Designing Matrix Organizations That Actually Work

While more and more companies are interested in matrix organization structures, they can be challenging to implement. Jay R. Galbraith wrote Designing Matrix Organizations That Actually Work to demonstrate the characteristics of effective matrix organizations. His findings are based on more than 40 years of studying and consulting with matrix organizations worldwide. A matrix is a type of organization structure that is constructed around two or more dimensions and in which people have two managers. For example, a firm may have a strategy that is both global and local, or it may be necessary to deliver new products quickly while also having functional excellence. Matrix organizations are unique because they have a dual reporting structure. When a company moves to a matrix structure, the organization must make changes to its IT systems, planning and budgeting processes, the performance management system, bonus awards, and its selection and development criteria. Based on this realization, Galbraith devised the Star Model. This serves as the foundation on which a company can base its design choices. Design policies fall into five categories: 1) strategy, 2) structure, 3) processes, 4) rewards, and 5) people. One of the challenges associated with implementing matrix structures is that companies have used them in more and more complicated business situations, such as expansion into global markets and increased emphasis on customers. To illustrate a highly complex matrix structure, Galbraith provides a case study of IBM, which in 2002 was organized around six dimensions. Leaders in matrix organizations must encourage staff to escalate issues and listen to conflict, but must act as decision makers if others cannot reach consensus. One of the main messages that must be conveyed is that conflict is a natural consequence of the matrix structure. Designing Matrix Organizations That Actually Work is most relevant to executives who are considering a move to a matrix structure or to managers who are trying to manage a matrix organization more effectively.