to apply a “modern”
management concept – one which tries to establish control and order – to a
situation where order is limited. My work in organizations has shown me that this
tension is the result of two main patterns of action on the part of the manager:

1. Local interpretation of organization objectives: Rationally, we assume that the

organization acts methodically, consistently and efficiently in order to create
stable, unmistakable and a priori objectives. However, as the organizational
environment becomes more complex, each unit within the organization
reflects the organization objectives differently.
In one of my client companies, a major IT service provider, the following
behavior pattern repeats itself. The sales team makes every possible effort to
sell the company’s products because this is how they perceive their role and
their contribution to increasing company profits. Consequently, they reduce
prices, try to accommodate the customer’s requirements and promise them
all that is needed to close the deal. On the other hand, the delivery units
which are responsible for carrying out the actual supply of services sold to
the client are assessed according to the profit generated from the total input
required to execute the service. The more the salesman promises benefits to
the client the greater his chances of closing a sale. However, he reduces in

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direct proportion his colleague’s chances of generating the required

profitability.

In this situation, the system must be optimized, in other words, to generate

maximum benefit for the organization each side must make concessions.
The salesman will promise benefits but not too many, and the profit
generated by the delivery unit will decrease but only slightly.

This matter is not self-evident. In many organizations, I saw managers who

worked based on their own understanding and interpretation of the
organization’s objectives within the narrow frame of reference of their own
positions. The example I gave is just like the familiar story about the elephant
and the five blind people – each manager thinks that he knows what is best
for the organization, but finds it difficult to see the overall picture and
ultimately harms the organization’s broader interests.

2. Struggle for authority: In a nutshell, the theory of management is based on

the notion that responsibility equals authority. This principle is clearly
presented in the hierarchical organization structure. Responsibility is seen
in the tasks that the manager must perform as part of his job definition.
Authority is the power that the organization confers on the manager to
enable him to take charge and make difficult decisions in real time. As long
as these two variables in the equation are equally balanced, the manager will
perform his job in the best possible manner.
The matrix structure exposes the manager to many managerial situations
that require him to take responsibility even when he does not necessarily
have the appropriate level of authority. In such situations, the manager can
choose one of two possible approaches:
i. When there is no authority there is no responsibility. The manager
chooses not to undertake the task imposed on him because he feels
that he does not have the ability to perform as required.

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ii. Where there is responsibility there is also authority. The manager

chooses to seize the necessary authority by force in a struggle that will
always be at the expense of another manager.
In this world of competitive individualism, I find it hard to believe that there
are managers who would choose the first option. Failure to act would
mean harming your chances for promotion. Since organizations expect
their managers to carry out all duties and tasks, most managers will
choose the second option, that which maintains the survivor’s constant
battle for authority.

Management is also comprised of human beings

The behaviors described above are an expression of our natural need as human
beings to provide ourselves with a feeling of stability and order which we do by
simplifying reality. This is the way we deal with the complex environment in
which we must function.

The organization’s upper management is also motivated by the same need to

achieve stability. Take for example, a leading telecommunications company that
decides to switch to matrix management structure. From the management’s
point of view, the hub of activity focused on consolidating the structure to meet
the strategic needs of the company, and did not refer at all to the significance of
the change for the company’s middle management. Up until the changeover,
every employee in the company knew who his manager was. The switch to
matrix management required employees to work in ad-hoc project teams that
had been set up. Consequently, the managers found themselves in a new
situation where there was a high level of reciprocal dependence between them
and the team members, and no clearly defined managerial hierarchy.

Following the formal announcement about the new organizational structure,

people were given a one-month acclimation period after which the organization
was supposed to operate in its new format. There was great confusion from the

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very beginning. Work processes changed and those that had previously been
clear became blurred. In order to cope with the difficulties they faced, and based
on their understanding of the situation, each manager took steps according to
the approaches outlined above. The confusion generated a wave of escalations
aimed at the supervising managers, i.e. questions that required organizational
clarifications. The fact that some of the questions went unanswered caused the
managers, and especially middle management, to feel that they had been
abandoned and left to contend with the complex reality of matrix management
without receiving the necessary tools for the job.

