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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
NDTMA 2017 Annual Conference
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
Golden Nugget Hotel, Las Vegas, NV February 14-16, 2017
NDTMA 2017 Annual Conference
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
Golden Nugget Hotel, Las Vegas, NV February 14-16, 2017
NDTMA 2017 Annual Conference
What is Matrix Management ? § The famous and sometimes infamous “dotted line” reporting:
Golden Nugget Hotel, Las Vegas, NV February 14-16, 2017
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…???
NDTMA 2017 Annual Conference
What is Matrix Management ? § The final say goes to:
Golden Nugget Hotel, Las Vegas, NV February 14-16, 2017
Helen Bob
Fred
BOTH!
NDTMA 2017 Annual Conference
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 …
Golden Nugget Hotel, Las Vegas, NV February 14-16, 2017
NDTMA 2017 Annual Conference
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
Golden Nugget Hotel, Las Vegas, NV February 14-16, 2017
NDTMA 2017 Annual Conference
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
Golden Nugget Hotel, Las Vegas, NV February 14-16, 2017
NDTMA 2017 Annual Conference
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
Golden Nugget Hotel, Las Vegas, NV February 14-16, 2017
NDTMA 2017 Annual Conference
Why and where MM could be used: § Large-size corporate example:
§ ACME is the world leader in bird feeders
Golden Nugget Hotel, Las Vegas, NV February 14-16, 2017
§ 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
NDTMA 2017 Annual Conference
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.
Golden Nugget Hotel, Las Vegas, NV February 14-16, 2017
NDTMA 2017 Annual Conference
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
Golden Nugget Hotel, Las Vegas, NV February 14-16, 2017
NDTMA 2017 Annual Conference
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.
Golden Nugget Hotel, Las Vegas, NV February 14-16, 2017
Golden Nugget Hotel, Las Vegas, NV February 16-18, 2016
NDTMA 2017 Annual Conference
Thank you for your participation in the NDTMA
2017 Annual Conference
Golden Nugget Hotel, Las Vegas, NV February 14-16, 2017