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4 Tips for Performance Management in Matrix Style Organizations

Claire Beveridge

Running a matrix management structure and feel like your performance management could use a boost? Unfortunately, there’s never one clear answer to improving employee performance, and a matrix structure is often confusing. 

But by understanding the challenges of running a matrix organization and following our recommendations for better performance management, you and your employees will feel more aligned, connected, and functional.

What is a matrix management structure?

A matrix management structure is an organizational structure where employees report to more than one manager and there’s a strong emphasis on cross-functional teams and collaboration.

In matrix organizations, the chain of command is segmented into two lanes, and an employee reports to two separate managers who are equally as responsible for performance. Usually, one manager is in an administrative function such as finance, HR, information technology, sales, or marketing. The other works in a business unit related to a product, service, customer, or geography. 

Matrix structures contrast hierarchical models where business control is centralized, and employees report to one manager who is in a single-lane chain of command. This type of structure is modeled after the military and can often create silos around products, regions, departments, and customers.

Challenges of matrix management structure

A matrix organizational structure allows businesses to collaborate between different departments easily, operate more agilely, improve team communication, and upskill employees. Additionally, because equipment and employees are shared across projects, the matrix structure means resources are used more efficiently. 

However, numerous challenges operating in a cross-functional, matrix-style structure can bring to a company.

Managing multiple reporting relationships

In a matrix organization, employees will have multiple managers who are equally responsible for different aspects of their work. This can make it difficult to establish clear lines of communication and accountability, which can impact performance management.

Conflicting priorities and goals

With multiple reporting relationships, employees receive conflicting priorities and goals from different managers. This can lead to confusion and frustration, making managing and measuring performance challenging.

Identifying and measuring performance

It can be difficult to identify and measure performance in a matrix organization, especially if employees are working on multiple projects or teams. In addition, without clear performance metrics, it can be tricky to evaluate individual performance accurately.

Lack of visibility

Managers may have limited visibility into the work that employees are doing for other teams or departments, making it difficult to evaluate performance.

Ensuring consistency

With multiple managers, ensuring consistency in performance management practices across the organization can be challenging. This can lead to confusion and frustration among employees, which can impact performance and employee engagement.

Providing feedback

Providing timely and effective feedback can be challenging in a matrix organization, particularly if employees work remotely or across different time zones.

Four tips to improve performance management in matrix-style organizations

1. Align goals and objectives

Research by McKinsey found that only a small percentage of matrixed employees are clear about their goals, compared to 60% of employees in a more traditional organizational structure. Unclear responsibilities can impact job performance, employee satisfaction and create bottlenecks, with McKinsey stating that “clear and accountable roles are among the most important drivers of organizational health.”

To counter this, leaders need to focus on creating clear goals that are specific, actionable, achievable, and time-bound, which helps employees have a clear understanding of their responsibilities. Additionally, goals need to be measured (which is made easy with one centralized system for performance management), so employee progress can be monitored and assessed.

Tracking and managing goals and OKRs is simple with Focus, where each employee can set goals, track progress, and take actions to achieve them regardless of reporting structure.

It is important for everyone to have visibility into each other‘s priorities to provide clarity and transparency as well as being able to update those goals within the flow of work.

2. Implement continuous and effective performance feedback

A matrix-style structure means employees often work on various projects and juggle multiple tasks for different teams while reporting to two different managers. A situation like this makes it difficult for managers and leaders to measure employee performance. For the employee, it can be challenging to understand who they should report to and who’s accountable for their performance.

One proven way to provide valuable continuous feedback is through effective 1-on-1s. In 15Five you can have recurring 1-on-1 agendas with multiple colleagues, regardless of role or level. For example, if an employee has two managers who she reports to for different projects there is a clear and streamlined way to organize talking points, action items, and next steps on a regular basis.

Now both the managers and the employees feel equipped to focus on the right things which drives higher levels of performance and engagement.

Regular, asynchronous check-ins are also crucial for matrix-style organizations in order for teams to stay aligned and monitor progress to multiple initiatives all while saving time avoiding hours of meetings per week.

When performance feedback is used effectively, it has the ability to grow and develop employees and retain them for the long haul, improve trust and communication, and strengthen bonds between employees and managers. 

3. Conduct 360 degree reviews

To ensure that feedback is impactful in a matrix-style structure, leaders need to adopt a 360 model that takes the sole responsibility of feedback away from one manager and leans on peer reviews and upward and downward feedback to help form a bigger-picture assessment of the employee. Self, Manager, Peer, and/or Upward reviews are a great way to assess performance holistically.

You can also reduce bias in your review process by assessing competencies by role and allowing multiple managers to review a single employee.

In a matrix style organization you likely have several managers who need to provide feedback and have visibility into the performance of your employees. Within 15Five it is easy to add additional managers to a performance review cycle for your employees, so that no matter how the reporting is structured you get a complete picture of performance in a fair and efficient way. If teams and roles change frequently you can also have flexibility by assigning some reviewers as default managers and others for only certain review cycles.

A huge benefit of 360 reviews is to help identify developmental needs at an individual and organizational level. This generates common themes that the employee can use for growth and development while ensuring that employees who change departments or job roles access continuous development across the organization.

4. Create clear communication guidelines

In a matrix organization, there’s confusion about roles and responsibilities due to employees reporting to more than one manager. As discussed, this leads to confusion and uncertainty about expectations. Without communication guidelines, employees run the risk of operating in a silo and opening up avenues for confusion and conflict — and no manager wants to end up caught in the middle playing referee. 

To solve this problem, companies need to create and implement clear communication guidelines that enable employees to easily understand who they need to turn to for guidance, how to reach this person best, how they’ll work with each manager, the frequency of 1-on-1s and what’s expected in those conversations, and how employee progress will be measured and documented — which usually occurs in a performance management system that allows for dual input.

In addition to regular check-ins and 1-on-1s being a core part of strengthening the manager-employee relationship, at 15Five we start every employee-manager relationship with a Best Self Kick Off to ensure psychological safety.

The benefit for matrix-style organizations is you can run these meetings as frequently as you wish and document important things like work style, strengths, communication preferences, and more.

When asked about the benefits of being on different teams, research by McKinsey found that supermatrixed employees were twice as likely as slightly matrixed ones to say that their organizations not only helped them collaborate more effectively with coworkers, do their best work, and serve customers well but also stimulated bottom-up innovation. 

With cross-functional collaboration a key goal of matrixed organizations, it’s even more important to ensure communication clarity as teams focus on problem-solving while working across different departments. 

By utilizing performance management software that provides a one-stop platform to conduct one-to-ones and check-ins, track and manage OKRs, and boasts an additional manage features for fully-aligned performance reviews, managing employees in a matrix-style organization becomes streamlined and effective. Sign up to a 15Five free trial to get started.