how different team downsizing approaches influence …faculty.washington.edu/mdj3/derue et al...

HOW DIFFERENT TEAM DOWNSIZING APPROACHESINFLUENCE TEAM-LEVEL ADAPTATION AND PERFORMANCE

D. SCOTT DERUEUniversity of Michigan

JOHN R. HOLLENBECKMichigan State University

MICHAEL D. JOHNSONUniversity of Washington

DANIEL R. ILGENDUSTIN K. JUNDT

Michigan State University

This study examined the relative effectiveness of three structural approaches to re-ducing team size. Seventy-one five-person teams engaged in a simulated interactivetask in which the approach to downsizing was manipulated. Results suggest that thestructural approaches to reducing team size differentially impact team performance,and this relationship is mediated by how and to what degree teams adapt theirtask-related behaviors. Moreover, results from this study emphasize the importance ofteam composition in cases of team downsizing. Specifically, emotional stability andextraversion can help mitigate the negative effects associated with reducing team size.

There are a variety of reasons at multiple levels ofanalysis why teams might be reduced in size, ordownsized, in organizational settings. For example,organizational downsizing initiatives (e.g., layoffs)are a common reason why teams are forced to workwith fewer people. In fact, from 2000 to 2003, or-ganizations in the United States engaged in over28,000 extended layoff or downsizing events (U.S.Bureau of Labor Statistics, 2005). In other cases,organizations may be forced to reduce team size inorder to cope with multiple, simultaneous workdemands. For example, Thompson and Duffy(2003) recounted how U.S. Army units were poten-tially too small to handle both military and peace-keeping operations in Afghanistan and Iraq at thesame time. This was because unit size had beenreduced as a result of personnel being deployedacross multiple simultaneous needs. Other re-search contains the argument that team downsizingshould occur because managers tend to “assumethat more is better and therefore put too many

people on the team . . . and although managerssometimes form teams that are too small to accom-plish their work well, the far more common mis-take is overstaffing them” (Hackman, 2002: 115–116). In sum, team downsizing occurs in modernorganizations for a variety of reasons.

To date, the literature on team size has focusedon its implications in static environments. For ex-ample, in a between-teams study, Wagner (1995)established that team size impacts degree of coop-eration. Gallupe and colleagues (Gallupe, Dennis,Cooper, Valacich, Bastianutti, & Nunamaker, 1992)showed that team size directly impacts the numberand quality of ideas generated. In fact, Hackmanand Vidmar (1970) concluded from a cross-sec-tional study that the optimal team size (acrossteams and settings) was 4.6 members. This staticperspective, although valuable, is limited in severalimportant ways. Most notably, static views of teamsize do not address conceptually how teams shouldchange size over time, nor the implications of thesechanges for team functioning. Moving from a staticperspective on team size to a more dynamic modelis essential for understanding these issues and wasthus a central purpose and theme of the presentstudy. Specifically, we identify from a structuralperspective several ways in which teams candownsize over time and then examine the implica-tions of these structural approaches for adaptive

This research was supported in part by Grant N00014-96-1-0983 from the Cognitive and Neural Sciences Divi-sion of the Office of Naval Research. Although supportfor this work is gratefully acknowledged, the ideas ex-pressed herein are those of the authors and not necessar-ily endorsed by the funding agency.

� Academy of Management Journal2008, Vol. 51, No. 1, 182–196.

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behaviors and performance. We also consider howthe relative effectiveness of these structural ap-proaches to team downsizing depends on compo-sitional elements within teams. As such, this is thefirst empirical study that examines the perfor-mance implications of reductions in team size.

DOWNSIZING IN TEAMS: THREE BASICSTRUCTURAL APPROACHES

To identify the three structural approaches toteam downsizing, we draw from literature on or-ganizational downsizing. Cameron, Freeman, andMishra (1991, 1993) identified and differentiatedthree approaches to downsizing: (1) workforce re-duction strategy, (2) redesign strategy, and (3) sys-temic strategy. The workforce reduction strategy isa simple reduction of the number of lower-leveloperational employees, involving no considerationof structural differentiation. The redesign strategyis downsizing a unit through work redesign andstructural change. The systemic strategy focuses onchanging the way employees approach their workso that the principles of downsizing (e.g., simplifi-cation, continuous improvement) are embraced “asa way of life” in the behavioral routines of employ-ees (Cameron, Freeman, & Mishra, 1991: 62). Thesethree downsizing strategies are not mutually exclu-sive and can be implemented alone or in combina-tion. In the present study, we extend this frame-work from the organization to the team level todevelop three structural approaches to team down-sizing. We refer to these three approaches as main-taining hierarchy, eliminating hierarchy, and inte-grating hierarchy. Figure 1 identifies the threestructural approaches and schematically outlinestheir operation.

These three structural approaches to team down-

sizing differentially impact team performance, andthese effects are mediated by how teams adapt theirtask-related behaviors in response to the downsiz-ing. As illustrated in Figure 1, the structural ap-proaches to team downsizing differ on two dimen-sions: (1) degree of recomposition and (2) degree ofstructural change. We conceptualize recompositionas changes in membership (e.g., existing membersleaving a team). The degree of recomposition is afunction of (1) how many membership changes oc-cur in a team and (2) the importance of the mem-bers who are affected by these membershipchanges. Team member importance is determinedby how unique a member’s contributions to theteam are; importance could be a function of uniqueknowledge, skills, and abilities or the degree towhich the individual is a gatekeeper for team func-tioning. Recomposition that directly affects teammembers who are vital to team functioning (e.g., ateam leader) is a more severe trigger for behavioralchange than recomposition that affects team mem-bers who are less vital to team functioning. Struc-tural change refers to changes in a team’s hierarchi-cal structure (e.g., moving from a very hierarchicalstructure to a flatter one). Both recomposition andstructural change are important because may trig-ger team adaptation, which we define as team-levelbehavioral change. Specifically, the degrees of re-composition and structural change are positivelyrelated to teams’ adaptation of task-related behav-iors in response to disruptive events such as down-sizing (Bettenhausen & Murnighan, 1991; Gersick &Hackman, 1990).

