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Combating the Challenges of a Matrix Organization
By Kathlika Thomas

When project teams are built in preparation for an upcoming assignment, the structure of the surrounding enterprise organization can greatly affect how easy it is to gather resources and how a project is managed from start to finish. While tradition has it that businesses are usually organized around functional groups – i.e., the sales team is managed by a sales manager, the finance team is managed by a finance manager, etc. – most organizations have transitioned into matrix organizational structures. What exactly does that mean and what sort of problems did it solve?

Matrix Organization

Matrix Organization

A matrix company is more like a mix between a strictly functional organization and one that’s been “projectized” (interesting word but don’t blame me for it… that’s all PMI). For example, on a team that is strictly functional, the lead or functional manager has all the say over the team budget and a project manager would likely have no authority. Because of that lack of or limited say in decision-making, the project manager may have a hard time rounding up resources to work on an engagement. No authority = no resources…very bad. An organization that has been “projectized” is just the opposite. The PM has all the say over budget and resources – not necessarily a good thing though when you think about the affect such omnipotence may have on everyday functioning in a business.

While most organizations have some mix of both functional and projectized groups at times – as in a functional organization that may pull together a special task force to get an important project done – matrix organizational structures (shown above) are actually growing more common today. In a matrix company, work is divided into projects and the team has members from each necessary functional group who report to their functional managers but who also, for the purposes of the project at hand, report to their project manager.

What’s the first disadvantage of a matrix company that jumps out at you? Project staff members have two bosses: the PM and the Functional Manager. Conflicts of interest and a battle of authority are sure to arise at some point in this kind of organization. So the best way to combat potential battles for money and resources is proper planning. When the departmental budget is being planned for the upcoming year, perhaps at fiscal year end, it’s wise to allocate a certain number of dollars to project endeavors. What are the activities that need to be completed during the upcoming year to help improve the business? Knowing months in advance the dollars to be allocated to project work will help minimize conflicts later. And the same with resources. Planning on what resources will be required months in advance, like during project initiation and chartering, will help functional managers divvy up the work appropriately so that the functional needs of the organization are met by a base staff while others on their team can contribute their efforts (whether full- or part-time) to project work.

Another disadvantage is this: having a project manager and a functional manager can be much more expensive than simply having a functional manager who may play the role of a project manager from time to time. Complexity is added to the organizational structure in this way and with complexity usually comes a slower response time to client or departmental needs. To combat this increased cost in both funding and scheduling, many organizations choose to outsource certain projects. Others will maintain strict budgeting guidelines to make sure that in a solid project work force, ROI is seen in increased organizational efficiencies.

What structure does your organization have in place and what do you think are its pros and cons? Is there a substantial benefit to having a matrix company? Are there weak and strong matrix organizational structures? Share your thoughts here!

Kathlika Thomas has over a decade of business analysis and project management experience. She has roots at Accenture, one of the “Big Five” consulting firm and has managed numerous international projects. Kathlika has also developed a number of workshops and training programs related to business analysis, business intelligence and project management. You can read more from Kathlika at the IT Project Blog.

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