Analysis of this example shows that senior management elected to only consider
the structural aspects of matrix management although they did not intentionally
choose to ignore its psychological aspects. This is an indication of the natural
difficulty (even senior managers are human beings) of dealing with the
complexity that leads to the passing on of responsibility to middle management
and to the expectation that they themselves will know how to deal with the
change within a short time.

The solution does not depend on manager capabilities

In many organizations there is an expectation that middle managers will resolve
the systemic difficulties that are part of the matrix management structure on their
own. Consequently, extensive resources are invested in providing them with
training processes and development of sustaining interpersonal skills such as
informed conflict management, improved internal service and influencing
techniques.

The assumption that the solution for dealing with this complexity lies with the
manager is incorrect. Avoiding any attempt to find solutions at a systemic level
indicates a natural concern about dealing with the full-blown complexity. Despite
the tools and skills, many middle management managers felt a sense of
helplessness in trying to deal with the managerial complexity. This helplessness

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translates into anger and frustration that is directed at the organization which, in
their opinion, has not taken adequate steps to ease the feeling. On the other
hand, the organization is disappointed with its managers who, despite the tools
received for dealing with the difficulties still do not “deliver the goods.” This is a
vicious circle that impedes many organizations using the matrix management
structure and prevents them from achieving the anticipated outputs of the
structure.

Tactical mechanisms to enhance the successful application of the matrix

management structure
The solution must represent a wider context and can be found in the connection
between the following three organizational elements: people, positions and
processes. I will conclude this article with a number of tactical mechanisms that I
believe can help your organization to stabilize its activities in the matrix
management structure:

1. Appoint a matrix guardian: In order to ease the feelings of confusion and

disorder that are characteristic of matrix management, the organization’s
management should appoint a matrix guardian whose job is to ensure that
management proceeds in a unified organizational spirit. The job of matrix
guardian is an accepted position in large organizations overseas, and usually
goes to a senior manager on the verge of retirement, as he is an accepted
figure in the organization and will be able to make unbiased decisions. The
matrix guardian must create a set of management principles for the complex
structure. These rules are actually like clear organizational operating
instructions which the manager can follow and apply.

For example, a strategic client requests the organization’s services for a mini
project that will generate negligible revenues in comparison to the turnover
that this client usually brings to the organization. The client manager will do
everything in his power to satisfy this client. The service provider is liable to

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reject the request altogether because based on his priorities, the income
from this project is meager. This is a classic opportunity for the matrix
guardian to lay down the rules defining organization priorities – anticipated
income versus a satisfied client.

2. Reinforce horizontal dialog: As mentioned previously, the confusion and

disorder cause the managers to abstain and to withdraw into their units. It is
essential that mechanisms are created to facilitate open discussion among
organization managers, thereby enabling each of them to understand all
angles of the complexity. This is the only way to formulate practical joint
solutions, which are adapted to the organization’s unique nuances, and can
then be projected onto other ambiguous situations in the future.

One of my client companies carried out a broad-reaching analysis of sales

opportunities in which all those involved in the process took part. During the
joint discussions accepted solutions were formulated and a commitment was
made at middle management level to implement them.

An additional solution is to carry out a Search Conference, a unique

technique in which all those involved, i.e. the whole system, work together to
explore the difficulties of matrix management and find solutions that are
acceptable to all.

It is important to understand that the matrix is constantly evolving and is a

procedural evolution. On-going dialog-supporting mechanisms help the
organization to differentiate between those procedures that must survive and
those that must be phased out in order to retain the organization’s relative
advantages.

3. Management educates rather than punishes: The expectation that

managers in the company will be able to see the broader organizational

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picture is baseless. Middle management lacks the systemic overview of

upper management and therefore always acts from a narrower point of view.

Instead of being disappointed with the way in which middle management

functions and conveying a message of dissatisfaction, upper management
must demonstrate its leadership, with the aim of transforming outlooks and
behavior through positive feedback. Empathy and upper management’s
willingness to help middle management will increase motivation and improve
managerial performance within the organization.

The organization must go beyond the day-to-day “educational” activity and

adapt its evaluation processes or performance management according to the
requirements arising from the way in which the matrix is administered.
Furthermore, it should acknowledge and commend those managers who do
this.