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In general, we have observed that international companies that choose to use a matrix organization in China struggle to get their organizations up to speed for a much longer period than companies that use a functional structure. A matrix organization has no clear hierarchical structure and defined responsibilities as a functional organization has. A matrix organization can take different approaches when dividing responsibilities and one of the most common approaches is project orientation.

A project-oriented organization has line managers and project managers. Some responsibilities are clearly defined but in other areas, who is responsible for what depends on the situation. This is usually very confusing for employees and managers in the beginning. Further this is not a common way to organizing companies in China. The educational system in China is therefore not preparing student for working in matrix organizations, there is simply no need for this. Another factor that slows down the implementation is that employees in general do not feel permitted to freely discuss their work, challenges faced and potential problems with managers from other departments or employees outside their team, department or group.

When the hierarchical structure is unclear, information does not flow as easily among teams and between people. As a matter of fact, some employees feel very uncomfortable and uncertain on how to be professional in a matrix organization and cannot perform at all as a result. The inability to approach, inform, ask questions and speak freely within the organization strongly hampers the development of synergies in the matrix organization in China.

I have noticed that those companies who are successful in establishing a matrix organization are either small or very big-sized companies. The reason is that staff in small companies usually has broader job descriptions. This naturally allows interaction between staff and makes it easier to implement a matrix structure. Big companies succeed because they have a “critical mass” of employees; if one quits or changes role others can quickly take over since it is a “self-learning” organization. I also noticed that process-oriented companies have an advantage in getting a matrix organization up to speed.

My conclusion is that it is much more challenging to run a matrix organization in China as compared to most Western countries. It will take a whole lot more of adaptation from the employees to feel comfortable in this kind of structure. This can be achieved with patience, preparation and some specialized training. Due to the challenges when implementing a matrix organization, I recommend this structure only when no other option is available and only when the organization is prepared for it.

- Peter J Karlsson