UK: Heller on management - Matrix management muddles. (1 of 2)

UK: Heller on management - Matrix management muddles. (1 of 2) - Robert Heller looks critically at matrix-style organisations where senior executives spend time with each other instead of where the action is.

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Last Updated: 31 Aug 2010

Robert Heller looks critically at matrix-style organisations where senior executives spend time with each other instead of where the action is.

Inattention by top management is a dangerously expensive pastime: just ask Sir Derrick Holden-Brown and his fellow directors at Allied-Lyons, whose foreign exchange fiasco was equivalent to 27% of 1989-90 pre-tax profits. To put it another way, that one slip wiped out the benefits of £1.25 billion of sales. You could argue that guarding the company against unauthorised and stupid foreign exchange finagling is not a direct collective responsibility of top management. But what if this indirect oversight (or lack of oversight) is symptomatic of wider failings?

Inattention certainly often extends to the widest issues of all - even to the whole corporate system. Hewlett-Packard, for example, is now taking the axe to a massed undergrowth of bureaucracy which had developed, seemingly without the knowledge of chief executive John Young and his cohorts, to the point where the creativity of the whole electronics empire was being stifled. The critic is entitled to ask what the board members, and all others in like circumstances, were doing. But the question is general: what is the board doing?

That comes down to the days of individual directors - and their duties. Thanks to ICI's staff magazine, the answer is clear - or rather unclear - in the case of the nine men who direct Britain's largest industrial company: they may be highly attentive, but their attention is deeply divided. Thus the duties of David Barnes include the oversight (in the non-pejorative sense, one hopes) of agrochemicals and pharmaceuticals, in both of which ICI is a world-class player. He also has charge of the small territory known as "The Americas".

In the moments spared from these tasks Barnes chairs the annual report committee (which, if I know committees and annual reports, and I do, may be the most arduous role of the lot). Nor is he alone in this heavy load of overlapping responsibilities: compared with at least one colleague he may even get off lightly. Frank Whiteley has Africa, the Indian subcontinent and the Middle East, while also minding group personnel affairs, head office and group engineering (the latter being not an oversight but an "overview"). He also chairs a couple of board committees and all of the pension trustee companies.

Connoisseurs of organisation charts will spot the governing principle at once: ICI is organised on matrix lines, by territory, function and business. No director operates in all three departments, but most have a double load. At least that is some (but not nearly enough) improvement on the old BHJ (before Harvey-Jones) days, when ICI's executive directors, with a territory, function and division apiece, were notoriously neutered by the impossible weight and complexity of their duties. This is not a criticism of ICI but of the matrix principle - blamed in an article by Christopher A Bartlett and Sumantra Ghoshal for the fact that "top-level managers in many of today's leading companies are losing control of their companies".

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