According to Ilgen and Hollenbeck (1991), be-havior can be described along two dimensions:quantitative and qualitative. In this study, we con-sider the extent to which quantitative and qualita-tive behavioral change mediate the relationship be-

FIGURE 1Three Structural Approaches to Downsizing Teams

2008 183DeRue, Hollenbeck, Johnson, Ilgen, and Jundt

tween structural approaches to downsizing andteam performance. The quantitative dimension ofbehavior simply refers to the frequency with whicha behavior is performed. In other words, teams maycontinue to exhibit the same types of behaviors, butengage in more of them at a faster pace. Simpleincrease in the quantity of behaviors, however, isonly one form of behavioral change.

Teams may also qualitatively change the types ofbehaviors they engage in while performing tasks(i.e., they can work differently). In the presentstudy, we consider how teams qualitatively changetheir approaches toward two important team func-tions: (1) monitoring their task environment and (2)sharing information among team members. Wechose to focus on these two functions because in ahierarchical team structure, the team leader is oftenresponsible for them (Hackman, 1987), and thesefunctions are critical for team effectiveness (Ilgen,Hollenbeck, Johnson, & Jundt, 2005; Marks,Mathieu, & Zaccaro, 2001). In teams with no formalleader, team members are collectively responsiblefor performing these functions effectively (Cohen,Chang, & Ledford, 1997). Because the structuralapproaches to downsizing identified here manipu-late either the hierarchical structure within a team,team composition, or both, we expect the structuralapproaches to qualitatively impact the way teamsperform these two important functions.

Maintaining Hierarchy

As Cameron et al. (1991, 1993) stated, the work-force reduction approach to downsizing concen-trates primarily on reducing the number of opera-tional employees in an organizational unit. Thisapproach, which manifests itself as layoffs, earlyretirement programs, and buyout packages, focuseson fast implementation and short-term payoffs(e.g., cost reduction). This strategy permits no con-sideration of the structure of a unit or how workgets done within it. This form of downsizing hasalso been referred to as pure employment downsiz-ing and, after the initial cost savings, is often asso-ciated with severely negative implications for per-formance at an organizational level (Cascio, Young,& Morris, 1997).

We develop the maintaining hierarchy approachto downsizing teams by extending this workforcereduction approach to the team level. At the organ-izational level, no change in hierarchical differen-tiation accompanies a reduction in organizationalsize; instead, the primary focus is on headcountreduction. At the team level, the analog to thisapproach would be maintaining the same form ofhierarchical differentiation in a team and simply

reducing team size by removing one or more lower-level members. The formal team leader maintainshis or her role and responsibilities within the team,and the resources and responsibilities associatedwith displaced team members shift to the remain-ing team members.

Drawing from the work of Gersick and Hackman(1990), we suggest that this approach to teamdownsizing should result in fewer adaptive behav-iors at the team level. The approach does not alterthe hierarchical structure of a team in any way.Moreover, in terms of recomposition, this approachto team downsizing targets only lower-level opera-tional roles within a team. Relative to the leader ofthe team, the team members who are displaced inthis structural approach are less central to teamfunctioning. As a result of the absence of structuralchange and the relatively low degree of team re-composition, the remaining team members andteam leader continue to perform routine functions.For these reasons, the maintaining hierarchy ap-proach provides a minimal trigger for change andtherefore should result in relatively little team ad-aptation. We expect that, relative to downsizedteams that experience more significant structuralchange or recomposition, as is the case with otherteam-downsizing approaches, maintaining hierar-chy teams will not exhibit as much quantitativebehavioral change. Similarly, we do not expectthese teams to qualitatively change how importantteam functions are performed because maintaininghierarchy provides much less of an impetus forbehavioral change. Given that adaptation is vital tomaintaining unit performance in downsizing(Cameron et al., 1991), we expect the maintaininghierarchy approach, because it does not trigger asmuch quantitative or qualitative behavioral changeas other approaches, to negatively impact teamperformance.

Eliminating Hierarchy

Cameron and colleagues suggested that the ap-proaches to downsizing that they identified—work-force reduction, redesign, and the systemic strate-gy—were not mutually exclusive and that in fact“the most successful firms implemented all three”(1991: 62). With this view in mind, we develop theeliminating hierarchy approach to team downsiz-ing by considering all three approaches. Althoughstill focused on reducing overall team size, thisapproach redesigns a team’s hierarchical structureand eliminates a central member of the team.Specifically, the leader of a hierarchically differen-tiated team is removed, thus eliminating any hier-archical differentiation within the team. Further-

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more, whereas the team leader had been largelyresponsible for important team functions such asmonitoring the external task environment and fa-cilitating the exchange of information within theteam, now the team members are collectively re-sponsible for these functions.

In contrast to maintaining hierarchy, eliminatinghierarchy alters a team’s hierarchical structure andeliminates a central member (i.e., the team leader).As a result of these changes, the remaining teammembers are forced to work together in nonroutineways. Thus, one should observe more adaptive be-haviors in teams that employ this approach (Ger-sick & Hackman, 1990). In quantitative terms, weexpect eliminating hierarchy teams to increasetheir overall effort and collectively adapt to thedownsizing by performing more task-related behav-iors than teams that employ other downsizing ap-proaches. This is because these teams, with the lossof their leader, will realize that they must exertmore effort to maintain team performance. In qual-itative terms, we also expect eliminating hierarchyteams to exhibit fundamentally different types ofbehaviors. Because the team leader is no longerpresent, the team functions that this person (andposition) used to perform must now be fulfilled bythe team. To accomplish this, the remaining teammembers must qualitatively change their behaviorin such a way that they can collectively performthese important functions. In line with research atthe organizational level (Cameron et al., 1991), weexpect teams that employ this approach to engagein significant behavioral change and, as a result, toexperience the least amount of performance de-cline as a result of downsizing.

Integrating Hierarchy

In developing the integrating hierarchy ap-proach, we also extend multiple elements of Cam-eron et al.’s (1991) framework to the team level. Inthis approach to downsizing, as in the eliminatinghierarchy approach, the hierarchical differentiationin a team is removed. However, this approach doesnot remove the person who had been the teamleader from the team, only the role of team leader.Instead, a lower-level team member is downsized,and the team leader assumes the roles and respon-sibilities of the displaced team member. Accord-ingly, the team leader’s role changes in such a waythat he or she must assume specific operationalduties that were not part of the prior leader role.Thus, the team adapts structurally to the downsiz-ing by removing hierarchical differentiation andreallocating roles and responsibilities. Organiza-tions may adopt this structural approach to reduce

hierarchical differentiation within themselves whileretaining their ability to draw on the perspectiveand past experiences of people in former leader-ship positions. The basic principles of this ap-proach are also apparent in recent literature onrotated team leadership, where members systemat-ically move from leadership to peer positions (Erez,LePine, & Elms, 2002).

