Matrix Organizations: How do they Work?

What is Matrix Organization? 

A multidisciplinary team with members from various functional units of hierarchical organizations are also referred as "Matrix Organization". Such teams are usually built around a purpose or specific task referred as project. These became popular as problems and projects become more complex and the inadequacy of the hierarchical organizational structure became clear. 

The matrix is built up as a team of personnel drawn from both the project and the functional or disciplinary organizations. 

The primary reason for such organizational structures is that, it can handle significant complexity of a multidisciplinary effort. Because it requires multiple functions with respective expertise to come together for a project. Some examples are as follows:

What are the Pros and Cons?

Matrix organization has many advantages which help outweigh its main disadvantage of complexity. 

Pros of Matrix Organization

Key characteristics which can be turned into advantages are:

Clear Project Objectives Clear definitions are setup for project which helps functional organizations to clearly define and align objectives if they are not already. 

Integration of subsystems through coordination among functional lines. 

Efficient Resource Utilization makes matrix organization generally less expensive than an equivalent pure project organization.

Effective flow of information and learnings across projects is easier in a matrix organization as information of use to other projects is not locked up within a single project.

Retention of functions and teams Even when projects come and go teams are retained. So loss of knowledge is prevented at the closure of projects and specialists like to work with specialists of the same group enhancing Innovation and productivity as compared to working alone in projects. 

More celebration through success of projects: Successful project deliveries keep the morals high. Connecting to specialists of same functions also helps to get clarity and confidence in career progression up on respective functional ladder.

Development and training platform for project managers with promise and potential. 

Easy closure of projects without trauma and pain. Large layoffs are avoided through cross project Utilization.

Challenges in Matrix Organizations:

While matrix organization has a lot of advantages, they have lot of challenges which need to be addressed to ensure expected deliveries from projects. Some of the common challenges of a matrix organization are Multiple bosses, complexity, difficulty in monitoring, slow reaction, conflicting priorities and guidance. 

While found in conventional functional organizations also but, matrix organizations are more vulnerable to power struggles, anarchy, groupitis (solution: Group decision making should be done as often as necessary, and as little as possible), collapse during economic crunch(matrix organizations seem to blossom during periods of rapid growth and prosperity), excessive overhead (though as the matrix matures, these overhead costs decrease and productivity gains appear), decision strangulation, sinking(difficulty in keeping the matrix viable), layering, and navel gazing(tendency to become absorbed in the organization’s internal relations at the expense of the world outside the organization, particularly to clients).

In matrix organization, power struggles are a logical derivative of the ambiguity and shared power that has been built purposefully into the design. 

Building a Productive Matrix 

So a Matrix organization can be crafted to be productive for the success of the projects they exist.

Top Management support 

Top management must give real and immediate support to the matrix, including a clear project charter. This charter should state the purpose of the project and spell out the responsibilities and authority of the project manager. In addition it should indicate to the fullest extent possible his relationships with the functional managers involved in the project.

Adoption by Functional Managers, Project Managers and Project Personnel 

Functional managers need to change the way they determine their priorities. It may be a considerable shock to functional management to find that their priorities must change, and that the project comes first.  Project management must realize that they get their job accomplished primarily through the process of negotiation, and that they should become negotiation experts. If all major decisions are made with the concurrence of the involved functional managers, the project manager finds himself in a very strong position in insisting that the decision be carried out and that the desired goals be accomplished. In addition, the project personnel must be able to adapt to the two-boss situation which can be a traumatic experience when first encountered.

Balance between Functional and Project Managers 

At the heart of the operation of the matrix is the balance of power through clear definition of roles and responsibilities of functional managers and project managers. 

Project Manager’s Responsibilities

1. What is to be done?
2. When will the task be done?
3. Why will the task be done?
4. How much money is available to do the task?
5. How well has the total project been done?

Functional Manager's Responsibilities

1. How will the task be done?
2. Where will the task be done?
3. Who will do the task?
4. How well has the functional input been integrated into the project?

