MATRIX MANAGEMENT: Pros and ConsNDTMA 2017 Annual Conference MATRIX MANAGEMENT: Pros and Cons Steve...

NDTMA 2017 Annual Conference

MATRIX MANAGEMENT: Pros and Cons Steve Strachan Vice President Sensor Networks, Inc. Boalsburg, PA Management Session II February 16, 2017

Golden Nugget Hotel, Las Vegas, NV February 14-16, 2017


Agenda §  What exactly is Matrix Management? §  Where and why is it used? §  Pros & Cons to this style of management §  A few examples of how it is used §  How to ensure successful MM §  Conclusions



What is Matrix Management ? §  Matrix management is the practice of managing individuals with more than one reporting line which forms a matrix structure to leverage functional infrastructure and optimize efficiency §  Often used to describe management across functions, regions, and even other business units

§  Classic example: §  Product expertise on Y-axis §  Functional expertise on X-axis



What is Matrix Management ? §  The famous and sometimes infamous “dotted line” reporting:


Helen Bob

Fred §  Bob has two bosses – reporting directly to his P&L leader, Fred, and indirectly to his Engineering manager, Helen. §  Both Fred and Helen set Bob’s objectives and his annual review. §  The budget is owned by all 3 however Fred has the final say when push comes to commercial matters §  Helen has the final say in technical decisions. §  So who has the final say over how Bob spends his time…???


What is Matrix Management ? §  The final say goes to:


Helen Bob

Fred

BOTH!


Who, What, Where, Why & How MM used: §  Who: Usually larger companies with complex organizations and well defined functions – HR, Legal, Supply Chain, etc. §  What: Companies who have multiple business units but offer either complementary products or service like customers §  Where: Companies which operate across different geographic regions … typically global §  Why: To leverage the company’s existing functional architecture which aims to help the business focus on the customer and being successful in the market §  How: Very carefully …



Advantages to MM Structure § Access to information silos – increase cooperation and communication to help achieve growth or promote competitiveness §  Efficiency – leveraging functional expertise (sales, supply chain, etc.) … less reinventing of the wheel §  Flexibility – be able to react quickly to global and local market changes/demands §  Saves Money – duplication/streamlining of jobs, reduces waste §  Individual Growth – allow employees to learn different facets of how the business is run, see the “big picture” and produce the next generation of leaders



Disadvantages to MM Structures

§  Goal misalignment – competing objectives or inconsistent messaging from bosses §  Ambiguous authority – who has the final say, when a decision MUST be made §  Silo-based workers – only as strong as your weakest link, team players > self gratifiers are required §  Unclear roles & responsibilities – difficult to figure out who to go to for support, feels like constant fire fighting §  Mid-level management challenges – this level of mgmt. loses authority but often is required to restore order to day-to-day issues §  Snowball effect – corrections must be made quickly or risk customers, talent, & future



Why and where MM must be careful §  Mid-size merger example

§  $100M NDT OEM is purchased by a multi-billion dollar multi-national who already has MM strategy in place

§  Good: §  Access now to the world’s stage including significant internal customers. Global sales management has potential to push commercial activity and growth in hard-to-access markets such as Middle East, Russia, Australia.

§  Bad: §  Senior Sales Management doesn’t embrace or fully understand the nuances of the new P&L especially at each regional level §  One-size-fits-all strategy about what was best for the overall business or the smaller P&L are made §  Legacy bias … employees gravitate to what they know §  Forced MM approach §  Unnecessary processes are put in place that only add bureaucracy and kingdom-building with no value-add. §  Cost pressures can cause knee-jerk reactions



Why and where MM could be used: §  Large-size corporate example:

§  ACME is the world leader in bird feeders


§  ACME decides they want to create a vertically integrated software platform where customers can purchase everything from bird feeders to bird video games §  ACME creates an MM structure where the engineering, supply chain, marketing, and sales from each business will now each report into one function leader but still have responsibility to their P&L GM, to help achieve this lofty task


Why and where MM could be used: §  NDT Example §  Private equity company wants to get into NDT space but wants to make sure they stay diversified in different verticals during industry specific downturns, so they purchase 5 companies:

§  Aerospace lab §  Pipeline lab §  In plant (O&G/Petrochem/PG) lab §  Manufacturing/fabrication lab §  Offshore lab

§  Each of these 5 companies has NDT in common, but may specialize in something different §  The parent company creates a MM structure to help streamline quality documents, onboarding processes, enhance brand recognition, share equipment/techs, and have a local presence in many regions in which they operate.



Keys to Ensure MM Success §  Clear vision … §  Aligned objectives … §  Resource allocation … §  Role clarity … §  Communication … §  Process definition … §  Employee engagement … §  Keep you dotted lines close … If done properly this will create a culture of shared fate and the company will gain the trust and confidence of their employees



Conclusions §  MM works well if all aspects of the organization fully understand the goals & objectives and when the interests are aligned and incentivized for all to succeed as a team. §  MM struggles when team members do not feel as though there is clarity and direction. Ambiguity breeds hostility and confusion, which can quickly spiral out of control, if not managed properly §  Judicious common sense needs to be applied so as to not throw the baby out with its bathwater. MM organizations require hard work and a lot of effort in understanding and close alignment of incentives will be key to making this work.



Thank you for your participation in the NDTMA

2017 Annual Conference


MATRIX MANAGEMENT: Pros and ConsNDTMA 2017 Annual Conference MATRIX MANAGEMENT: Pros and Cons Steve...

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