Because the team leader is retained within a teamand only lower-level members are displaced, theintegrating hierarchy approach to team downsizingdoes not affect team composition as much as theeliminating hierarchy approach. Thus, in accor-dance with Gersick and Hackman (1990), integrat-ing hierarchy is a less severe trigger for behavioralchange than eliminating hierarchy. We thereforeexpect less adaptive behavior in integrating hierar-chy teams than in eliminating hierarchy teams.Quantitatively, integrating hierarchy teams shouldnot increase the number of task-related behaviorsthey perform to the same degree as eliminatinghierarchy teams. Qualitatively, because the teamleader is still present, it is less likely that integrat-ing hierarchy teams will adapt their task-relatedbehaviors to include different types of behaviors.With the former leader still present, behavioral rou-tines developed while this person was in a leader-ship position are likely to persist, despite the struc-tural change (Ancona & Chong, 1996; Bettenhausen& Murnighan, 1985, 1991; Gersick & Hackman,1990). Any potentially positive contributions asso-ciated with moving to a less differentiated teamstructure are negated by the preservation of estab-lished behavioral routines that, in essence, helpsustain differentiation within the team. Becauseintegrating hierarchy teams will engage in feweradaptive behaviors, we expect their performance todecline as a result of downsizing.

In sum, we expect teams adopting an eliminatinghierarchy approach to downsizing to perform betterthan teams adopting a maintaining or an integratinghierarchy approach. In fact, eliminating hierarchyteams are expected to realize performance levelsthat are not significantly different from the perfor-mance of teams not subject to any downsizing (ourcontrol group). This is our expectation becauseeliminating hierarchy teams will adapt their task-related behaviors in both quantitative and qualita-tive ways. Quantitatively, these teams will exertmore effort toward the team task than will teamsthat employ other downsizing approaches. Quali-tatively, eliminating hierarchy teams will adapthow they go about performing critical team func-tions now that their leader is no longer present. Theintegrating and maintaining hierarchy teams are


less likely to make these same behavioral changes.Thus, we formally hypothesize the following:

Hypothesis 1. Teams employing a maintaininghierarchy or an integrating hierarchy approachto downsizing perform more poorly than teamsthat employ the eliminating hierarchy ap-proach and teams that do not downsize.

Hypothesis 2a. Quantitative behavioral changemediates the structural approach–team perfor-mance relationship.

Hypothesis 2b. Qualitative behavioral changemediates the structural approach–team perfor-mance relationship.

DOWNSIZING AND TEAM COMPOSITION

Existing research clearly states that downsizinginitiatives can promote, through unwanted job en-largement and increased task demands, feelings ofstress and overburden in surviving personnel (Koz-lowski, Chao, Smith, & Hedlund, 1993). These feel-ings of stress, when combined with overly highwork demands, can lead to job burnout (Lee &Ashforth, 1996; Maslach, 2003). Job burnout islargely affective in nature, and recent meta-analy-ses have connected it to the affective states of indi-viduals (Thoresen, Kaplan, Barsky, Warren, & deChermont, 2003). Since the impact downsizing hason individuals is partly affective (e.g., Brockner,Tyler, & Cooper-Schneider, 1992; Brockner, Wies-enfeld, & Martin, 1995), affective elements of teamcomposition should influence how well teams areable to adapt to downsizing.

The Affective Plane of Personality: EmotionalStability and Extraversion

One affective element of team composition thathas received considerable attention is the “affectiveplane of personality” (e.g., Costa & McCrae, 1980;Watson & Tellegen, 1985). Costa and McCrae (1992)introduced the concept of two-dimensional planesof personality as a way to group nonorthogonalpersonality factors into theoretically meaningfulpairs. The affective plane includes extraversionand emotional stability and “represents an individ-ual’s basic emotional style” (Costa & McCrae, 1992:19). Existing literature on personality at the teamlevel suggests that both emotional stability and ex-traversion impact team processes and performance(e.g., Barrick, Stewart, Neubert, & Mount, 1998;Beersma, Hollenbeck, Humphrey, Moon, Conlon, &Ilgen, 2003; Porter, Hollenbeck, Ilgen, Ellis, West, &Moon, 2003). We focus here on how these two

personality factors—emotional stability and extra-version—impact the relationship between teamperformance and the three structural approaches todownsizing.

Costa and McCrae (1992) suggested that individ-uals low on emotional stability have a general ten-dency to experience negative affective states likefear, sadness, embarrassment, anger, guilt, and dis-gust. Because these disruptive emotions interferewith individuals’ ability to adapt to change, Costaand McCrae (1992) also suggested that individualswho are low on emotional stability are less ablethan others to adapt to change. In contrast, thosehigh on emotional stability are usually calm, even-tempered, and able to face stressful situations with-out becoming upset.

A long line of research on team composition andperformance has addressed how emotional stabilityimpacts team performance (e.g., Heslin, 1964). Forinstance, research has suggested higher aggregatelevels of emotional stability in a team lead togreater levels of cooperation and prosocial behaviorwithin the team (e.g., Watson & Tellegen, 1985). Inaddition, emotional stability has been linked toteam adaptability in the sense that teams with moreemotionally stable members show better adaptabil-ity to structural misalignment (Hollenbeck, Moon,Ellis, West, Ilgen, & Sheppard, 2002) and unevenworkload distributions (Porter et al., 2003)—bothof which are potential problems in downsizedteams. For these reasons, emotional stability islikely a key compositional factor in explaining howteams adapt structurally to downsizing.

Similarly, extraversion may also attenuate thepotentially negative effects of downsizing in teams.Extraversion incorporates an element of positiveaffectivity (Costa & McCrae, 1992; Watson & Clark,1984) in the sense that highly extraverted individ-uals are prone to experience more positive emo-tional states (Barrick et al., 1998). In teams, extra-version promotes positive interaction, informationexchange, helping behavior, and cooperationamong members (e.g., Beersma et al., 2003; Porter etal., 2003), all of which are expected to be importantfor adaptation to reductions in team size.

