Presentation at The Pacific Northwest Conference
American Water Works Association, May 1978
By Steven Pinnell
Ladies and Gentlemen, my talk today will be on Matrix Management, a relatively new concept that blends functional department management with project management. Many of you may already be practicing matrix management without knowing what it is called. Some may be calling it “project management”. Others may find in it some new ideas to help resolve their organizational problems.
I wish to caution you, however, that many of my remarks are based on personal observation and opinion and may not be applicable to your particular situation.
I. Why worry about a New Method of Management?
If you are facing a major new capital expansion project that threatens to overwhelm your staff, you probably heed a better organizational system.
Other reasons to look at matrix management are:
- Costs getting out of control
- Schedules not being kept
- A shortage of trained manpower
- Poor management practices resulting in recurring technical errors
- Poor communication and organizational rigor mortis
- Personnel dissatisfaction
- A growing sense of loss of control
Need a quick, cheap, painless cure-all?
Try matrix management.
No, it is not quick, cheap, or necessarily painless; but it might be a means to improve your organization.
II. What is Matrix Management?
A. What it isn’t – the Functional Organization
Water Works organizations (and almost all others) are organized in a basic hierarchical structure (the pyramid). The structure is by functional department (engineering, maintenance, administration) with the boss at the top, workers at the bottom, and middle managers in between. Work is passed from one functional group to another. Each department approaches a project independently with a project engineer for that department who coordinates the activities of his department.
The functional organization is based on such management theories (proverbs) as specialization, line and staff relations, authority and responsibility, and span of control. It is an efficient, secure organization that works well. The problems with the functional organization are rigidity, a tendency to emphasize technical specialties over project needs, and frequent conflicts over resources.
B. What it isn’t – the Separate Projects Organization
The opposite end of the spectrum from the hierarchical functional structure is the separate projects organization.
A construction company is a good example of the separate projects organization. A construction company has the typical functional organization at the main office (accounting, estimating, operating manager). The fieldwork, however, is usually organized by separate independent units. A project manager (superintendent on smaller projects) has full authority over the job with direct control over all project personnel, including the power to hire and fire.
The project itself, however, is usually organized as a functional structure with engineering (project engineer), field operations (project superintendent), administration (office manager), and top management (project manager).
The strengths of the separate projects organization result largely from: (1) the singleness of purpose and responsibility of the project manager and his team, (2) his full control of all needed resources, and (3) the team spirit.
The weaknesses are: (1) a lack of organizational continuity when projects close down, (2) duplication of facilities, (3) some rigidity in use of personnel, and (4) almost total reliance on the abilities of one man-the project manager.
C. What it is – A Multidimensional Matrix Structure
The matrix organization has both a vertical, hierarchical structure and a horizontal, project structure.
Each person works for 2 (or more) bosses–his department head and his project manager(s). This results in occasional problems with team members sometimes caught in the middle of a conflict between a project manager and department head.
Matrix management is based on an organizational structure that blends functional department and project management. The term “matrix management” refers to this structure. It also includes the management practices and employee attitudes that result from the structure and help make it work.
The advantage of matrix management is that one can enjoy many of the strengths of both project and functional management while avoiding most of their weaknesses.
In visualizing a matrix structure, one should consider a blending of organizational structure from functional departments with no project coordinator nor sense of team effort on the left to an independent team with their own support services on the right. The matrix fills the broad area between and can vary from a weak matrix with a part-time coordinator and little else, to a strong matrix with a full-time project manager, separate project office, and internal administration.
In describing the relative strength of a matrix structure, some people refer to the balance of power between project managers and department heads as defining weak versus strong matrixes. Others refer to whether the team works full-time or part-time or, to the proportion of the work done by project team members versus functional department staff.
D. Separate Project Managers For Matrix Management
Most of the literature refers to a project manager operating separately from the departments. These people are titled project managers, work strictly on projects, and are not assigned to a functional department but have their own project management department.
