What is Matrix Management

As Tom Peters has pointed out, the essence of most organizations is centered around projects. The traditional organization, organized around departments, is fast giving way to work by project. As project work replaces department work, more and more organizations are adopting a matrix formation to their structures.

Matrix management is the interface of an organization both vertically and horizontally. Traditional organizations consist of horizontal layers with a distinct line of command. Under matrix management, people may report to more than one person. Therefore, you could have a Salesmen report to the Finance Manager or a Production Supervisor report to the Chief Technology Officer. The balancing of horizontal and vertical structures creates a matrix or grid whereby people move according to project. Thus, the organizational chart looks like a series of vertical department columns crossed over by a series of horizontal project rows. By moving people around according to projects, skills are improved and human resource capital is enhanced. Matrix management can provide several benefits:

•  Reduces the number of organizational layers down to project by project.

•  Better utilizes the human resources of the organization.

•  Eliminates unnecessary work and improves value-added type activities.

•  Emphasizes the need to change and work around projects as opposed to department.

Matrix management does have some drawbacks:

  • It can create much more conflict since people are forced to interact with others outside their traditional areas.
  • Traditional career paths no longer exist.
  • Top managers (especially Project Managers) can gain increased power over traditional department managers.

One of the biggest challenges to matrix management is getting "buy-in" from those affected. If employees have difficulty getting along and they are suspicious of management, then employees will view matrix management as another popular fad of the month. Additionally, matrix management emphasizes core competencies and as a result, in-house personnel may find themselves outsourced. Thus, matrix management is appropriate for organizations that have wide fluctuations in their workloads. Companies involved in major project work, such as Research & Development, function well under matrix management.

Additionally, matrix management works best when an organization has clearly defined goals and there is strong fit between organizational goals and the goals of horizontal components and vertical components within the matrix. This binds the grid together and facilitates accountability through measurement (such as a Balanced Scorecard).

The evidence is quite clear. More and more companies are emphasizing projects. More and more jobs are requiring project management skills. The demand for Project Managers has never been stronger. And to solidify this trend, matrix management is becoming a standard for rebuilding organizational structures.

matt evans photo Written by: Matt H. Evans, CPA, CMA, CFM | Email: matt@exinfm.com | Phone: 1-877-807-8756

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