23rd May 2013
Assignment submitted to

GROUP II

ASSESSMENT OF LINKAGE BETWEEN STRUCTURE & PERFORMANCE

Group Members
Sonal Zade Jayeeta D’Souza Bipul Sharma Rohit Kedare Rajneesh Malik Nitin Amin – Roll No. 32 – Roll No. 08 – Roll No. 02 – Roll No. 26 – Roll No. 20 – Roll No. 14 – IBM – Capita – HUL – H J Heinz – Zynga – WNS

1. Introduction 2. Case on Formation of Autonomous Work Groups at Hindustan Unilever Limited 3. Case on Adaptability, Discipline & Innovation in Structure at H J Heinz Company 4. Case on Job Architecture and Performance at WNS Global Services 5. Case on Impact of structural change and Ventura grades at Capita India 6. Case on structural linkage with performance at Zynga (Online Gaming) 7. Case on matrix structure linkage with performance at IBM

3 3 5 8 11 13 16

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Introduction
We have undertaken studies in our companies to understand the correlation between structure and performance. We have made an attempt to disintegrate the level of complexity in the structures and what impact it exercises on the output or performance. We have explored the above subject keeping in mind that the important variables while dealing with organisation structure are – formalization (rules, routines), centralization (hierarchy, use of authority, verticality), control systems (span of control), coupling and structural embeddedness and specialization (role clarity).

Case 1 - The Hindustan Unilever Experience
By the end of year 2010, Hindustan Unilever Limited erstwhile Hindustan Lever Limited considered safely as largest FMCG company of India was faced by a dilemma, the market was becoming highly dynamic specially demand for some of its flagship products like Vim and Rin with forecast struggling to exceed 50-60% accuracy levels thus leading to a staggeringly high inventory due to production-sales mismatch. HUL in its existence for last 78 years had not faced such situation in any of its categories like the foods, personal care and Home Care and had grown into a large conglomerate with a complex structure of organisation, standard operating processes, high role differentiations etc often surfaced in discourses like we are the best and we know the best, nothing which was “not invented here” seems practically implementable and not even considered. A legacy we found that we were not willing to shed off. However, the essence of Company was to survive in a difficult environment and the challenge percolated down to us operating in a lead site manufacturing the above products and more having more than 10 different variants. We had a set of 8 assembly lines called cascades which could make only single product variant at a given time and a changeover to another variant would normally take more than 8 hours which involved immense coordination between maintenance, production and supply management departments normally led by the Shift Officer – the incharge. The plant operated in shifts and each shift had a large group of workers of about 60-80 reporting to a single Officer. Officer was the source of all instructions for all parameters of production and scheduling changeovers & maintenance activity. The plans were received on a weekly basis and the Shift Officer was accountable to deliver the same. Being an FMCG company volumes were very high with immense stress on the Officer and workmen, and the changing dynamics had further fuelled stress in the workforce. As the market became dynamic, the Central Planning department realized the inventory pile up and resorted to dynamic planning, which involved plan changes for every shift. This was not only a change demanded on machines but a change in our perception as none of us were exposed to such unthinkable challenge and serious doubts cast over its success in such high volume environment. When discussed with the workers, an obvious discourse of “never tried before and shall not work here” flowed in the group with elements of suspicion on continuity of production ensued.

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However, we discussed the issue in quality circle with the workmen and what emerged were series of suggestions culminated into three themes - Flexibility, Connectedness and Empowerment. Flexibility: The original patriarchal structure was under severe question owing to large complexities and dynamism engaged in the new scenario and a new structure very close to autonomous work team evolved where the workmen was assigned end to end responsibility for a six different roles like managing packing materials availability, ensuring quick changeovers, plan compliance, autonomous maintenance (Jisu Hozen) , safety etc in their groups. The function of officer was changed from controller to facilitator and was expected to intervene only when asked for.