The Role of Emotional Stability and Extraversionin Team Downsizing

In accordance with Mischel and Shoda’s (1995,1998) cognitive-affective personality system the-ory, the degree to which basic dispositional traitssuch as personality are expressed in a team de-pends on the situation in which the team operates.In other words, situational features can activate ortrigger the enhanced expression of stable personal-


ity traits. We argue here that the three structuralapproaches to downsizing differ in the degree towhich they trigger expression of the affective planeof personality. These differences among the struc-tural approaches to downsizing are due to the se-verity of change associated with each approach; theleast severity is associated with maintaining hier-archy, and the most severity is associated witheliminating hierarchy (see Figure 1).

Maintaining hierarchy makes no change to ateam’s hierarchical structure and only minimallyaffects team composition. Integrating hierarchychanges the team’s hierarchical structure but onlyminimally changes team composition. Thus, theoverall severity of these changes is low to moderatein comparison to the eliminating hierarchy ap-proach. As a result, teams employing either themaintaining or integrating hierarchy approach ex-perience a minimal trigger for change and willtherefore be less likely to recognize a need to adapt.Because these teams are less likely to recognize theneed for adaptation, we do not expect the expres-sion of emotional stability or extraversion to beenhanced in any meaningful way. Therefore, theaffective plane of personality is expected to have noinfluence on the performance of teams using amaintaining hierarchy or an integrating hierarchyapproach.

In contrast, we do expect the severity of the elim-inating hierarchy approach to provide a significanttrigger for adaptation. According to Mischel andShoda (1995, 1998), this trigger for adaptationshould activate the enhanced expression of emo-tional stability and extraversion within a team,thereby positively influencing team performance.Enhanced expression of emotional stability or ex-traversion in a team will enable it to better copewith the challenges associated with downsizing.For instance, with the loss of a team leader, a team’sother members must collectively perform tradi-tional leadership functions such as monitoring theenvironment, obtaining and reallocating resources,and designing the team’s task (e.g., Hackman, 1987;Morgeson, 2005). To effectively perform these func-tions without a formal team leader, the team musthave high levels of coordination and informationexchange and a high overall sense of positive en-ergy. Empirical evidence suggests emotional stabil-ity and extraversion promote these positive inter-actions within teams (e.g., Barrick et al., 1998).Thus, we formally hypothesize the following forteams employing an eliminating hierarchy ap-proach to downsizing:

Hypothesis 3a. The tendency for teams to per-form more poorly when they do rather than do

not employ the eliminating hierarchy ap-proach (as predicted in Hypothesis 1) isweaker when their members score high onemotional stability.

Hypothesis 3b. The tendency for teams to per-form more poorly when they do rather than donot employ the eliminating hierarchy ap-proach (as predicted in Hypothesis 1) isweaker when their members score high onextraversion.

METHODS

Research Participants and Task

Research participants were 355 upper-level un-dergraduate students at a large midwestern univer-sity. Average age was 21 years, and 57 percent ofthe participants were male. Each student was amember of one of 71 five-person teams. All indi-viduals were randomly assigned to teams, and allteams were randomly assigned to experimentalconditions (see the section on Manipulations fordetails on conditions). In return for their participa-tion, each student received class credit and waseligible for a cash prize.

Participants engaged in a dynamic and net-worked military command-and-control simulation.The task was a modified version of a simulationdeveloped to study team behavior, Distributed Dy-namic Decision-Making (DDD). Miller, Young,Kleinman, and Serfaty (1998) and Hollenbeck et al.(2002) describe the DDD task. In the present study,each team engaged in the same two separate, 30-minute simulation exercises. In each exercise,teams were charged with keeping unfriendly“tracks” from moving into a restricted geographicspace while allowing friendly tracks to travelthroughout it. This task was particularly appropri-ate for the present study for two reasons: (1) thetask enabled team members, after a downsizingevent, to collectively share in the removed teammember’s task responsibilities, and (2) the task re-quired all team members to coordinate with eachother the downsizing.

All individuals and teams, regardless of experi-mental condition, received the same training on thesimulation. This training consisted of two separatemodules. First, all participants watched a 15-minute introductory video. Second, they hadhands-on instruction and time to practice all of thepossible tasks in the simulation. This second mod-ule lasted approximately 45 minutes and allowedparticipants to learn the basic mouse movementsand operations associated with all the possibletasks.


After team assignment, each participant was alsorandomly assigned to a team role: leader or mem-ber. Each team had one leader and four members.Each team member controlled four vehicles (assets)that could be launched and used to monitor a geo-graphic space, identify tracks as friendly or un-friendly, and properly engage and disable un-friendly tracks. Of 12 unique tracks, 3 wereconsidered friendly and 9 were considered un-friendly. These tracks differed in terms of theirspeed of movement and requirements for disabling.Like the other team members, the team leader couldidentify tracks as friendly or unfriendly.

However, the team leader had several uniqueabilities that other team members did not have.First, whereas the vision of each team member waslimited to his or her own geographic space, theteam leader was able to view any part of the geo-graphic space that was viewable by another teammember. This enabled the team leader to monitorthe overall task environment for the team. Second,only the team leader was able to reallocate assetsamong the team members and to assume controlover team members’ assets. This ability enabled theteam leader to redistribute assets according toworkload within the team as well as to controlassets when needed. In the experimental conditionin which the team leader position was eliminated(i.e., under eliminating hierarchy), the team mem-bers had to share information with each other aboutwhat they were seeing and what assets they neededsince no one other than the leader ever had theability to see the entire geographic space. Thus,significant interaction (i.e., information sharing orother ways of coordinating) among team memberswas needed when the team leader position waseliminated. This increased level of interaction wasneeded, also, in the integrating hierarchy condi-tion, which eliminated the leader role and reas-signed the leader to the role of peer.

