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Scott DeRue
  Scott DeRue

A New Lens for Viewing Team Adaptation

9/12/2007 --

When downsizing teams, managers must signal a need for behavioral change and team adaptation by altering team composition and hierarchy.

ANN ARBOR, Mich.—Companies have come to rely heavily on downsizing through layoffs, early retirement and buyouts as a quick and relatively easy way to trim costs. But such initiatives often fail to realize their intended benefits because of the way these work-force reductions impact teamwork in organizations.

In a new study of team downsizing, the University of Michigan's D. Scott DeRue and colleagues argue that the approach used to implement reductions significantly influences how well teams adapt and affects their performance afterward. They suggest that managers can use two key levers—recomposition and structural alterations—to signal a need for behavioral change and adaptation in teams. When team functioning is sufficiently disrupted, the remaining members make the necessary behavioral changes that enable them to adapt and perform better after the downsizing. The researchers also emphasize the importance of team composition. They find that team members who have greater emotional stability are best equipped to deal with disruptive downsizing events, such as the loss of a team leader.

"When downsizing teams, managers must find a way to signal a need for behavioral change and adaptation in how the team functions," said DeRue, assistant professor of management and organizations at Michigan's Ross School of Business. "This can be accomplished by altering who in the team is downsized and modifying the team's hierarchy. Without these changes, teams simply don’t realize the dire need for adaptation, and their performance suffers as a result."

DeRue also advises managers to prepare in advance for downsizing by assembling teams capable of dealing with disruptive events. Emotional stability is one factor managers should consider in the selection process to enhance teams' adaptive capacity, he adds.

In their research, DeRue and co-authors Michael Johnson of the University of Washington and Dustin Jundt, John Hollenbeck and Daniel Ilgen of Michigan State University examine the relative effectiveness of three structural approaches to downsizing teams.

The "maintaining hierarchy" approach is a work-force reduction strategy in which downsizing occurs by removing lower-level team members without affecting the team's hierarchy. In the "eliminating hierarchy" approach, the team leader is removed and his role is eliminated. This strategy in effect downsizes the unit through significant changes in team composition and structural hierarchy. In the "integrating hierarchy" approach, the team's hierarchy is changed by removing only the leadership role but not the team leader. Instead, a lower-level team member is downsized and the team leader assumes the displaced person's role and responsibilities. This latter strategy focuses on changing the way employees approach their work, such that the principles of downsizing (e.g., simplification and continuous improvement) are embraced "as a way of life" in the behavioral routines of teams.

For their study, the researchers recruited 355 undergraduate students and assigned them to 71 five-member teams, composed of one team leader and four team members. Unlike the lower-level members, the leader was given the ability to monitor the overall task environment and to control and reallocate assets among team members. All of the participants were tested beforehand to determine their level of emotional stability and extraversion.

Each team engaged in two 30-minute interactive military command-and-control simulation exercises. Between the first and second simulation, some teams were downsized using one of the three approaches while others experienced no reduction and served as controls. The teams' post-downsizing performance was measured and compared to their pre-downsizing performance to determine whether the groups were working faster and harder (quantitative behavior change) or differently in how they accomplished the work (qualitative behavior change).

DeRue and colleagues report that the teams in the "eliminating hierarchy" condition, which experienced the greatest changes to team composition and structural hierarchy, performed significantly better than teams in either the "integrating" or "maintaining hierarchy" conditions. The differences in team performance were the result of "eliminating hierarchy" teams adapting so that they worked faster and harder than the other teams.

"The 'eliminating hierarchy' teams adapt to downsizing by increasing their efforts," DeRue said. "In contrast, the two alternative downsizing approaches do not signal the same need for team adaptation, and, as a result, those teams do not engage in the behavioral changes necessary to adapt effectively to the downsizing."

Furthermore, the researchers' findings indicate that emotional stability and extraversion can help to mitigate the negative effects associated with team downsizing. Their analysis shows that greater emotional stability enhances the performance of "eliminating hierarchy" teams while highly extraverted teams downsized according to the "integrating hierarchy" approach significantly outperform similar teams with low levels of extraversion.

"Not all types of behavioral change and team adaptation are equally effective, so managers must learn how to identify and then facilitate the type that is appropriate for the needs and constraints of their organization," DeRue said.

Written by Claudia Capos

For more information, contact:
Bernie DeGroat
Phone: (734) 936-1015 or 647-1847