Connectedness: The workmen gained access to information in advance so that they could plan how and what they had to deliver. The production and quality performance charts were changed to real time and made available on the shop floor. A distinct evidence of enhanced connectedness was the pattern of communication which migrated from just being monologue between officer and workmen to interactions between workmen and workmen and that of officer as a change agent. A rule broken for the good and thus discourses gradually aligned to the variables of new structure with increased usage of language closer to the business. We also planned for workmen to engage within shifts so that knowledge / plan transfer for the shift would take place seamlessly and leave less space for network holes. Empowerment: With changes came dilution of authority which erstwhile rested in the office of officer. The workmen now had the opportunity to directly engage with other department, get work done through others and also question the work done by his colleagues which often ended up stopping the machine due to quality issues unless same were corrected. Another well exercise discourse around “nothing happens here .. no one listens to our suggestions” found its way out of the factory premises as now the ownership and budget for identifying the implementable suggestion was with the team. Moreover, the team’s goals were structured on 3 +1 patterns akin to Officers & Managers to introduce direct linkage. The above not only called for penetration into the workmen structures but also of the entire hierarchy and resulted in changes in the job descriptions from being transactional to strategic. What we observed was as the structure was flattened and simplified, there was an initial lowering of performance which was attributed to effect of reorientation and was followed by gradual increase in efficiency of plan compliance which impacted an important metric of On Shelf Availability of product which has been operating close to 90% or what we consider good with the given infrastructure. However, from a Human Resources point of view, the dominant logic that workmen were just doers was put to serious question as they emerged as thinkers and had their share of participating in the business strategy, though in a miniscule manner. Page 4 of 18

Case 2 – H J HEINZ COMPANY
A World of Good Food
The H.J. Heinz Company, headquartered in Pittsburgh, Pennsylvania, is the most global of all U.S.-based food companies. Famous for our iconic brands on six continents, Heinz provides delicious, nutritious and convenient foods for families in 200 countries around the world. In more than 50 of those countries, we enjoy the number-one or number-two market position.

The First Name Ketchup
Throughout the world, Heinz is synonymous with ketchup. We sell 650 million bottles of Heinz ketchup every year and approximately two single-serve packets of ketchup for every man, woman and child on the planet. For millions of families the world over, “if it isn’t Heinz, it isn’t ketchup.”

The Good Food Company
Beyond ketchup, Heinz also markets an ever-expanding selection of other g reat tasting foods. Our core products include ketchup, sauces, meals, snacks, and infant/nutrition. Among them are our 15 Power Brands, which comprise approximately 70% of our global sales. In short, Heinz is committed to enriching your family’s eating experience, whether you’re at home, dining out, or “on the go!”

Satisfying Tastes and Appetites around the World
At any given moment, on any given continent, the 32,000 employees of Heinz are hard at work...creating new products, perfecting fresh ideas, and developing nutritious and innovative foods for today's families. Heinz is a trusted name for consumers, a valued partner in the community, and a great investment with tremendous growth potential.

HEINZ INDIA
Heinz came to India in 1994 by taking over the Family Products Division of Glaxo with powerful brands such as Complan, Glucon-D, Nycil and Sampriti. Heinz India is fully integrated into the global Heinz operations employing high standards in quality at its state-of-theart manufacturing facility at Aligarh in the State of Uttar Pradesh and at Sitarganj in Uttaranchal. Heinz products synergize the three pillars of the Heinz tradition namely TRUST, TASTE & NUTRITION. “Today, iconic brands like Complan & Heinz and category leaders like Glucon D & Nycil are being nurtured with a combination of formulation and flavor up-gradation, packaging innovations and new positioning strategies with strong equity quotients.”

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The scope of the study on the linkage between Structure and Performance is mainly on the context of Heinz India Operations. The flagship product for Heinz India is ‘COMPLAN’ which contributes almost 70% of the total sales to the Indian operation. In 1994 when Heinz acquired the Glaxo Food Division (now Glaxo Smith Kline) the biggest challenge was to maintain the power image of the brands like ‘Complan’, ‘Glucon D’ & ‘Nycil’. The FMCG as industry was at the booming stage in the early 2000s. The competition in the FMCG sector has raised at 15% growth year on year. The war for survival of the fittest started among most of the big FMCG players.

