In matrix reporting, two heads are worse than one

By Dr. Henry Wong Meng Yeong | Wednesday, January 23, 2013 at 3:49AM

Following our discussion about how stringent criteria for the selection of leaders sets the right tone to curb corruption and fraud, let's now look at organizational structure and the role it might play.

Take for example matrix reporting -- a dual line of authority in which an individual has more than one boss. The benefit often cited is that it enables employees to multitask, while gaining a wider perspective of the workings of the organization. This structure is commonly used in financial institutions.

But what about compliance?

Serving two masters becomes a delicate balancing act. Power wielded from bosses can cause conflicting loyalties compared to line management. When things go wrong, it is easier for bosses to shirk their responsibilities as no one is ultimately accountable in a matrix and the subordinate is the scapegoat. Conversely, an errant opportunistic employee such as a rogue trader would also find this method of reporting most conducive, as tracks are easily covered and fraud is more likely to go undetected in the complex lattice.

The reporting structure should create an atmosphere which eliminates conflicts of interest in the employees and also encourages a system of accountability and honesty.

Next time we'll look at personal qualities -- moral character and values.