Matrix organisation: formalised irresponsibility

The matrix organisation originated in the 60s and 70s of the last millennium and is still often seen today as the answer to the increasing complexity within organisations. I have already seen job advertisements in which “several years of experience in working within a matrix organisation” was required as a competence for the position in question. When people need special skills to be able to operate successfully within a given organisational structure, it makes me wonder. After all, structures should make it easier to operate successfully and not be a challenge in themselves.

In my day-to-day consulting work, the presence of a matrix organisation has proven to be a fairly reliable warning sign of an unsuitable organisational design. Here are some examples of observations in connection with matrix organisations that you may know from your own everyday life:

• it takes a long time to make decisions as all dimensions of the matrix have to coordinate and decisions are often made by consensus or consensus
• More meetings, emails, closed meetings, conferences due to increased need for coordination
• lack of transparency in information, strategies, decision-making, etc.
• Uncertainty among employees regarding their multiple subordination
• Attribution problems of successes and failures

This last point is taken from a Wikipedia entry on matrix organisation¹ and puts the basic problem into rather harmless-sounding words. In the article title I express myself more drastically: the matrix organisation formalises and anchors irresponsibility. And that on several levels.

Matrix organisation: irresponsibility at team level

Above all, unclear and non-overlapping regulations on competences and authority to issue instructions as well as prioritisation conflicts sometimes bring teams to the edge of their performance capabilities. As a result, we observe, for example, that self-organisation is not successful due to unclear parameters and responsibilities. It is not uncommon for this observation to be attributed to the employees: “It just doesn’t work with this team.” This conclusion is most likely simply wrong.

If the scope for action and decision-making, strategies, risks, responsibilities, etc. are not defined clearly enough, the resulting uncertainty will generally lead to a wait-and-see attitude in the teams. A lack of acceptance of responsibility is therefore not a character trait, but is significantly encouraged by the structures of the matrix.

Matrix organisation: irresponsibility at management level

Despite serious disadvantages, companies still consciously opt for a matrix organisation today. Of course, one reason could be that, after careful consideration, the realisation has been reached that the matrix has more advantages than disadvantages in the specific context of the organisation.

My hypothesis goes in a different direction: matrix organisations are usually established when the complexity within the organisation becomes increasingly difficult to manage.

It is hoped that the formal distribution of responsibility across many shoulders along the organisation chart will reduce complexity. What happens in reality is the following: irresponsibility that has already being practised (or to put it more gently: multiple responsibility distributed across different dimensions) is simply made formally visible. Nothing changes in terms of complexity within the organisation.

Responsibility for economic success

Matrix organisations always arise when a significantly important management decision is not made: the decision as to who is ultimately responsible for economic success or failure and which dimension has primacy in management.

This missed decision becomes visible when we take a look at the management of the organisation’s value-creating units. One key question we can ask ourselves here is, for example: Based on the value-creating units, can we recognise how we want to solve our customers’ problem and who is responsible for achieving the customer benefit?

This question, which can be answered with a “yes” or “no”, seems trivial at first, but it is not. Because answering it requires us to think radically from our customers’ perspective. Who are our customers? What problems do we solve for them? What are they really prepared to pay money for?

This last sub-question is crucial, because answering it provides the primary control criterion that anchors accountability and frees the organisation from the temptation to take refuge in the matrix. Here are some examples to illustrate this:

• If our technology leadership is a decisive buying criterion for our customers, we should manage our value creation primarily according to technologies.
• If our products or services have to be highly customised depending on the region in order to meet customer needs, it may make sense to manage them primarily by region.
• If we deliver products and services for individual key accounts, we should consider customer/account-centred management.

Regardless of which criterion we identify, this serves the primary management of value creation and formalises responsibility for the economic success of the product and service. Through this segmentation, we create a clear framework for functioning self-organisation, quick decisions and reduce the need for coordination and communication.

A note should be made at this point: different control levels in the organisation can be managed using different control criteria. For example, a global manufacturer of sweets can decide to manage value creation by product (i.e. type of sweet) at the level of the overall organisation. At the level below this (here: product level), it may make sense to manage by region if customers have different expectations of the respective sweet depending on the region – Nutella, for example, tastes different all over the world. Each region could perhaps also be managed according to different application areas. Perhaps the organisation produces “normal” fruit gums and fruit gums with added vitamins, which are used as nutritional supplements and need to be managed differently accordingly.

This means that the organisation’s entire value creation does not have to be managed according to just one criterion. This would probably be too under-complex in many cases. It is crucial to decide on exactly one control criterion at each level in order to avoid slipping into formalised irresponsibility.

Conclusion

A clear control variable creates the framework for successful self-organisation and quick decisions in line with the market. We rarely see both of these things succeed in matrix organisations because the mere existence of the matrix often has an inhibiting effect. The entrepreneurial decision for the primary control variable at different levels of the organisation is often bypassed because it is a real decision under uncertainty: We can only determine whether the decision was “right” or “wrong” after a time lag, if at all.

Many decision-makers do not want to bear this risk alone, but there are relatively simple tools that limit the decision space to a manageable level. In his book “Die dritte Dimension des Organisierens” (“The Third Dimension of Organising”), Dr Martin Pfiffner has derived a table from key questions, some of which you will also find in this article, which can support the decision for the primary control variables.² I myself have already been able to use this tool successfully.

Notes (partly in German):

Are you interested in this or other organisational topics? Stefanie Hamann is looking forward to an exchange! She is easy to reach via LinkedIn.

[1] Wikipedia: Matrixorganisation
[2] Martin Pfiffner: Die dritte Dimension des Organisierens, https://link.springer.com/book/10.1007/978-3-658-29247-8

If you like the article or would like to discuss it, please feel free to share it in your network. And if you have any comments, please do not hesitate to send us a message.

t2informatik develops and modernises software as a service provider. Click here to learn more.