ORGANIZATION STRUCTURE:
In early 2000s the organization structure at Heinz India was centralized where all the planning and decision making was controlled at Head Office (India) which also controlled the branch offices across regions and factories. The structural type was “Functional” where Employees within the functional divisions of Heinz tend to perform a specialized set of tasks, for instance the sales department was staffed only with employees having knowledge in sales distribution. This lead to operational efficiencies within the group. However it also lead to lack of communication between the functional groups within the organization, making the organization slow and inflexible. As a whole, being a functional organization structure we were best suited as a producer of standardized goods and services at large volume and low cost. Coordination and specialization of tasks were centralized in such a functional structure, which made producing a limited amount of products or services efficient and predictable. Moreover, efficiencies were further realized as it integrated activities vertically so that products were sold and distributed quickly and at low cost. But as the FMCG competition was not in the favour of managing the game at lower cost and producing higher sales numbers, but was competing with the methodology of high risk and high returns. For Instance “Aggressive Competition”: The advertising war between two popular health drink brands Horlicks and Complan in India was very well observed. The war for supremacy between these two brands started as early as in 1960s and had continued ever since. Over the years, the brands were involved in aggressive comparative advertising in print and television over attributes such as ingredients, protein content, growth, and flavors. However, in late 2008, the makers of Horlicks, GlaxoSmithKline Consumer Healthcare (GSK), and the makers of Complan we Heinz India (Heinz), came out with advertisements that directly compared the brands using the competitor brand's trademarks. Industry observers felt that in their bid to outdo each other, the two companies had ended up denigrating the competitor brand. In short this was the aggression on the grounds of how much you spend on reach out to your audience by the means of advertisement which indirectly influence the buying behaviour of the consumer.

As Heinz India was operating under the functional structure which provided inflexibility in decision making and process orientation was also heavy challenged and paralyzed the entire system which resulted in the high turnaround time in decision making. The impact of the same was observed as stagnant growth in the period of 2000 to 2004 where Complan had heavily lost its market share. Page 6 of 18

Time to Change the Structure (Year 2004):
As the FMCG competition was roaring and was at full acceleration, it was time for us (Heinz) to revamp our organization structure. The structure was made “Decentralized” i.e. The Matrix Structure. The Heinz India - Head Offices acted as administrative authority whereas the process orientation, controlling and decision making was made decentralized for all the 4 Branches (North, East, West, South) and 2 Factories (Aligarh and Sitraganj). Now, the activates were formulated and executed at the locations with easy and in a time effective manner. It was observed that the Matrix Structure has improved productivity, turnaround time, cost efficiency, administration, and communication among the team located in all 4 branches and factories.

PERFOMANCE:
As the structural change management was engineered at Heinz in 2004, the productivity has immensely improved year on year with an average growth of 20%.

10.6 8.0
New products* % of total sales

11.0 305

6.9
26.4%

6.9
27.1% 5.5%

200
Total sales Growth %, Value in MM

0.8
4.5%

1.4
12.6%

3.1

2.3
13.4%

1.5
19.3% 20.1%

235

249

13.6%

185

0

71
FY04

79
FY05

90
FY06

102
FY07

123
FY08

146

FY09

FY10

FY11

FY12

FY13AOPP

The branches started operating by appointing their decentralized vendors and agents, which bought a cost control mechanism. Each location designed a timely review formats (weekly, biweekly, monthly, quarterly) of the sales achievements in line with the actual AOP (annual operating plan) of Head Office. The employee efficiency building models were designed in coordination with the Human Resource team as the review formats have given a fair idea the performing employees and the employees who need pointers for improvement. This has also enabled effectively in the R&R (reward & recognition) programs as the performers were clearly identified. As the R&R program was regulated on monthly, quarterly, half yearly and annual basis the teams were highly motivated and engaged. The highly engaged teams have also influenced on the attrition control mechanism which help to keep employee turnaround on the lower end.

CONCLUSION:
To conclude with Heinz India had inculcated a model of Adaptability – i.e. adapting to the external environment, Discipline – designing and adhering to the review formats and mechanism, and Innovation – i.e. bought innovations in the context of competitor’s strategy. Hence this is how the entire case focuses light on the linkage between organization structure and performance which in the case of Heinz India was replacing the Functional Structure with the Matrix Structure Mode. Till today the tag line of H J Heinz remains the same Good Food Everyday Page 7 of 18

Case 3 - WNS Global Services Pvt Ltd

WNS (Holdings) Limited (NYSE: WNS), is a leading global business process outsourcing company. WNS offers business value to 200+ global clients by combining operational excellence with deep domain expertise in key industry verticals, including Travel, Insurance, Banking and Financial Services, Manufacturing, Retail and Consumer Packaged Goods, Shipping and Logistics, Healthcare and Utilities. WNS delivers an entire spectrum of business process outsourcing services such as finance and accounting, customer care, technology solutions, research and analytics and industry-specific back-office and front-office processes. WNS has over 25,000 professionals across 31 delivery centers worldwide, including China, Costa Rica, India, the Philippines, Poland, Romania, South Africa, Sri Lanka, UK and US.