The team task employed in the present study isadditive for two reasons. First, each team membercontributed to team output in a meaningful way,unlike in a “disjunctive task” (e.g., problem solv-ing), in which a team’s best member determines itsoutput. Our experimental task also differs from a“conjunctive task” (e.g., mountain climbing), inwhich a team’s weakest member determines theteam’s output. According to Steiner (1972), the ideathat each team member makes a meaningful contri-bution to team output suggests the task is additive.Secondly, teamperformance in this studywasopera-tionalized in additive terms (i.e., as the total num-ber of effective and ineffective engagements), andprior research suggests an additive approach iswarranted when the dependent variable of a study

is also operationalized in additive terms (e.g., Por-ter et al., 2003).

Manipulations and Measures

Downsizing approach. All teams were randomlyassigned to one of four conditions. These condi-tions varied in the approach used to downsize theteam from five to four members. In the controlcondition, teams experienced no downsizing andthus performed the second simulation with thesame composition and structure they had in thefirst simulation. In the other three experimentalconditions, we downsized teams between the firstand second simulation using one of the three ap-proaches to downsizing identified earlier.

In the first experimental condition, which werefer to as “maintaining hierarchy,” a single teammember was displaced from the team, and thisindividual’s assets were redistributed to the re-maining team members in such a way that theremaining team members collectively shared theoperational responsibilities originally assigned tothe displaced team member. The team leader re-mained in the leadership role and had no addi-tional operational capabilities or responsibilities.Thus, in this condition, no structural change wasmade in response to the downsizing. In the secondexperimental condition, labeled “eliminating hier-archy,” the team leader was displaced from theteam, thereby eliminating the hierarchical structureof the team. Although the operational scope of teammembers was left unchanged, they needed to ex-pand their roles to include performing many of thefunctions previously performed by the leader. Thelatter description applies also to the third experi-mental condition, labeled “integrating hierarchy,”since this condition eliminated the leader role (andhence the functions previously performed by theleader); however, unlike in the eliminating hierar-chy condition, the former leader remained in theteam but had duties previously assigned to a dis-placed lower-level member.

Recall that the leader role had unique capacitiesto monitor the entire geographic space and transferassets among team members; therefore, in the ab-sence of the former leader (in the eliminating hier-archy condition) and in the absence of a formalleader role (in the integrating hierarchy condition),the team had to collectively monitor the task envi-ronment and reallocate tasks when workload dis-tribution problems arose. In other words, in each ofthese experimental conditions, no single teammember could assume the leader role (e.g., view theentire geographic space, transfer assets); rather, the


team as a collective unit had to perform thesefunctions.

Affective orientation. We measured emotionalstability and extraversion via the short form of theRevised NEO Personality Inventory (Costa & Mc-Crae, 1992). Each of these personality factors wasmeasured with 12 items, and the correspondingreliability coefficients were .80 and .79, respec-tively. We aggregated individual team members’scores on each personality factor into an overallmean-level score for the team. Our choice to use theteam’s mean is consistent with research indicatingthat the appropriate measurement technique forconfigural unit properties such as personality de-pends on a team’s task (e.g., Barrick et al., 1998;Barry & Stewart, 1997; LePine, Hollenbeck, Ilgen, &Hedlund, 1997; Moynihan & Peterson, 2001; Porteret al., 2003). Drawing on Steiner (1972), this re-search suggests that an additive approach is appro-priate when a team’s task is additive.

Adaptive behaviors. Both quantitative and qual-itative behaviors were composite variables thatwere captured by the simulation. Quantitative be-haviors were measured as a combination of thetotal number of times teams (1) launched their as-sets and (2) identified tracks as either friendly orenemy targets. These behaviors reflect a generallevel of activity or effort on the part of a team andcapture how much effort it was directing at task-related behaviors. Launching a large number of as-sets and identifying tracks requires no real thought,decision making, or coordination of efforts amongteam members, as it is simply a function of how fastand how long participants can manipulate the soft-ware with their mice. Thus, if one sees an increasein the level of these behaviors from time 1 to time 2,it is direct evidence that the teams were workingfaster and harder, but not necessarily any differ-ently in terms of types of behaviors. We standard-ized and averaged these two team behaviors to cre-ate the scores.

Qualitative behaviors were a combination of thetotal numbers of times team members assisted otherteam members by (1) identifying tracks inside otherteam members’ geographic areas and (2) electroni-cally sharing identification information related tothe tracks. These behaviors reflect a qualitativechange because they do require thought, decisionmaking, and coordination among team members. Inteams with a formal leader position (all teams attime 1), the leaders were best able to perform thesefunctions. In teams without a formal leader posi-tion (the eliminating and integrating hierarchyteams at time 2), the team members were collec-tively responsible for these behaviors. Thus, if teammembers increased the number of these behaviors

from time 1 to time 2, it was direct evidence thatthey were working differently than they had been attime 1. As with the quantitative behaviors, we stan-dardized and averaged these two team behaviors tocreate the scores.

Team performance. Performance was a compos-ite variable that was captured by the simulation asthe total number of effective and ineffective engage-ments. In the context of the simulation, an effectiveengagement occurred when a team successfullydisabled an enemy track by deploying vehicleswith the appropriate power levels. An ineffectiveengagement occurred when the team either dis-abled a friendly target or disabled any track thatwas outside of the restricted area. We reverse-coded the number of ineffective engagements sothat higher numbers indicated better performance.Team performance was computed by standardizingand averaging these two scores.

Procedures

Each participant was scheduled for a three-hoursession. When a participant arrived, we first ad-ministered the Revised NEO Personality Inventory(Costa & McCrae, 1992) to measure emotional sta-bility and extraversion. Then, each participant wasrandomly assigned to a five-person team, and teamswere randomly assigned to one of the four condi-tions: (1) control, (2) maintaining hierarchy, (3) in-tegrating hierarchy, or (4) eliminating hierarchy.Roles within the teams were randomly assigned.Once the teams were formed, each team wastrained together for approximately 60 minutes. Af-ter the training was complete, the trainer informedthe team of a performance-based incentive. Teamshad an opportunity to earn up to $50 based on theiroverall team performance in the simulation. Then,the teams were granted approximately 5 minutes todiscuss their strategies for the simulation. Theteams then performed the first of two 30-minutesimulations. After the first simulation, the trainerinformed all of the teams in the experimentalconditions (maintaining hierarchy, integratinghierarchy, and eliminating hierarchy) that ateam member would be removed prior to thesecond simulation.