My own experience was with a firm where the project managers came from one of the departments. I feel that this is usually a better system.
The literature also assumes most of the work will be done by functional departments with only management functions provided by the project manager (and his team). I feel that this is usually a mistake as it doesn’t foster a team spirit.
Work is done by people. They may be physically located in the department spaces and accountable to their departmental manager for certain tasks and overall direction, but when working on a project, they should be answerable to that project manager and should think of themselves as being on his project team. Projects can be assigned to an individual department. The department head can then assign a project manager and staff and other department heads can assign a project engineer and other staff from their department. The combined team works for the project manager.
The project should have its own cost accounting and the project manager be held responsible for maintaining the budget. The department heads should also be held responsible for the budgets of projects assigned to their departments since the cost status of these projects can be reflected in their departmental cost report.
A matrix organization does not require that all work be done under both functional and project control. Some projects can be done by teams independent of the functional departments. Other projects (or tasks) can be done by the functional departments without benefit of a project team. Some departments (e.g. drafting) can continue as functional departments. Even a single project can be handled by all three types of structure—either at different points in time or at the -same time for different functional sub-areas.
Quite simply, the major factor in successful matrix management is people’s attitudes.
A sense of belonging and loyalty to the department must be supplemented by a sense of responsibility to the project. The best way to do this is to teach people that whenever they do any work on a project, they are a part of the project team.
The second major attitude is one of cooperation with others to achieve both joint and individual goals. This is best fostered by having personnel, including department heads, participate in some project teamwork. This forces them to depend upon other departments and reminds them of the need for cooperation. Having project managers come from the functional departments instead of a separate project management department also helps foster this attitude.
G. Project Management
“Project Management” is a new buzzword in engineering management. Its meaning and relationship to matrix management needs clarification.
Matrix management is an organizational structure and style (management practices and employee attitudes). It also requires good project management practices to be successful.
“Project Management” means several different, but similar things:
(1) The management of projects.
(2) A group of specific skills for good management of projects. For example, my course in Engineering Project Management at Portland State University covers critical path scheduling, cost estimating, budgeting, cost accounting, cost control, reporting, contracts, contract administration, technical writing, and a brief discussion of communications and human relations.
(3) An organizational structure and style (i.e. matrix management). When people say they use “project management”, they usually mean they use an incomplete matrix structure with most of the work done by functional departments, but some projects done by separate project teams.
I prefer to use the term “matrix management” to describe the organizational structure and style and the term “project management” to describe the management of projects or the specific skills required of the project manager.
The rest of this paper will discuss the matrix management style. One should remember, however, that good project management practices are required prior to implementing a matrix management structure. At least a few projects should be done with project teams and all managers should learn good project management practices before an organization considers changing from functional to matrix structure.
III. When do you Use Matrix Management?
A. Contingency Theory
The current vogue in management literature is that there is no ideal method of management. The best solution is contingent upon the key factors in the environment in which the solution will have to operate. Put simply, “Use whatever fits the situation.”
One should approach implementation of matrix management in the same way-. Not all organizations need matrix management. Not all managers can handle it. It is complex, difficult to implement, and requires much better communication and interpersonal relations skills than functional or separate projects management. Unless used in the proper circumstances and after careful preparation, it can be very frustrating.
C. What Size of Project
Size alone is not a deciding factor. The matrix system works as well for small projects as large projects. The only difference is that the project manager (and team) work part-time on small projects.
Organizations with a great number of small projects can probably do as well with functional management. Organizations with a few, large projects might do best with a separate projects organization. Firms with a mix of large and small projects probably need matrix management.
D. What Type of Project
Organizations with repetitive projects requiring little outside coordination and only one “client” to satisfy could probably continue to do well with functional departments. Those with projects requiring great speed and which are independent of each other might use separate project management. However, those organizations with projects requiring extensive coordination, many disciplines, high technology, etc., might do better with matrix management.