Structural Change
WNS started its operations in India in 1996 as an in house unit of British Airways. WNS started focusing on providing business process outsourcing to third parties in 2003. WNS went public in 2006. Since 1996 WNS did not change the organizational structure until 2012. Around mid of 2011 WNS felt the need of a strong structure with clear understanding of job roles & responsibilities along with a corresponding pay bands. The contract was given to Aon Hewitt to analyze the situation and change the job architecture. WNS being a leading outsourcing company had to concentrate more on productivity and profit to be in the competition. Aon Hewitt found out that WNS had multiple levels of reporting which were not required and also roles were not clearly defined thereby impacting performance and hampering the productivity. They came up with the structure which was very well defined as the requirement was to create a performance-oriented culture.

Following was the Organization Structure:

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Following observations were noted      Overall 257 designations/ titles exist within WNS across 21000+ employees globally. Title Inflation and Role-Title Mismatch is one of the major challenges identified within WNS across different BUs. Anomalies were identified in terms of years of experience, span of control and designations across same levels in different BUs. Conflicts in career progression were observed and need was felt for well-defined career roles which provide clarity & facilitate growth within the organization. The understanding of the WNS Operating Structure was found to be inconsistent across BUs. Consequently, conflicts and lack of clarity in the roles and responsibilities were observed for individual incumbents.

Job Architecture
Based on the above observations the job architect was designed.         Entire organization will fall into 5 Broad Based Career Bands These 5 broad based career bands are split into 9 Role Bands These 9 role bands will tie up to 13 Pay Bands For 80% of the population Role bands will directly co-relate to pay bands 4 Broad Based Job Families identified These tie up to 11 Sub-Job Families The total number of designations will collapse to 41 (as against 257) 90% of the designations will be directly identifiable with roles people are performing (5-10% variance for outliers)

Career Bands Executive Officer Business Manager Manager

Role Bands X F E D C-I C - II B-I B - II

Pay Bands L13 L12 L11 L10 L9 L8 L7 L6 L5 L4 L3 L2 L1

Professional

A

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Linkage between Structure & Performance
The following graph clearly shows the linkage between structure and performance using the earnings per quarter before and after the structural was done.
Performance Revenue (in $millions), Dec15, 117.23 Revenue (in $millions), Mar16, 113.3 Revenue (in $millions), Jun16, 107.81 Revenue (in $millions), Dec16, 120.17 (in Revenue $millions), Mar17, 119.2 Dec-15 Revenue (in Jan-16 $millions), SepFeb-16 16, 113.08 Mar-16 Apr-16 May-16

Revenue (in $ millions)

Span

As mentioned in the paper Optimal Structure and Market Dynamism by Jason P. Davis, Kathleen M. Eisenhardt and Christopher B. Bingham, the above situation goes along with the first fundamental argument derived from various literatures talking about how the amount of organizational structure shapes performance in dynamic environment. The above example clearly shows that there’s an inverted U-shaped relationship between the amount of structure and performance. It’s very soon to say that the relationship will always be an inverted U-shaped as we cannot rule out the possibility that in the future the situation and challenges may be different. As pointed out in the second theory based on the fundamental arguments that organizations with too much structure are too inflexible and organizations with too little structure are too inefficient. We need to consider key factors like limited attention and time delays as less structure enables flexible improvisation which is attention-consuming and mistake-prone process. WNS need to consider all the factors and take necessary steps to enable a favourable environment for the organization which would ensure that performance has an upward trend.

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Case 4 – CAPITA INDIA
Who we are We are the UK’s leading customer and business process management (BPM) company. We deliver back office administration and front office customer contact services to private and public sector organisations across the UK and Ireland. We deliver multiple services to individual clients, and multiple services across multiple markets.

Leading player in customer management and BPM
The demand for our services continues to be driven by the public sector’s need to deliver quality, cost efficient services and the private sector’s requirement to remain competitive and innovative. We focus on meeting the individual needs of our clients and delivering measurable service improvement and value. We have grown consistently over the past nearly 30 years and continually look to new market areas to ensure our long term leading position. The UK customer management and BPM market still generates a wide range of opportunities to fuel our future growth and we continue to influence the shape of the customer management and BPM market, delivering both traditional outsourcing and transformational outsourcing to our clients. In India, we work for 23 clients from our 5 sites across 3 cities (Mumbai, Pune and Bengaluru), most of which are ISO27001 certified. We are Capita’s largest multi-client service center. Our India business includes clients from a diverse range of industries including, Life and Pensions Administration, Commercial Insurance Services, Investor / Shareholder Services, Utilities, Retail, Public Sector, Debt Management and Health services.