The trainer made clear that the manipulation wasfor research purposes only but provided no furtherexplanation as to why the person was being re-moved from the team. The trainer did, however,indicate that the remaining four team membersshould think about and discuss how the team mightadapt to such a change. For the control group,where no team member was removed, the trainerindicated that the team should discuss how it


might improve its performance between the firstand second simulations. Teams were granted ap-proximately 5 minutes to discuss their performancestrategies between simulations. Teams then per-formed the second simulation. After completingthe second simulation, teams were thanked fortheir participation and rewarded if appropriate.

In the three experimental conditions, the indi-vidual who was removed from the team was es-corted away from the team and asked to complete a30-minute, individual-based version of the DDDtask. This task was completed in a room separatefrom where the team was performing their task.

Data Analysis

The research design and analyses employed inthis study were all conducted at the team level. Toexamine the impact of each structural approach todownsizing on team performance, we conducted ahierarchical regression analysis. To begin, we dum-my-coded the downsizing approaches with thecontrol group as the referent. With team perfor-mance from the second simulation as our depen-dent variable, we then entered team performancefrom the first simulation in step 1. By entering priorperformance as step 1, we controlled for between-team performance differences prior to the downsiz-ing manipulation. We then entered the dummycodes for downsizing approach in the second stepof the equation. By entering all dummy codes in thesecond step, we were able to examine the indepen-dent effects associated with each downsizing ap-proach; with these variables entered simulta-neously, the regression weights associated witheach approach to downsizing reflect the mean dif-ference in performance between each downsizing

condition and the control group (Cohen & Cohen,1983).

The mediation and moderation hypotheses weretested by extending this hierarchical regressionanalysis to include additional steps. To examinethe mediating effects of behavioral change, we usedBaron and Kenny’s (1986) method. To test the mod-erating effects of emotional stability and extraver-sion, we included a third and fourth step in thehierarchical regression analysis. For each personal-ity factor, we created an interaction term by multi-plying the dummy codes by the mean rating foreach personality factor. We entered the meanscores on the factors in the third step and the in-teraction terms in the fourth step of the equation.

RESULTS

Table 1 presents the means, standard deviations,and correlations of all variables measured or ma-nipulated in this experiment. As noted, variance onall measured variables was adequate, and the inter-correlations among variables were modest.

Hypothesis 1 predicts that teams in the controland eliminating hierarchy conditions will performbetter than teams in either the integrating or main-taining hierarchy conditions. As indicated in step 2of Table 2, teams in the maintaining (� � –.37, p �.01) and integrating (� � –.28, p � .05) hierarchyconditions performed significantly more poorlythan teams who did not experience any downsizing(control). The performance of teams in the elimi-nating hierarchy condition was not significantlydifferent than that of teams in the control condition(� � –.01, n.s.), suggesting that these teams per-formed significantly better than teams in either theintegrating or maintaining hierarchy conditions. A

TABLE 1Descriptive Statistics and Correlationsa

Variable Mean s.d. 1 2 3 4 5 6 7 8 9 10

1. Maintaining hierarchy 0.26 0.442. Eliminating hierarchy 0.25 0.44 �.33*3. Integrating hierarchy 0.24 0.43 �.35* �.32*4. Emotional stability 3.45 0.24 .01 �.03 �.055. Extraversion 3.64 0.21 �.04 �.23* .15 .28*6. Time 1 quantitative behaviors 0.00 0.73 �.16 �.16 .08 �.08 .077. Time 2 quantitative behaviors 0.00 0.79 �.40** �.05 �.21 �.06 .10 .54**8. Time 1 qualitative behaviors 0.00 0.73 �.05 �.06 .09 .00 .20 .05 .059. Time 2 qualitative behaviors 0.00 0.72 �.31** .15 �.10 .01 .12 .01 .33** .63**

10. Time 1 performance 0.00 0.70 �.18 .02 .17 �.10 .01 .30** .02 �.03 .0211. Time 2 performance 0.00 0.67 �.31** .21 �.13 .09 �.03 .02 .41** �.21 .10 .13

a n � 71 teams.* p � .05

** p � .01


one-tailed significance test with eliminating hierar-chy as the comparison condition confirmed thatteams in this condition did indeed perform signif-icantly better than teams in both the maintaininghierarchy condition (� � �.37, p � .01) and teamsin the integrating hierarchy condition (� � �.27,p � .05). This step explained approximately 14percent of the incremental variance in team perfor-mance at time 2. Thus, Hypothesis 1 was fullysupported.

Hypothesis 2a states that quantitative changes inbehaviors will mediate the relationship betweenthe downsizing conditions and team performance,and Hypothesis 2b states that qualitative changes inbehaviors will mediate the relationship. We testedthese hypotheses using Baron and Kenny’s (1986)method, which requires that three conditions bemet for mediation to be inferred: (1) the indepen-dent variables must be significantly related to thedependent variable, (2) the independent variablesmust be significantly related to the proposed medi-ators, and (3) the previously significant relation-ship between independent and dependent vari-ables decreases and becomes nonsignificant whenthe mediator is controlled for. As noted in the test ofHypothesis 1, the first of these conditions was met.

With respect to the second condition, weregressed the time 2 quantitative and qualitativebehaviors on the dummy codes for experimentalcondition. We also controlled for the time 1 quan-titative and qualitative behaviors to remove anybetween-teams variance that existed prior to the

downsizing. In terms of quantitative behaviors,maintaining hierarchy (� � �0.64, p � .01), inte-grating hierarchy (� � �0.59, p � .01), and elimi-nating hierarchy (� � �0.39, p � .01) teams en-gaged in significantly fewer of these behaviors thanthe control teams. In terms of qualitative behaviors,both the maintaining hierarchy (� � �0.30, p �.01) and the integrating hierarchy (� � �0.29, p �.01) teams engaged in significantly fewer of thesebehaviors than the control teams. The eliminatinghierarchy (� � �0.13, n.s.) teams were not signifi-cantly different from the control teams on qualita-tive behaviors.

