During her studies at Brandeis University and the Harvard Business School Teresa Amabile studied the effects of downsizing on creativity and innovation output. The purpose of her studies were to understand the effects of downsizing on specific elements of the work environment, identify managerial implications for minimizing the negative effects of downsizing on creativity and innovation, and identifying possible positive results of downsizing if any.
When looking at the stimulants to creativity: freedom, challenge, sufficient resources, supervisory encouragement, workgroup support, and organizational encouragement, it was found that all elements fell between 20% and 30% upon announcement of a 30% downsizing until the time that the downsizing effort was approximately 70% complete. These factors then improved roughly 5 to 10% by the time the downsizing was 100% complete. Studies four months after the completed downsizing also showed a continued 5% to 10% rise in the set of the creativity stimulants, although few ever returned to their initial values. During this period of time the average number of patent applications dropped between 10 and 15%, and invention disclosures dropped between 20 and 30%. The comments related to this experience could be summarized as “the quality of the work has dropped because the sense of pride is gone. We’re no longer really part of a team. Instead, everyone was trying to protect their job, just to satisfy themselves by looking good. They’re not focused on the work itself”.
Thus the overall implications when downsizing innovation organizations are that they have a negative impact on work environment creativity. There were no positive effects found. A slight recovery in performance may occur but it is only after both downsizing, restructuring and rebuilding efforts have been completed. Most of the negative effects are likely due to the instability of an individual’s own workgroup and anticipated downsizing versus the actual downsizing experience. From a management standpoint negative effects may be avoided or alleviated by: (1) all directional information communication, (2) teambuilding, (3) maintenance of intact groups, and (4) getting it over with quickly.