The impact of structural changes in the Organization
The company believes in growth largely through acquisitions, being established with the India since 2004, we have grown from a 700 FTE number to 4500 FTE across 8 years, we have since larger mergers and have also sailed through the challenges critically faced embedding a uniform culture to job bands and ensuring that the Organizational structure is well defined. Can share with you a recent acquisition in 2011 year end, this was in the wing of Customer management business and a FTE 1500 integration. This business being the 1st introduction in its unit within Capita we had to align it to the overall Organizational structure looking at defining the right business leader. With this acquisition one of our major concerns were on job banding the current scene • There are a Large number of unique designations at Ventura: 93 • Employees with different designations may have the same grade / level (e.g., a CSA and Team Leader might have the same grade – 1A) • Job descriptions were not in place for all the unique roles listed • The grades did not provide any distinct advantage in either the career-path or compensation related decisions Due to these factors, it made it difficult to do a like-to-like comparison of current Customer Management Business roles with Capita Roles. Hence, the need for Job Evaluation

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Capita has : • • • • Detailed Job descriptions for every role in the organization ‘Grades & Designations’ structure in line with the job descriptions (and linked to a comprehensive job evaluation exercise) This structure also allows for a Career Path to be specified for every grade/ level in the organization

Why was it important for the Ventura grades to be mapped to the Capita structure:
To have a common ‘Grades & Designations’ structure across the organization To make the Career Path applicable to all employees – in all functions, at all levels To provide clarity on the growth methodology and options to every employee across the organization To make it easier for employees to move laterally / vertically: • Within the same function • To a different function • To a different account • Across business verticals – Customer Management, Life & Pensions, Integrated Services, Financial Services Job Evaluation is a proven scientific method used to: • • • Compare different jobs against the same set of factors Rank jobs by assigning scores Group jobs to form Grades/Bands • • • •

Steps involved in Job Evaluation • • • Using the Ventura headcount database, arrive at all unique designations Obtain the Job Descriptions for all the unique roles Studying all the Job descriptions and individual roles (where relevant) to understand the roles and role requirements

This entire exercise enabled us to reduce the 93 existing bands into 6 bands per the Capita structure. Though structurally fit the company faced challenges in keeping self-flexible to handle exceptions on evaluation and increment cycle. This also brought in a huge cultural challenges, HR is hugely involved to arrest challenges and work towards bringing in the cultural change, this meant increase in HR sessions, understand the diversity & complexity of the business and ensuring that talented and skilled resources are recognized and retained through various retention plans.

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Case 5 – ZYNGA (Online Gaming)
Who are we? Zynga is a provider of Social Games, founded in 2007 by Mark Pincus and headquartered in San Francisco, California. Their games are seen on Social Websites (Facebook, Google+, Tencent), Mobile Platforms. Zynga got famous with their game “FARMVILLE” on Facebook and from there on they picked the popularity. Zynga has delivered very popular games like Mafia Wars, City Ville, Draw Something, Zynga Poker, Bingo, Yo Ville etc on Facebook and other platforms. Zynga started operations in Bangalore, India in 2010 with small setup and later went on to purchase five storeys building in Bangalore with a huge plan to hire. At present India headcount stands at 350 employees which is 10% of total Zynga Head Count. Zynga went for an IPO in December 2011 with initial pricing of 10$ and was a $ 4 billion company.

Industry
Social Gaming Industry is very dynamic and requires a good amount of creativity to success and survives for a long time. The life span of a product i.e game here is very small and audience likes to see improvement and innovations in games on weekly basis. Zynga’s Farmville and City Ville were the only games to survive and generate revenue for more than a year whereas other games were able to create impact for maximum of six months.Even after quite a downfall of games, Zynga still holds a position of leading online social games developer.