Regarding the third condition for mediation, weregressed time 2 performance on time 1 perfor-mance, the dummy codes for experimental condi-tions, and the quantitative and qualitative behav-iors. The effects of both the maintaining hierarchyand integrating hierarchy dummy codes dropped tononsignificance. The maintaining hierarchy effectdecreased from �0.37 (p � .01) to �0.12 (n.s.), andthe integrating hierarchy effect decreased from�0.28 (p � .05) to �0.07 (n.s.). The time 2 quanti-tative behavior variable remained significant (� �0.36, p � .05), but the time 2 qualitative behaviorvariable did not (� � �0.11, n.s.). Thus, the quan-titative—but not qualitative—behaviors fully me-diated the effects of downsizing condition on time2 performance as expected, thereby supporting Hy-pothesis 2a but not Hypothesis 2b.

In Hypotheses 3a and 3b, we examined theimpact of team-level emotional stability and extra-

TABLE 2Results of Hierarchical Regression Analysis for Team Performancea

Independent Variables Main Effects Mediated Effects Moderated Effects

Team performance, time 1 0.10 0.11 0.08Maintaining hierarchyb �0.37** �0.12 2.34Integrating hierarchyb �0.28* �0.07 �7.54**Eliminating hierarchyb �0.01 0.17 �3.43Quantitative behaviors 0.36*Qualitative behaviors �0.11Emotional stability �0.12Extraversion �0.13Maintaining hierarchy � emotional stability �0.16Integrating hierarchy � emotional stability 1.40Eliminating hierarchy � emotional stability 4.26*Maintaining hierarchy � extraversion �2.59Integrating hierarchy � extraversion 5.87*Eliminating hierarchy � extraversion �0.87

R2 .16 .25 .37F 3.13* 3.48** 2.78**

a n � 70 teams.b Dummy-coded variable: control � 0; other � 1.

* p � .05** p � .01


version on the performance of teams adopting aneliminating hierarchy approach to downsizing.Specifically, Hypothesis 3a predicts that downsiz-ing teams according to the eliminating hierarchyapproach will work especially well when a teamscores high on emotional stability. The significanceof the interaction term in Table 2 and the illustra-tion in Figure 2 support this hypothesis (� � 4.26,p � .05). Hypothesis 3b predicts a similar effect forextraversion. However, as noted in Table 2, thishypothesis was not supported in the current data(� � �0.87, n.s.). Another finding, not formallyhypothesized in this study, was that highly extra-verted teams downsized via the integrating hierar-chy approach significantly outperformed teams inthe same condition who scored low on extraversion(see Figure 3). A potential explanation for this isthat higher levels of extraversion enabled integrat-ing hierarchy teams to recognize via interpersonalcommunication the need for team adaptation.Overall, the interaction terms between the person-ality factors and the structural approaches to down-sizing accounted for over 19 percent of additionalvariance in team performance.

DISCUSSION

Disruptive events are clearly one impetus for be-havioral change and adaptation in teams (Louis,1980). However, not all disruptive events impactteam functioning in the same way (Morgeson &DeRue, 2006). Thus, it is important that we exam-ine specific types of disruptive events and theirunique implications for team adaptation and per-formance. In the present study, we considered teamdownsizing as one type of disruptive event andfocused specifically on how three structural ap-proaches to team downsizing impacted adaptive

behaviors and performance in teams. The findingsfrom this study have several important implica-tions for how teams respond and adapt to disrup-tive events such as downsizing.

Implications

One such implication is that the approach usedto implement team downsizing has considerableinfluence over how teams adapt to the downsizingand ultimately team performance. In our findings,the fate of a team leader, in terms of both personand position, seems to be an important driver ofthis relationship. When the team leader (both per-son and position) is eliminated from a team, as isthe case with eliminating hierarchy, the jolt to teamfunctioning is sufficiently disruptive to prompt theteam to recognize the need for and engage in be-havioral change. Specifically, in this study, wefound that eliminating hierarchy teams adapted tothe downsizing by engaging in quantitative behav-ioral change and increasing the effort they directedat task-related behaviors. This pattern contrastswith that observed with downsizing approachesthat maintained the leadership hierarchy or inte-grated the leader into a team. These alternativeapproaches to team downsizing (maintaining hier-archy and integrating hierarchy) do not employ thesame degree of recomposition and, as a result,teams employing either a maintaining or integrat-ing approach to team downsizing do not engage inthe behavioral changes necessary to effectivelyadapt to it. Prior research has not addressed howthe fates of team leaders within the context of dis-ruptive events shapes teams’ adaptive behaviorsand performance, so this is one way in which ourstudy extends existing theory and research. Thisfinding also has important implications for how

FIGURE 2Effects of Emotional Stability on Structural Approaches to Downsizinga

a High and low emotional stability represent one standard deviation above and below the mean, respectively.


team downsizing is managed in organizations. Ourresults suggest that managers should employ ap-proaches to team downsizing that involve bothstructural change and recomposition. If a downsiz-ing approach does not involve both structuralchange and recomposition, teams are less likely toadapt to the disruption, and managers will need tofind some way to actively intervene and facilitatethe necessary team adaptation. Otherwise, teamperformance will suffer from a lack of adaptation.

Another finding of this study with implicationsfor how teams respond to disruptive events is thatthe affective plane of personality, especially team-level emotional stability, enables teams to betteradapt to disruptions. The downsizing literature of-fers little guidance regarding how compositionalfactors such as personality impact postdownsizingoutcomes. Existing literature on team adaptation,however, has suggested that team compositionalfactors such as personality can influence teams’adaptive capacity (LePine, 2003). Our study ex-tends this prior research in at least two ways. First,we know surprisingly little about how the affectiveplane of personality impacts team adaptation. Ourfindings suggest that the affective plane is a keycompositional factor that impacts teams’ ability toadapt to disruptive events. Second, existing re-search on team adaptation and composition doesnot address how compositional factors interactwith a team’s approach to adaptation. In our study,we show that the affective plane of personality im-pacts team adaptation and performance differentlydepending on the team’s approach to downsizing.

Specifically, our findings indicate that team-level emotional stability enhances the performanceof eliminating hierarchy teams only. One potentialreason why emotional stability enhanced perfor-mance only under the eliminating hierarchy ap-

proach is that losing their leader, both the personand the position, was the most disruptive downsiz-ing event for the studied teams, and teams com-prised of members who were emotionally stablewere the best equipped to deal with this disruption.From a managerial perspective, although organiza-tions can rarely predict truly disruptive events, ourstudy suggests that they can prepare in advance forevents such as downsizing by composing teamsthat are well suited for dealing with disruption.Emotional stability is one such factor that managersshould use in team selection processes to enhanceteams’ adaptive capacity.