Another way of stating the roles is: the project manager is responsible for the overall integration of the total project system and the functional manager is responsible for technical direction in his discipline.

A useful tool is RACI MATRIX filled in during a meeting of all concerned managers resulting in agreement on the job responsibilities. 

Preparing RACI matrix with all stakeholders results in potential conflicts being resolved early, before specific problems arise. An example of RACI is as follows:

Project Manager has to be the Axis

Since the project, program or product is usually a very important part of a company’s activities, the project manager is a very important person. He is the one who puts the company in a position where it can make more profit, or lose money.

Some conscientious, knowledgeable project managers would not get personally involved in “how will the task be done?” However project schedule and “when will the task be done?” responsibilities do not allow the luxury of sitting back and waiting for functional management to make every technical decision. 

• PM must ensure that technical decisions are made on schedule. 
• PM Must review the key technical decisions and challenge them if necessary. 
• As project integrator, has the overriding responsibility for evaluating every key project decision 
• PM should determine how it interfaces with the other project tasks, and with project schedule and budget. 

The project manager therefore must get involved and influence every project action and as a last resort he always has appeal rights or veto power — for the good of the project. The project manager even gets involved in “who will do the task?” After all, the highest achievers and most innovative personnel in the discipline organizations will be highly sought after, and the project managers will seek to obtain only the very best people for their projects.

Cooperation and negotiation are the keys to successful decision making across the project/functional interface. Arbitrary and one-sided decisions by either the project or functional manager can only lead to or intensify the potential for conflict.

Very strong top-management support for the project manager is necessary to get the matrix to work, and even very strong support will not guarantee project success. However, the matrix will not work without it. The project manager must get the job done by every means at his disposal even though he may not be perceived as the real boss. He can always appeal to higher authority, however such actions must be kept to a minimum or top management may view the project manager as ineffective.

Relationship is a Two Way Street: KEY to Success 

Consultation, cooperation, and constant support are particularly necessary on the part of the project and functional managers. Relationships between Functional and Project managers are very important relationships and are keys to the success of any matrix organization, and must be carefully nurtured and actively promoted by top management and by both project and functional management.

While the matrix organization actually is a method of deliberately utilizing conflict to get a better job done. The project team must be more concerned with solving the problem rather than with who solves it. Teamwork and problem solving must be emphasized rather than role definition.

Supporting the Project Manager: Provide Clout

It is not just a question of balance of power, but does the project manager have sufficient clout to be effective? For the most part, the project manager’s clout is a direct function of the level at which he reports in the hierarchical organization. 

The project manager must be on at least an equal level with the highest level of functional management that he must deal with.  

Tweaking the Balance of Power 

The balance of power can be tilted in either direction by changing any one or any combination of the following three factors:

• Administrative relationship: The levels at which the project and involved functional managers report, and the backing which they receive from top management.
• Physical relationship: The physical distances between the various people involved in the project
• Time spent on the project: The amount of time spent on the project by the respective managers

These three factors can be used to describe whether the matrix is strong or weak. The strong matrix is one in which the balance of power is definitely on the side of project management and vice versa. 

Summary 

Matrix organization has greatly added to the versatility and effectiveness of project management. The matrix has permitted project management to be effective not only for very large projects but small projects as well, and has been extremely valuable for solving multidisciplinary problems.

The matrix organizational form is only desirable if there is a real need for its added complexity. Not only is it not for everyone, but it cannot be guaranteed to work. It will only work if the entire organization, from top management to the project personnel, are thoroughly “sold” on the matrix concept. There are many reasons why the matrix will not work, but failure to lay the groundwork and fully prepare the organization is the principle reason for failure. The matrix will function and result in very improved project productivity if top management gives its unwavering support and if functional management and the project personnel accept the matrix as a “way of life” which can only be of great advantage to the company in improving output and profit.

Source: PMI.org