Monetization Model

Zynga has unique business model and started with only this model- “IN GAME REVENUE” This model is so different and innovative that it leads to several discussions among experts and strategist about its existence. In Game Revenue:- Zynga is supported in two manners: via direct credit card payments and partner businesses. Several Zynga games require an "Energy" characteristic to play. Engaging in "Missions", a core feature of many games, consumes a certain amount of energy. After expending energy, it slowly replenishes to the character's maximum limit. This can take minutes or several hours (energy replenishes whether or not players are logged into the game). After energy is replenished, players can engage in additional missions. Waiting for energy to replenish is a significant limiting factor in the games. Page 13 of 18

Their support mechanisms take advantage of this. Zynga games are linked to offers from a number of partners. Players can accept credit card offers, take surveys or buy services from Zynga's partners in order to obtain game credits, which would allow them to replenish their character's energy or receive premium currency that could be exchanged for other various virtual goods. Players may also purchase game credits directly from Zynga via credit cards or PayPal . From within the game, players can purchase the points for a fee: US$5.00 for 21 game credits, for example. In March 2010 Zynga started selling prepaid cards for virtual currency at more than 12,800 stores across the US Zynga has recently announced a partnership with bwin.party, an international real-money gamin operator to launch real money gaming in the UK, including the release of online poker.

Market Share

ORGANIZATION STRUCTURE:
Zynga follows flat structure and hires on skills and not on experience of an individual which is unlikely for standard organizations. Zynga strives for meritocracy and it’s one of their core values, and has a cultural of levelling up through promotions. And that’s the reason they have appraisal four times in a year, which keeps employees on their toes for performance. This is one of the reasons that Zynga is known for highly competitive and stressful culture, with long hours and relentless tracking of performance. For each game, following is the team distribution:
Business Vertical • • • • • • Engineering & QA Product Management Game Design Production Art Support Function • • • • • • Job Family SE, SSE, PSE, Architect, CTO APM, PM, Sr. PM, Lead PM, GM AGD, GD, Sr. GD, Lead GD AP, Producer, Sr. Producer, Lead Producer Artist, Sr. Artist, Lead Artist, Art Director HR(Recruiter & HRBP)

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PERFORMANCE:As mentioned earlier social games is a very complex and dynamic industry where almost all companies struggle and compete with each other to be on top charts which creates apprehension within the organization and its performance. As a result there have been many ups and down for Zynga, its initial public offering stock price was $10 which reached top high of $14.50 in March 2012, but fell steadily after that point, hitting $ 2.09 in 2012. Some analysts and journalists have questioned the long-term prospects of Zynga’s business model, especially after Zynga’s Q2 2012 earnings report failed to meet analyst projections for revenue and earnings. Zynga has been taking steps to cut expenses and expand its business into areas such as licensed board games, online gambling, and its own gaming platform (Zynga.com) and mobile game apps. Following graph shows the decline of the performance of the Zynga since IPO.

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Case 6 – IBM
Linkage between organization structure and performance with special reference to IBM
There is an implicit relationship between structure of any organization and its performance. The organization may be a Human body, a classroom or even a building interior. Say, for instance, the sitting structure of classroom can be of several types viz. an amphi-theatre class structure, round-table class structure in which all students can have their eye contacts thus enabling an interactive environment or a simple traditional structure in which the teacher stands in front of the all students and everyone is expected to hear only teacher. The same goes with the design of any building. The structure varies with the purpose of building. For example for schools/colleges, the structure would be entirely different from that of any office or a hospital. Hence, structure of any organization is created based on the objective of that organization or the performance expected out of it. Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities such as the branch, department, workgroup and individual. Organizational structure affects organizational action in two big ways. First, it provides the foundation on which standard operating procedures and routines rest. Second, it determines which individuals get to participate in which decision-making processes, and thus to what extent their views shape the organization’s actions.

THE CASE OF IBM:
International Business Machines Corporation, or IBM (NYSE:IBM), is an American multinational technology and consulting corporation, with headquarters in Armonk, New York, United States. IBM manufactures and markets computer hardware and software, and offers infrastructure, hosting and consulting services in areas ranging from mainframe computers to nanotechnology. Its one of those few companies in the world that has witnessed both the world wars. The company was founded in 1911. IBM has 12 research laboratories worldwide and, as of 2013, has held the record for most patents generated by a company for 20 consecutive years. Its employees have garnered five Nobel Prizes, six Turing Awards, ten National Medals of Technology, and five National Medals of Science. Notable inventions by IBM include the automated teller machine (ATM), the floppy disk, the hard disk drive, the magnetic stripe card, there national database, the Universal Product Code (UPC), the financial swap, SABRE airline reservation system, DRAM, and Watson artificial intelligence. The company has undergone several organizational changes since its inception, acquiring companies such as Kenexa (2012) and SPSS (2009) and organizations such as PwC's consulting business (2002), spinning off companies like Lexmark (1991), and selling off product lines like ThinkPad to Lenovo (2005). Apparently, IBM has a very strong legacy of brand and global presence. As per the experts, If a company spends 4% or more on R&D, it will need a strong global business unit head to achieve the global scale and integration to profit from the R&D. Modern organizations require new structural forms to cope with uncertainties arising from the challenges of global competition and rapid technological and environmental changes. One of the most important developments in the area of planned change has been on how to work with large systems so as to initiate and sustain change over time. It was from such contexts that the matrix concept emerged. During the 1950s the term matrix emerged in the United States aerospace industry and, as it has developed through the years, the term has come to be accepted in both business and academic circles. In the 1960s the matrix was sought as a fundamental alternative for dealing with unique management problems of coordination, communication and control. Page 16 of 18