E. What Size and Type of Agency or Firm
Most small organizations have well-developed informal communications and probably do not need a matrix structure anyway. A growing organization should probably go to a matrix structure if the intent is to develop their own managers. A large organization with a wide mix of projects would probably benefit from the matrix structure.
IV. How Do You Use Matrix Management?
A. An Example
First, let’s look at how some large consulting firms operate with a matrix system.
I worked for a large consulting firm for several years and although I never heard the phrase “matrix management” while there, they had one of the best-developed and most successful matrix organizations ill the business.
1. Functional Organization
The primary organization is by regional offices that operate as independent profit-and-loss centers. The office had five major divisions and several departments within each division. The departments were the lowest level functional units. They had a department head, their own profit-and-loss statement, and an overhead budget and common office area.
2. Project Organization
All projects within the regional office were assigned to a department, either the department that brought in the project or the one with the major amount of work. On major projects, a project director was assigned to exercise overall review. Normally, however, the project manager was the senior project officer. He was responsible for selling the job, establishing the fee, supervising the work, reviewing the product, meeting budgets and schedules, and maintaining client contact. The project manager would report to the department head if there were no project director. On many smaller projects – a project engineer was assigned who was responsible for technical matters while a project manager handled only administration and client contact.
One interesting aspect of their matrix management style was that senior engineers (and even one’s supervisor) were sometimes team members under a more junior engineer who had been assigned as project manager. In fact, all office personnel were available for consultation on any project (but, of course, they charged their time against that project).
3. Discipline Directors
Another aspect of a more complex matrix was the role of the discipline director who had firm-wide responsibility for technical aspects of all work w1thin his discipline. He assisted with new business development within his discipline. He also provided additional technical support to the department managers and facilitated utilizing discipline staff from other regional offices.
4. Regional Matrix
The matrix system and the ensuing cooperation made possible extensive cooperation between regional offices. Thus, a project in California, under the responsibility of the San Francisco office may have the soils design done by the Denver office, sanitary design in Seattle, and Construction Management from San Francisco with scheduling assistance from the Portland office.
One major advantage of this system is the reduced need to staff-up and lay-off people at one office or attempt to relocate people around the country. The telephone and transportation costs increase dramatically, but these are more than offset by reduced employee turnover, attendant learning time, etc.
B. Basic Management Functions for Matrix Management
Management is not a science, but like all other disciplines that focus on people, is an art. It has no immutable laws, but only rules-of-thumb. There are, however. six basic functions that a manager performs regardless of whether he is operating on a functional, separate project, or matrix structure. These are: planning, organizing, staffing, coordinating, directing, and budgeting.
In addition to long-term strategic planning, matrix management requires more extensive tactical planning or scheduling. Good scheduling is, in fact, essential to minimize conflict between project managers and department heads. One of the major problems of matrix management is the tendency to overwork the departments and create conflict over the use of resources (people, equipment, and funds).
The first step is to accurately estimate the use of resources on each project. This is difficult for construction and even more so for maintenance and design organizations. It requires a careful review of the work to be accomplished and good feedback (cost reports) from previous projects.
The second step is for the project managers to schedule the work activities for each of their projects and determine their resource requirements over time. This can only be done with critical path schedules. Forecasting and probabilities can be used to determine the most probable requirements of future projects.
The third step is to add up the resource requirements for each time period from all projects plus departmental overhead (vacation, administration time, etc.).
The fourth step is to compare the demands with the availability of resources. The project (and overhead) demands should balance with the department availability. Usually they don’t.
If availability exceeds demand, the fifth step is to either schedule more work or declare some resources surplus (lay-off excess people). The latter, of course, does not make for good employee relations.
More often, demand exceeds availability. In that case, the fifth step would be one or more of the following:
1. Hire more people (or get whatever other resource is needed).
2. Plan on substantial overtime.
3. Have more work done outside by consultants and contractors.
4. Assign priorities to projects and reschedule.
The sixth step is to monitor and update the plans to keep them current and to provide feedback for future projects.
