Does organizational change divide or unite teams? The role of internal team power structures

Abstract

While the effects of organizational change have been studied extensively on the organizational and the individual-level of analyses, its effects on teams, the building blocks of many organizations, has hitherto been neglected. Based on individual- level research that shows organizational change to be an unsettling experience during which individuals seek self-protection, we argue that organizational change has the potential to both bind teams together as well as tear teams apart, depending on the internal power structure of the team. In more hierarchical teams, we predict that organizational change elicits competitive intra-team power dynamics, as the different power ranks in these teams promote social comparisons and a competitive, team performance-detracting approach to self-protection in times of change. However, in more egalitarian teams, we expect organizational change to reduce competitive power dynamics, as this power structure emphasizes unity and a cooperative approach towards self-protection during unsettling times of change. We find support for our model in a field study of 142 teams in a health insurance organization. Results show that in more hierarchical teams, organizational change was negatively related to team performance, via increased intra-team social comparisons and power struggles, and in more egalitarian teams, organizational change was positively related to team performance, via decreased social comparisons and power struggles. As such organizational changes can push teams to achieve higher success, or can make teams go under, depending on the internal power structure within teams. Organizations seeking to be agile would be well-advised to use flatter teams.