Bundling competences through matrix organisation

Groups of companies with several operationally active line organizations tend to bundle their functional competencies without relinquishing location responsibility. One such possibility is offered by the form of matrix organization that came into vogue in the 1990s. Properly implemented, a matrix organization can bring business groups together and unlock benefits. But matrix organizations can also do a lot wrong and achieve exactly the opposite. Therefore, they should be used with great care.

If the specialist competencies (marketing, logistics, product development, human resources management, financial management, etc.) are bundled into support units and local responsibility for results is retained, a matrix can boost business. If the specialist competencies become the decisive “verticals”, the local business is likely to be weakened because both the scope for action by local management is restricted and silo thinking is reinforced. In a matrix organization, therefore, define the powers of local management and communication at the process interfaces particularly carefully. The point here is to unlock the benefits in an ambiguous organization through a both/and approach. In doing so, do not underestimate the influences from the previous corporate culture or personal sensitivities that resonate subliminally and can prevent the advantages of a matrix organization from taking effect.


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