Matrix Structure of the Company

What challenge did HR face when Philips China implement TOP?

Matrix structure of the company, with the corporate organization aligning horizontally at each geographical level and the Product Division (PD) aligning vertically, cause some problems to the company. The problem is as follow:

1. Allocation of responsibility: It’s happen when the problem need to be decide by many functions.

2. Double line of reporting: This problem made Pratt has no authority over the HR director in the difference PD since they reported directly to General Manager of each country PD and the HR director of the regional PD. So, Pratt could only coordinate with them based on informal relationship.

Beside the Matrix structure problem, there is also a problem from the culture of the company. Since the company growing through the mergers and acquisitions, the common culture and value were missing so the motivation and morale of the employees drop.

This TOP program was not first program Philips implement but the previous program was not successful due to the resistance from the Product division.

The value of the HR function was not recognized by many people in the company because it was administration driven. So one another challenge is to increase value of the HR to be the World Class HR.

The HR function had some problem about cost effective and complex and slow decision making process. So, centralization of HR function would solved this problem. There will be three distinct roles of HR after centralization:

1. Administrative HR: Focus on non-business specific HR process and performed by shared service center (PPS). This PPS will centralizing all the HR resource in China into one place to lower HR operational cost and improve efficiency. The PPS will charged the business unit based on employee number and the defined Service Level Agreement. However, the problem might occur since each business want the most resource as it can therefore the resource allocation problem will occur. Also each business unit require difference resource, the PPS must understand each business unit well enough in order to provide the suitable service for them.

2. Business HR: act as consultant and a business partner, understand difference SWOT for each product division. In order to implement this role, the HR function need the people who has a high level of business skill which may not easy to find.

3. Functional HR: acted like a bridge between PPS and Business HR. This role will transform traditional HR in to the modern HR by using intranet with many intranet application. This implementation will require a lot of cost and high skill people and it will be some resistance from the older generation people.

Key talent building is another problem HR face since there are