Revisiting the matrix organization

http://www.mckinsey.com/insights/organization/Revisiting_the_matrix_organization?cid=orgfuture-eml-alt-mkq-mck-oth-1601

Matrices are often necessary, but they may create uncomfortable ambiguity for employees. Clarifying roles can boost both the engagement of the workforce and a company’s organizational health.January 2016 | byMichael Bazigos and Jim Harter

Matrix organizations have been around for decades, stimulating vigorous debate between supporters and detractors for nearly as long.1 They remain prevalent at the large number of companies that need to bring functional centers of excellence together with business-specific people and processes. Eighty-four percent of respondents to a recent Gallup survey, for example, were at least slightly matrixed.

That survey, covering nearly 4,000 workers in the United States, highlights some benefits for employees in matrices, particularly in areas related to collaboration. At the same time, the survey suggests that these employees feel less clear about what’s expected of them than their nonmatrixed counterparts do. This problem has consequences: Gallup research indicates that clarity of expectations is a foundation for building an engaged workplace that performs at high levels. Furthermore, according to McKinsey’s Organizational Health Index (OHI), clear and accountable roles are among the most important drivers of organizational health. Taken together, the Gallup and McKinsey findings underscore how important it is for executives and line managers to address the role ambiguity that’s all too common in matrix organizations. (For more on the research behind these two studies, see sidebar, “About the research.”)

Ubiquitous and unexceptional

Eighty-four percent of the US employees Gallup surveyed were matrixed to some extent. Forty-nine percent served on multiple teams some days (we categorized them as slightly matrixed), and 18 percent served on multiple teams every workday but with different people, though mostly reporting to the same manager (matrixed). The remaining 17 percent reported to different managers in their work with different teams (supermatrixed).

Most employees in matrixed organizations, according to the survey, aren’t terribly engaged with their jobs. (Gallup defines employee engagement as involvement in and enthusiasm for work.) These figures are consistent with what Gallup has found in the workplace at large over a decade of study. They are alarming, given the relationship between worker engagement and vital business outcomes, such as productivity, profitability, and customer perceptions of service quality.2 The survey does suggest a modestly positive relationship between the four categories of organization and employee engagement, which rises slightly across them (exhibit).

Exhibit

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Collaboration and clarity

Beneath the surface, we found some areas (particularly collaboration) where matrixed organizations performed better than less matrixed ones and others (related to role clarity) where they did worse. The differences in engagement at more and less matrixed organizations suggest advantages and disadvantages that may cancel one another out.

A key area of strength for matrixed organizations lies in collaboration—a heartening discovery, since cross-company teamwork is one of the chief aims of many matrices. We asked employees of slightly matrixed, matrixed, and supermatrixed organizations about the benefits of being on different teams. Supermatrixed employees were generally about twice as likely as slightly matrixed ones to say that their organizations not only helped them collaborate more effectively with coworkers, do their best work, and serve customers well but also stimulated bottom-up innovation. Supermatrixed employees were also somewhat more likely than those in the other categories to say they had received recognition or praise during the past seven days, that their opinions counted, and that their fellow employees were committed to doing quality work. These are key elements in the overall engagement of employees and suggest that relationships and collaboration among employees in matrixed organizations and their peers and superiors really are better.

On the other hand, only a minority of the supermatrixed employees strongly agreed with the statement, “I know what is expected of me at work,” compared with 60 percent of the nonmatrixed. This reflects a common complaint about matrixed organizations—that the structure gives rise to a lack of clarity about responsibilities, expectations, and who reports to whom. Workers in the three matrixed groups were more likely than nonmatrixed ones to say that they need clear direction from project leaders and communication between their managers and project leaders to prioritize their work most effectively.

Also, employees in the matrixed categories were more likely than their nonmatrixed counterparts to say they spent their days responding to coworkers’ requests and attending internal meetings. Such responses are not surprising in an environment where employees receive instructions and feedback from multiple managers and work with a range of people to complete projects. These are also probably factors in the critics’ assertions that the matrix structure can slow decision making, blur lines of communication, stifle productivity, and hinder organizational responsiveness and agility.3

The link to organizational health

Interestingly, role clarity and related accountability practices emerge as among the most important drivers of organizational health, and ultimately performance, in McKinsey research based on the Organizational Health Index (OHI). McKinsey has consistently found that improving role clarity improves accountability, an outcome that is a critical component of the overall health-index score. In fact, organizations with high accountability scores have a 76 percent probability of achieving top-quartile organizational health—more than triple the expected rate. What’s more, the independent effects of role clarity are so powerful that they affect OHI scores directly, one of only four management practices (among 37) that do.4

These findings are consistent with work by McKinsey’s Suzanne Heywood and others showing that organizations can mitigate the complexity associated with matrices through clear accountability and targets for individuals.5 Further reinforcing these findings is the academic literature suggesting that higher levels of the ownership mentality predict higher levels of collaboration, organizational commitment, and corporate citizenship, as well as reduced levels of behavior that deviate from workplace norms.6

The Gallup survey does suggest that role clarity takes a hit in matrixed organizations. Yet it also indicates that super-matrixed employees were more likely to have received recognition or praise in the previous seven days and to believe that their opinions counted. McKinsey research suggests that these features of the employee experience in matrixed companies have a positive impact on organizational health: two management practices—recognition and employee involvement in direction setting—are important drivers of two of the OHI’s outcomes—motivation and direction—which, along with accountability, are meaningful components of the overall OHI score.

Priorities for matrixed managers

Given the importance of role clarity and accountability to organizational health and, ultimately, performance, addressing the role ambiguity that pervades matrixed companies is a critical priority for their leaders, who should help employees by continually setting clear expectations aligned with the direction of the business. This clarity should cascade into frequent conversations between managers and their direct reports about the specific role each person plays in advancing the company’s objectives. Consultative (as opposed to authoritarian) leadership practices can contribute meaningfully to accountability, according to McKinsey’s OHI research.

It is also imperative to maintain day-to-day lines of communication to root out and dispel ambiguity and ensure that everyone is consistently on the same page. This is true at the organizational as well as the team level: Gallup research shows that managers should not save critical conversations for once-a-year performance reviews—engagement flourishes when employees receive regular, actionable feedback on their progress.

Last, the matrix structure is notorious for frequently obscuring lines of accountability, so leaders and managers should ensure that all employees understand whom they answer to and the duties for which they are responsible. The importance of regular discussions to reclarify expectations as work demands change is compounded in matrix organizations. And highly engaged employees thrive in a system where everyone is accountable for his or her work.

About the authors

Michael Bazigos, head of organizational science at McKinsey, is based in McKinsey’s New York office.Jim Harter is the chief scientist of workplace management and well-being for Gallup’s Workplace Management Practice in Omaha, Nebraska.

The authors wish to thank Gallup’s Sangeeta Agrawal, Annamarie Mann, and Susan Sorenson, as well as McKinsey’s Lili Duan, Dominik Deja, Dinora Fitzgerald, and Yuan Tian, for their contributions to this article