Cracking the matrix code

Flatter organizational structures, global economy require leaders to take different course
By Rick Lash
|Canadian HR Reporter|Last Updated: 03/28/2011

In theory, it’s simple: The matrix provides a realistic solution to the complexity of a modern organization that operates in multiple geographies, with multiple products, customer sectors and services.

Having a matrix structure — a multi-functional team structure that facilitates both the horizontal and vertical flow of authority — creates a place for everyone and interconnects them. Everyone has a real boss (a solid line) and another boss (a dotted line).

Companies that make the matrix work gain unique positioning with customers and markets. They can combine products and services and innovate continuously in a way competitors cannot. Products and services get to market faster and revenues and margins improve in sustainable ways.

In practice, most enterprises find it difficult, if not impossible, to take full advantage of the matrix — if they can make it work at all. Although organizations may have become flatter in recent years, they are not feeling more connected.

New behaviours needed

Cracking the matrix code and realizing its full potential starts with new behaviours. With flatter organizational structures, leaders are faced with managing virtual teams spread out across the globe in different functional areas and with different backgrounds. Leaders have to take a different course.

Until recently, being a global company often meant a North American company operating in different countries around the world. But, over the next decade, business growth will increasingly come from emerging economies and some of the fastest growing organizations will be in India and China. Success in this global economy, which is becoming more connected and more matrixed, will depend on leaders at all levels working within and across teams and functions and acting in the best interest of the enterprise as a whole.

Elements of success

There are a number of success factors for cracking the matrix code, according to two global studies by Hay Group — Best Companies for Leadership and World’s Most Admired Companies with Fortune magazine.

The most successful global companies are able to foster collaboration and address areas in the matrix Hay Group describes as “white space” — areas within the matrix where no one is responsible. These are the areas where conflict, wasted time, bad decision-making and costly, wasteful activities arise.

Unhealthy competition: Collaboration is required for success in the matrix. However, leaders continue to be bred, trained and rewarded to gain results within their own business. While leaders may understand, at a logical level, synergy and collaboration benefit the broader organization, their competitive spirit often encourages them to meet their own goals. They are not optimizing for the enterprise as a whole but maximizing for their own performance metrics, potentially causing unhealthy conflict and turf battles, with some parts of enterprise succeeding at the expense of others.

Cultural intelligence: To operate successfully, cultural intelligence — a deep understanding of different cultures and how people in different cultures respond to different incentives and rewards — is also required. We’ve heard a lot about emotional intelligence and its critical role in effective leadership, especially when leading in the matrix, but we’re also seeing an increasing emphasis on cultural intelligence, with cultural sensitivity emerging as a key factor in business success.

Patience and presence: Developing cultural intelligence requires patience and an on-the-ground presence. Leaders can gain a conceptual understanding of different cultures in the classroom. But there is a strong social learning component to this and it’s important to be on the ground, interacting with the team, learning first-hand the values, perceptions and unwritten rules and behaviours they bring to the table. That can mean spending half a day at a restaurant building strong social bonds and learning how others see the world before spending an hour dealing with the business issues.

New approaches

Cultural intelligence must also be taken into consideration with compensation and other human resources issues. In North America, pay is established based on the job and level of responsibility. In other countries, an employee’s unique skills and business contacts may be more important than the job.

Leadership takes on a new dimension in the matrix. In some situations, leaders are being challenged to build a business from the ground up. They must know how to work within a complex global network to get things accomplished.

To work effectively in the matrix, managers need to develop a system-wide understanding of how the organization really makes decisions. For example, a manager in a developing country who is ordering 1,000 washing machines from a manufacturing division in North America must effectively influence decision-makers who typically deal with orders of 100,000 machines per month or more. It may be a critical priority for the local manager but it’s low on the list for colleagues halfway around the world. Knowing how to gain their attention and make it their priority is a difficult but essential skill successful global leaders need to learn.

Cracking the code

There are six steps to cracking the matrix code:

Redefine successful leadership: It should include collaboration, so managers act as if they are CEOs themselves, making decisions in the best interest of the organization rather than solely focusing on their own results.

Focus on behaviours: Provide people with the skills and knowledge they need to manage across an organization, rather than just up and down.

Address key financial systems: Ensure systems are aligned to nurture collaborative decision-making processes, such as how resources and capital are allocated and shared.

Create doable collaboration jobs: These roles should take into account the size and shape of a job and where the level of accountability matches the level of authority. Ensure the individuals selected for collaborative roles are comfortable sharing authority and can step back and allow others to lead.

Reward and recognize collaboration: People should be rewarded for behaving, acting and performing in a consistent way that benefits the organization as a whole.

Use a strategic scorecard: It needs to look beyond the typical metrics and focus on the elements required for making a matrixed organization successful. Define the valued results the organization hopes to achieve through better collaboration, such as improved innovation, greater operational efficiencies and collective revenue growth across the business.

Rick Lash is director of leadership and talent at Hay Group in Toronto, a global management consulting firm that works with leaders to transform strategy into reality and help people and organizations realize their potential. For more information, visit www.haygroup.com/ca.

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