Matrix Organizational Form

The matrix organizational form is an attempt to combine the advantages of the pure functional structure and the product organizational structure. This form is ideally suited for companies, such as construction, that are "project-driven." Figure 3-6 shows a typical matrix structure. Each project manager reports directly to the vice president and general manager. Since each project represents a potential profit center, the power and authority used by the project manager come directly from the general manager. The project manager has total responsibility and accountability for project success. The functional departments, on the other hand, have functional responsibility to maintain technical excellence on the project. Each functional unit is headed by a department manager whose prime responsibility is to ensure that a unified technical base is maintained and that all available information can be exchanged for each project. Department managers must also keep their people aware of the latest technical accomplishments in the industry.

Project management is a "coordinative" function, whereas matrix management is a collaborative function division of project management. In the coordinative or project organization, work is generally assigned to specific people or units who "do their own thing." In the collaborative or matrix organization, information sharing may be mandatory, and several people may be required for the same piece of work. In a project organization, authority for decision-making and direction rests with the project leader, whereas in a matrix it rests with the team.

Certain ground rules exist for matrix development:

• Participants must spend full time on the project; this ensures a degree of loyalty.

• Horizontal as well as vertical channels must exist for making commitments.

• There must be quick and effective methods for conflict resolution.

FIGURE 3-6. Typical matrix structure.

• There must be good communication channels and free access between managers.

• All managers must have input into the planning process.

• Both horizontally and vertically oriented managers must be willing to negotiate for resources.

• The horizontal line must be permitted to operate as a separate entity except for administrative purposes.

Before describing the advantages and disadvantages of this structure, the organization concepts must be introduced. The basis for the matrix approach is an attempt to create syn-ergism through shared responsibility between project and functional management. Yet this is easier said than done. No two working environments are the same, and, therefore, no two companies will have the same matrix design. The following questions must be answered before a matrix structure can be successful:

• If each functional unit is responsible for one aspect of a project, and other parts are conducted elsewhere (possibly subcontracted to other companies), how can a synergistic environment be created?

• Who decides which element of a project is most important?

• How can a functional unit (operating in a vertical structure) answer questions and achieve project goals and objectives that are compatible with other projects?

The answers to these questions depend on mutual understanding between the project and functional managers. Since both individuals maintain some degree of authority, responsibility, and accountability on each project, they must continuously negotiate. Unfortunately, the program manager might only consider what is best for his project (disregarding all others), whereas the functional manager might consider his organization more important than each project.

In order to get the job done, project managers need organizational status and authority. A corporate executive contends that the organization chart shown in Figure 3-6 can be modified to show that the project managers have adequate organizational authority by placing the department manager boxes at the tip of the functional responsibility arrowheads. With this approach, the project managers appear to be higher in the organization than their departmental counterparts but are actually equal in status. Executives who prefer this method must exercise caution because the line and project managers may not feel that there is still a balance of power.

Problem-solving in this environment is fragmented and diffused. The project manager acts as a unifying agent for project control of resources and technology. He must maintain open channels of communication to prevent suboptimization of individual projects.

In many situations, functional managers have the power to make a project manager look good, if they can be motivated to think about what is best for the project. Unfortunately, this is not always accomplished. As stated by Mantell11:

There exists an inevitable tendency for hierarchically arrayed units to seek solutions and to identify problems in terms of scope of duties of particular units rather than looking

11. Leroy H. Mantell, "The Systems Approach and Good Management." Reprinted with permission from Business Horizons, October 1972 (p. 50). Copyright © 1972 by the Board of Trustees at Indiana University.

beyond them. This phenomenon exists without regard for the competence of the executive concerned. It comes about because of authority delegation and functionalism.

The project environment and functional environment cannot be separated; they must interact. The location of the project and functional unit interface is the focal point for all activities.

The functional manager controls departmental resources (i.e., people). This poses a problem because, although the project manager maintains the maximum control (through the line managers) over all resources including cost and personnel, the functional manager must provide staff for the project's requirements. It is therefore inevitable that conflicts occur between functional and project managers12:

These conflicts revolve about items such as project priority, manpower costs, and the assignment of functional personnel to the project manager. Each project manager will, of course, want the best functional operators assigned to his program. In addition to these problems, the accountability for profit and loss is much more difficult in a matrix organization than in a project organization. Project managers have a tendency to blame overruns on functional managers, stating that the cost of the function was excessive. Whereas functional managers have a tendency to blame excessive costs on project managers with the argument that there were too many changes, more work required than defined initially and other such arguments.

The individual placed at the interface position has two bosses: He must take direction from both the project manager and the functional manager. The merit review and hiring and firing responsibilities still rest with the department manager. Merit reviews are normally made by the functional manager after discussions with the program manager. The functional manager may not have the time to measure the progress of this individual continuously. He must rely on the word of the program manager for merit review and promotion. The interface members generally give loyalty to the person signing their merit review. This poses a problem, especially if conflicting orders are given by the functional and project managers. The simplest solution is for the individual at the interface to ask the functional and project managers to communicate with each other to resolve the problem. This type of situation poses a problem for project managers:

• How does a project manager motivate an individual working on a project (either part-time or full-time) so that his loyalties are with the project?

• How does a project manager convince an individual to perform work according to project direction and specifications when these requests may be in conflict with department policy, especially if the individual feels that his functional boss may not regard him favorably?

There are many advantages to matrix structures, as shown in Table 3-5. Functional units exist primarily to support a project. Because of this, key people can be shared and

12. William P. Killian, "Project Management—Future Organizational Concepts," Marquette Business Review, Vol. 2, 1971, pp. 90-107.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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