This study also contributes to understanding ofhow teams adapt to disruptive events by decom-posing behavioral change into different types ofteam behaviors. Prior literature on team adaptationhas focused mostly on what factors prompt teamadaptation, directing much less attention at pre-cisely what types of team behaviors are beingadapted in response to disruptive events. Drawingfrom Ilgen and Hollenbeck (1991), we extendedexisting theory on team adaptation by decomposingbehavioral change into two types of team behaviors(quantitative and qualitative) and then looking athow the adaptation of these different types of be-haviors impacts team performance.

This distinction of quantitative and qualitativeteam behaviors produces a new set of questions forexisting and future research on team adaptation—namely, how are teams adapting (quantitatively orqualitatively), and what are the implications forteam performance if teams adapt quantitatively butnot qualitatively, or vice versa. This study foundthat disruptive events led to quantitative behav-ioral change but not qualitative behavioral change.It is possible, however, that other conditions ortypes of disruptive events could lead some teams to

FIGURE 3Effects of Extraversion on Structural Approaches to Downsizinga

a High and low extraversion represent one standard deviation above and below the mean, respectively.


make qualitative changes. Future research shouldseek to identify which conditions or disruptiveevents facilitate each type of behavioral change. Inthe present study, quantitative but not qualitativebehavioral change explained differences in teamperformance. Over long time periods, however,quantitative behavioral change has its limits, be-cause people can only work harder and faster for solong. This is evident in Trottman’s (2003) accountof how Southwest Airlines’ flight attendants wereonly able and willing to expend high levels of effortfor a certain period of time before they demandedqualitative changes in how work was accom-plished. Over long time periods, qualitative behav-ioral change may become a more important factorin explaining team performance. By distinguishingbetween quantitative and qualitative behavioralchange, we offer team adaptation scholars a theo-retical framework for decomposing the notion ofbehavioral change into different types of team be-haviors and exploring these issues. We also offermanagers a new lens through which they can viewteam adaptation. Specifically, not all types of be-havioral change are equally effective, and managersmust learn how to identify and then facilitate theappropriate type of behavioral change given theneeds and constraints of their organization.

Limitations

Several limitations of this study should be noted.First, a common limitation of laboratory studies isassociated with the external validity of the find-ings. Participants in the present study were under-graduate college students who were reasonably ho-mogeneous in terms of demographic characteristicsand work experience. Therefore, we cannot be cer-tain that our findings generalize to different popu-lations. However, one needs to keep the nature ofthe research question in mind when assessing therelevance of external validity (Berkowitz & Donner-stein, 1982). With regards to the present study,there is no apparent reason why the downsizingprinciples (Cameron et al., 1991) we extend fromthe organization to the team level would not holdin this specific context.

Second, the design of the task used in this studypresents several limitations. The task was designedfor completion by four or five team members. Inorganizational settings, downsizing a team mightpreclude their accomplishing certain tasks, and ourstudy would not apply to this type of task. In otherwords, we assumed here that the task could bedone with the knowledge and skills that remainedin each team after the downsizing. In addition, thetask used in this study was additive, and thus our

findings may not generalize to disjunctive or con-junctive team tasks. For example, downsizing byremoving a team’s best member would severelylimit the team’s ability to perform a disjunctive taskFinally, in the maintaining and integrating hierar-chy approaches to downsizing, the role and respon-sibilities of the displaced team member were eitherredistributed to the remaining team members orassumed by the team leader. In the present study,the task responsibilities of the displaced teammember were simple enough for redistribution tooccur. However, if this role required an exceptionallevel of expertise or experience, our findings mightnot generalize. Future research that examines ourteam downsizing model using different types oftask situations would be noteworthy.

Finally, this study documented that different struc-tural approaches to downsizing result in differentperformance outcomes because of the impact theyhave on behavioral change. This study does not, how-ever, address the question of why some disruptions toteam functioning (such as eliminating hierarchy) arebetter at triggering team adaptation than are otherforms of disruption (such as integrating or maintain-ing hierarchy). Existing theory suggests this differ-ence arises because of the structural and composi-tional changes associated with the eliminatinghierarchy approach, but we did not specifically ex-amine whether these objective features of the ap-proaches to team downsizing align with individuals’perceptions of severity, nor did we empirically ad-dress how individuals’ perceptions of severity influ-ence team functioning. Future research that tests ourassumptions about how the team downsizing ap-proaches differ in terms of severity and disruptionwould make a noteworthy contribution to the litera-ture. This study also did not address whether teamsadapt to disruptive events by means of explicit with-in-team discussion and planning or by means of im-plicit, instinctive adaptation of behaviors to the newenvironment. To address this issue, future researchshould differentiate among disruptive events thattrigger team adaptation on the basis of whether theirimpact occurs via explicit processes such as informa-tion sharing and planning or via implicit, unspokencoordination among team members. Insights fromsuch research would add clarity to understanding ofthe processes through which team adaptation occurs.

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D. Scott DeRue ([email protected]) is an assistant pro-fessor of management and organizations at the StephenM. Ross School of Business at the University of Michi-gan. He received his Ph.D. in organizational behavior andhuman resource management at Michigan State Univer-sity. His research focuses on issues related to leadershipand team development.

John R. Hollenbeck ([email protected]) received his Ph.D. inmanagement from New York University and is currentlythe Eli Broad Professor of Management at the Eli BroadGraduate School of Business Administration at MichiganState University.

Michael D. Johnson ([email protected]) is an as-sistant professor of management and organization at theUniversity of Washington Business School. He receivedhis Ph.D. in organizational behavior and human resourcemanagement at Michigan State University. His researchfocuses primarily on groups and teams, identity, andaffect.

Daniel R. Ilgen ([email protected]) is the John A. HannahDistinguished Professor of Industrial-Organizational Psy-chology and Management at Michigan State University.His research interests include work motivation and be-havior of teams and their members.

Dustin Jundt ([email protected]) is a doctoral candidatein industrial-organizational psychology at MichiganState University. His research interests include team pro-cesses and effectiveness, adaptive performance, self-reg-ulation and higher-order cognition, and levels issues.


how different team downsizing approaches influence …faculty.washington.edu/mdj3/derue et al...

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