Matrix management is a type of organizational management in which people with similar skills are pooled for work assignments. For example, all engineers may be in one engineering department and report to an engineering manager, but these same engineers may be assigned to different projects and report to a different engineering manager or a project manager while working on that project. Therefore, each engineer may have to work under several managers to get his job done.

For example, all the employees having expertise and experience in Web sphere technology comes into AIS horizontal but they are vertically aligned to a particular assignment like Barclays or Air India or JP Morgan bank. It may be possible that same employee can be assigned as SME for some fixed time to some foreign health insurance client like BCBSMN in the US. In this case, the employee would be reporting to his horizontal head, vertical head and project head of BCBSMN. When depicted on paper, this crossing of organizational lines is easily be represented by a grid of a matrix; Hence, the term Matrix Organization was created. The matrix structure is often used where the need for strong technical assistance across many areas is required. It is still particularly popular in the big and complex organizations.

Pros & Cons
The advantages of a matrix include: Individuals can be chosen according to the needs of the project The use of a project team that is dynamic and able to view problems in a different way as specialists have been brought together in a new environment 3. Project managers are directly responsible for completing the project within a specific deadline and budget 4. It avoids the partiality and favoritism in appraisal as if one manager indulges in biased appraisal, the other manager can give his better judgment
1. 2.

Whilst the disadvantages include:
5. 6. 7.

A conflict of loyalty between line managers and project managers over the allocation of resources Projects can be difficult to monitor if teams have a lot of independence Costs can be increased if more managers (i.e. project managers) are created through the use of project teams Page 17 of 18

Challenges: While it may have been a fad to some, organizations saw the matrix as a way to resolve the classic structural issue of centralization or decentralization of resources to optimize productivity. However, the matrix organization required a different way of leading and managing – and many companies simply did not lay the necessary groundwork to ensure the success of the matrix. Adopting a matrix structure requires a collaborative organization form, proper power, and accountability distribution, complementing changes to the information systems, planning and budgeting process, the performance evaluation and bonus system, and so on. Define roles and responsibilities up front. In a matrix, as well as with many of today’s teams, there are at least two sets of roles that are important to define: the matrix leader who is reporting to at least two bosses (one is the functional boss – the boss to whom he/she ordinarily reports to, and the other is the matrix boss), and the two bosses themselves. It is often observed that an employee gets confused as to whom to follow as sometimes there is conflict in opinions of two bosses. Absence of clarity of line of actions diminishes the performance of employees and the organization in long run. This also slows down the decision-making within the organization as both managers may have different views for certain thing. Matrix organizations feature exactly the opposite characteristics, which results in a high degree of complexity, unclear decision paths, unproductive agreement processes, and most worrisome, nontransparent responsibilities. Conflicts of competence are preprogrammed, and it is not clear who is responsible for successes and failures. Hence, leaders must have Influence and conflict management capabilities, empathy to help them to build consensus cross-divisional, international teams over whom they have little formal authority. Few suggestions for effective functioning and high performance in a matrix driven organization are: Managers in a matrix organization have to be extremely effective at making decisions Managers/bosses should regularly communicate and update each other on decisions taken and other key organizational matters that impact the group, the process or the product they are accountable for 3. Working in a matrix structure provides opportunities for resource sharing and skill building. It allows members to develop interpersonal communication, and collaborative skills 4. Each manager's expectations of the subordinate should be clearly communicated to the employee and to each other 5. Clarity in reporting structure per se subordinate should know whom to go to for what
1. 2.

The power structure in the matrix need not be balanced. Concentration of power at a particular location for a resource should be avoided by various means like rotation or knowledge transfer sessions

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