The entire process of planning: forecasting future projects, scheduling current and future projects, resource demand listing, controlling, and feedback can be done intuitively; with time-scale critical path schedule networks plus a few manual computations; or, with sophisticated computer programs.
I have found that a manual system, if kept relatively simple, works well for scheduling engineering manpower. It is only necessary to prepare a time-scale critical path network, assign resources to each activity, and add up the resources for each time frame. Most of the computer programs that schedule engineering manpower are too complex and difficult to use. The only one that is satisfactory for scheduling and resource listing lacks controlling and feedback options. Hopefully, that will be corrected in the near future.
The difference between a project coordinator and a project manager is the difference between mere integration and actual decision-making. The difference between a part-time project manager and a full-time project manager is usually the size of the project (in terms of management effort required).
When a project coordinator is utilized (even if he is called a project manager), a project representative is sometimes appointed within each department to serve as a focal point. This person could as well be a sub-project manager.
2. Delegation of Authority and Responsibility
Responsibility for cost, time, and quality must be given to the project manager. He cannot just be called a project manager; he must be given authority and resources and be held responsible. The department heads should have either a specific responsibility for providing resources or share in the responsibility for maintaining cost, time, and quality.
The project manager has a different type of authority than the department head. He often has no direct authority over his team, but must exercise authority through his knowledge, leadership skills, interpersonal relations skills, and ability to “horse-trade”. This lack of traditional authority makes a project manager’s job rather difficult.
A project management structure does not require sophisticated communication systems, as the team is usually fairly small and all oriented towards the same objective.
A functional organization requires a great number of formal communications — plans, schedules, budgets, and reports.
A matrix organization requires even more sophisticated (but more informal) communication than a functional system. In fact, good communications are essential to the matrix concept. The importance of the informal communication system makes familiarity with the organization and other people in it a prerequisite to successful matrix management.
The organizational design must consider the individual project manager — his style, strengths, and weaknesses.
A project organization requires a project manager with broad general management skills
A matrix organization requires a project manager who is good at interpersonal relations, working across jurisdictional lines, and communication.
Since the matrix organization depends heavily on informal communication, the project manager should know the organization well or have an assistant who does.
Also, a matrix organization requires certain longevity of people in order for them to function well together. A brand-new, rapidly expanding, or high employee-turnover organization might do better with either the project or functional organization structure.
2. Management Styles
The generally recognized management styles are authoritarian, consultative, and participative.
Functional management lends itself to an authoritarian management style. Project management can be authoritarian, consultative, or even participative. Matrix management does not work well with an authoritarian management style, but should probably use consultative or participative· styles.
3. Job Satisfaction
Matrix management offers an increased involvement in projects, a generally more versatile work-experience, an increased opportunity to participate in management, an egalitarian attitude among all levels of employees, and technical support from a functional department. It appears to be particularly suitable for engineers as it matches their personality, training, and experience. For some people, however, the ambiguity can create problems.
Implementation of matrix management requires a major training effort both in project management skills and familiarity with the matrix structure and style.
1. Business Schools can provide either a degree program or courses and seminars of specific interest. Any organization interested in development of itself and its people should encourage people to pursue a business degree. Unfortunately, except for a few specific courses, an MBA program tends to train a man to be a president instead of a project manager.
2. Engineering Schools have started to offer a few courses in project management skills. Portland State University, where I teach part-time, offers one course in engineering project management and this fall we intend to add a course in contracts, specifications, and claims. I suspect that a school in your area offers similar courses.
3. Self Improvement is another good means of training. People can be encouraged to attend seminars or take correspondence courses – often packaged by the various professional societies. A good organization library can also provide an opportunity for those who are eager to advance.
4. In-House Training programs can vary from effective to marginal.
One tool that worked well at the consulting firm where I worked was a weekly brown bag lunch where a firm or outside expert in either technical or managerial subjects would give a talk over the lunch hour to anyone interested in the subject. Good speakers and some management support are needed to make this work. Another effective training tool is a monthly evening meeting of project managers. The firm would provide beer, fried chicken, and a well-prepared discussion on some aspect of project management. The project managers gave up an evening, but everyone really enjoyed it.
