Category Archives: Matrix Organizations

Follow the Money

Organizations today come in many forms and structures. They can be created along geographic lines, product lines, markets and even customers. In most major corporations today there are usually aspects of each of these organizational structures present. This has given rise to the organizational “Matrix”. While this structure probably was not the basis for the popular movie trilogy, it can be comparably confusing.

 
The drives to specialize and push repetitive labor intensive functions into low cost labor environments and to take advantage of low cost manufacturing while streamlining supply chain operations have resulted in an organization structure where ownership for the business and its associated processes is fragmented, while the responsibility for the overall solution usually remains centrally vested. Despite all of this diversification and fragmentation of the business structure, there is one thread running through the business that enables the business leader to draw it all together and drive the solution.

Follow the money.

No organization within the corporation does anything for free. They have people, equipment and overhead that they need to pay for. The way they sustain and pay for these items is to provide or “sell” their particular service to you as the business owner. In this corporate structure, certain specific functions may not report to the business unit (Matrix) but they are funded by it.

Over time it is possible for these business funded functional groups to assume and believe that they are in fact entitled to the ongoing funding of the business group. They normally have multiple businesses providing funding to them in addition to delivering on their own organizational commitments. It is possible for them to lose their focus and begin to deliver what they chose and prioritize to provide, not what the business has chosen and required of them.

This should not the case.

As the business owner it is your responsibility to require performance from all aspects of the business, whether they are internal or external to the business or corporation. And just as is the case with external suppliers, the way this is accomplished with Matrix reporting internal providers is with money. Setting clear expectations of deliverables, requiring year over year efficiencies and business improvements, and yes in some instances refusing to pay (fund) unacceptable performance are some of the tools that can be used to assure desired performance of the Matrix group.

In today’s Matrix based organizational environment the business owner may not and probably does not own all of the aspects and functions that go into running the business, but more often than not they still own the checkbook. And while they may not have direct reporting control over the prioritization and performance of those Matrix organizations, no group (internal or external) is “entitled” to their funding. Today’s business owner needs to understand and remember that they can no longer simply direct other organizations on what needs to be done. They also need to understand that they are not at the mercy of internal organizations and must pay whatever is required by the functional group. They can and must remind the Matrix organizations that if the desired work is not performed, that the business will in return stop paying (for) them, just as they would any other under-performing supplier. The health and performance of the business should always more important than any of the functions that supply and support it.