The Effect of Downsizing on Hierarchical Work Flow Dynamics in Organizations

The objective was to determine the impact of the downsizing of management personnel on the flow of work throughout the organization, given that the quantity of workers (or technicians) must remain the same. In particular the objective of study was to assess the impact of downsizing on performance dynamics, where social factors such as power objectives of the management groups, job insecurity, and perceptions of fairness were not active variables in the process. Three groups of university students (19-33 in a group) were formed to play the Chaos Exercise in a three-level hierarchy. In the three experimental conditions, management groups were downsized during the game from 3 to 2 players, from 2 players to 1, or from 3 players to 1. Nonlinear dynamical structures were explored for each condition and at all three levels of hierarchy using production records generated by each group. Results showed chaos for two out of three conditions at the lowest level of the hierarchy, and usually a tendency toward asymptotic stabilization in middle management, although the functions themselves were markedly varied. The 2-to-1 condition, however, showed a tendency toward performance stabilization at the worker and middle management levels, but chaos at the top management level.