What is a matrix organisation?
A matrix organization is one in which people may have multiple reporting lines and multiple relationships. So it may be an across a business line and then a geographic one, or a business line and a functional one. So for example, a finance person who is supporting a particular business reports to that business and then reports back to the CFO organization. This idea is to create a structure that provides checks and balances, if you will, to make sure that there is complex thinking around decisions, from multiple angles. So in the example I just gave, the business line finance person is the one closest to the situation so they have some expertise about that. The business line though, has some expertise around what is needed for the overall running of that business and how the decisions from finance interact with that. And then, the CFO though, has a bird’s eye view over the financial situation of the entire organization, not just that particular business line. So those two things can hopefully influence and help the business finance person come to the best decision for everyone.
What are the main challenges in making this kind of organisation work?
I think that organizations are inherently political. And so, in an ideal world, those three entities: the business finance, the business, and the CFO, are all having a conversation about what is the best outcome. But the reality is that the business wants what it wants. The CFO may want what it wants, and the business finance person or group is caught in the middle and must try to navigate a tricky political situation to come to the best outcome: to try to please both parties. Which is not necessarily the best outcome for everybody involved.
How does leading with soul play a role?
I think one of the key tenants of leading with soul… is empathy. And I think one of the key attributes of leading with empathy is listening. I think a matrix organization works very well if people are actively listening. There is the reason why that we have them situated throughout the company. They are the experts in those view of the organization than everybody else and so as we listen to them, it can help us make more effective decisions. What I think often happens is people enter these relationships and conversations with agendas, and they do a lot of talking about their agenda, but not necessarily a lot of listening.
Clearly people need strong empathy skills, people who are intellectually curious and then people who are bridge-makers, so to speak. I had an experience where I was working in Toshiba headquarters in Japan, and they were facing the challenge of putting together teams, as they were building a semiconductor factory in Thailand. They had a local Thai HR person and then brought in someone else from Japan as their manager. But people were leaving the organization. Turnover was about 33% and they were having a lot of difficulty really getting off the ground.
The Thai person and the Japanese ex-pat didn’t seem to be communicating very well. I was sent down to help them with the project. I asked the local Thai HR person to take me to his favourite restaurant. I found out that the Japanese person always insisted on them going to a Japanese restaurant. And so, we went to a quite different part of town and then I started to ask questions about, “Okay, what are commutes like? What are this or that like?” And then we began to get at the root of some of the problems. And he started to open up about some of the difficulties of Thai people working for Japanese companies.
And we started to get to the real root of the problem. He clearly had expertise that he was not sharing with his Japanese ex-pat boss, because he had not been made to feel comfortable. His boss had not taken an interest in understanding the culture that he was working in or understanding of the situation. Just simply, “Hey, these numbers are un-acceptable, and we have to do something about it.”
Do you think there’s a role for organizations to be actively developing skills like this, or should we just be looking for people who do this naturally?
No question that I think this kind of thing can be cultivated and so, one of the things that I did, leaving Toshiba, I joined Merrill Lynch, and now I was on the opposite end. I was the American ex-pat working in Japan. And then I would have the US headquarters people either putting pressure on us or making decisions that were not very well informed. And so, I tried to cultivate some of the things I had learned at Toshiba. So, for one, I didn’t want to be that ugly ex-pat who only eats at American or Western restaurants. I should try to integrate with the culture, integrate with the locals and then go around and teach my other ex-pat colleagues to do the same.
That’s a good lead to a second thing that I think is crucial in matrix organizations and a way to cultivate it: pragmatism. There isn’t always just one way to the answer. And sometimes you just need to reframe things, understand your stakeholders and their agendas, and then reframe something so that it’s more obviously meeting their needs.
So, in a matrix organization, you’re working a lot with building alliances with people, aren’t you?
Absolutely. Yes, it’s a lot of relationship building and the people who navigate matrix organizations the best are those who do some form of stakeholder analysis, and with very skillful people it’s intuitive. And they serve all these different masters by getting them what they want, all the while getting the overall objective through. And we talk a lot about emotional competence. I think that political competence is something that’s going to take on even greater importance, particularly in fragmented matrix organizations and fragmented is where we are today in many cases. So, I can’t, in the pandemic, for example, even if I’m working at headquarters, just pop down the hall and stick my head into somebody’s office and say, “Hey, I just need to make sure we’re on the same page.”
It’s much more difficult for people to navigate organizations right now because the interactions are very scheduled and formal. Obviously, you can text or email, but even then, the body language is not helping you elicit whatever information you need.
As we move into this hybrid world, what are the challenges for talent management and talent development that we’re going to be coming up against?
So, this is something, again, to an earlier point, I think was already happening before the pandemic. We very often refer to it as the future of work. But I think the future is here. And whether it’s the remote aspect of our work or the fact that machines and artificial intelligence are entering into the workplace more and more. I think that the components of work are changing. And so, this is some work we started to do it at Oppenheimer Funds, which dictated a lot of our talent strategy and our development work. So, if you break down the components of work into IQ, EQ, PQ and CQ. So, PQ is political competence, CQ is contextual competence. So, everybody pretty much, I think knows IQ and EQ.
So political competence is just like we’ve been discussing. Your ability to navigate the organization, your ability to influence others of your ideas. CQ is contextual intelligence and I hope this analogy works in England; it works in America. But you were in America, so… If you come to an intersection and there’s an eight-sided red sign with the letters, S and P, your contextual context is going to tell you that that’s probably a stop sign, and that the T and the O have fallen off.
Artificial intelligence can’t do that, right? A driverless car coming to that intersection will stop if it sees a stop sign, but if it sees 80% of a stop sign, it’s not going to stop. That’s still the advantage that we have over machines. So, a lot of our education, a lot of our development of high potentials is all around the IQ piece. But our work is moving into the EQ, PQ and CQ components of work. And more and more, the IQ piece will be done by machines. So, traditional education might teach, “What was the year John Kennedy was shot?” “Okay, that’s a multiple-choice question because that’s something I have to memorize for general knowledge.”
Nowadays, you can have that answer in five seconds. “Hey Siri, when was John F. Kennedy shot?” Right? So, education really needs to be in the other three components. And that’s how we’re going to add value to work and to organizations, teaching people to have empathy, teaching people how to influence others and teaching people to improve their contextual competence. And you can do that through helping people become lifelong learners and making sure that people have a broad understanding of many different things. That being a specialist on something is probably a way to get yourself disrupted out of the workforce because that specialty will eventually get replaced by technology.