5. On-The-Job Training is the most effective training tool–if it consists of more than just dumping a man into a new situation and letting him sink or swim. Although a formal training program with “tours” of the different departments is unnecessary or even undesirable, an informal system of giving new personnel an opportunity to manage a small project while supporting them closely and moving them into ever-increasing responsibility is a very effective tool.
One, if not the biggest advantage, of the matrix structure is the opportunity to offer junior managers a chance to manage small, then ever-larger projects yet give them support (and supervision).
6. Overtraining in project management skills can be a serious problem if the organization does not offer an opportunity to manage and to grow.
F. Directing and Coordinating
Good communication is an essential element of directing and coordinating. This includes oral presentation, individual or small group discussion, technical report writing, and the use of a wide range of reports and other records. All these skills are necessary for good project management with only a few special adaptations for the matrix structure.
A good cost accounting system is essential to matrix management. Costs must be reported by project if the project manager is going to be held accountable. The total cost and income for each project [I1ust also be reported by department if the department head is held accountable for projects assigned to his department.
Costs should be summarized by function or activity (survey, preliminary design, final design, printing, administration) for each project in order for the project-manager to know how his costs compare with his budget. Under each major activity or for the project overall, the costs should also be reported by expense category (telephone, auto, labor) in order for the project manager to take action to maintain costs within the budget.
In addition, the project manager should be able to either identify who expended funds and charged time on a project, or he should receive a sub-report for each department involved in the project so that he can control the costs of people in other departments. Some departments could have a subproject with any under run or overrun directly reflected in the department cost report.
V. The Effect of Matrix Management
Some conflict is inevitable. In fact, some is good for organizational health. Matrix management tends to bring conflict to the surface, especially since most people have two bosses and these bosses sometimes clash. In order to minimize the unpleasant aspects of conflict, a strong sense of teamwork and personal friendships should be encouraged.
B. A Spreading and lowering of Decision Making
Matrix management should result in a decrease in the decisions made by senior management. This should allow them more time for the critical decisions. The matrix structure should prevent decisions from being made on the basis of a parochial department interest.
Decisions will thus be made faster and closer to where they will be implemented
Vertical and especially lateral communication will increase in volume and tend to be more informal
The depth of management skills should substantially increase.
E. Individual Satisfaction
Technical professionals usually perform better in an “organic” environment where they can participate in the management of goals, planning, and production. Generally, these people will be more satisfied under matrix management.
Individuals who want management experience will have greater opportunity to manage themselves and others. Those who are promoted will not have to give up project work when they move into management.
Some people, however, prefer more structure and have difficulty with the ambiguity of matrix management.
F. Leadership Styles
The leadership style will tend to change from authoritarian to participative or consultative. Some managers will have difficulty coping with this.
G. Availability of Manager’s Technical Expertise
The best people will not be “lost to projects” when they move up to “administration”. Instead, the administrative duties should be lighter and more time should be available for project work—either as a project manager or at least on a consultative basis.
H. Organizational Effectiveness
Under the right circumstances and with the right implementation, matrix organization can substantially improve organizational effectiveness by balancing the needs of the organization and people with the needs of the projects.
I. Organizational Development
Implementation of matrix management can serve as a vehicle for extensive organizational development.
J. Control of Costs and Schedules
Better project management techniques under either a matrix structure or a separate projects structure should substantially improve the control of project costs and schedules.
K. Technical Quality of Work Product
I suspect that many design errors and obsolete design practices can be traced to poor management practices. Improvements in management techniques should, therefore, lead to improved design work.
In conclusion, full-scale matrix management (organizational structure, management practices and employee attitudes) may offer significant advantages over functional management for larger organizations. All organizations, however, no matter how small, should benefit from the use of project management in a limited matrix.