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The team scaling fallacy: Underestimating the declining efficiency of larger teams

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  • Staats, Bradley R.
  • Milkman, Katherine L.
  • Fox, Craig R.

Abstract

The competitive survival of many organizations depends on delivering projects on time and on budget. These firms face decisions concerning how to scale the size of work teams. Larger teams can usually complete tasks more quickly, but the advantages associated with adding workers are often accompanied by various disadvantages (such as the increased burden of coordinating efforts). We note several reasons why managers may focus on process gains when they envision the consequences of making a team larger, and why they may underestimate or underweight process losses. We document a phenomenon that we term the team scaling fallacy—as team size increases, people increasingly underestimate the number of labor hours required to complete projects. Using data from two laboratory experiments, and archival data from projects executed at a software company, we find persistent evidence of the team scaling fallacy and explore a reason for its occurrence.

Suggested Citation

  • Staats, Bradley R. & Milkman, Katherine L. & Fox, Craig R., 2012. "The team scaling fallacy: Underestimating the declining efficiency of larger teams," Organizational Behavior and Human Decision Processes, Elsevier, vol. 118(2), pages 132-142.
  • Handle: RePEc:eee:jobhdp:v:118:y:2012:i:2:p:132-142
    DOI: 10.1016/j.obhdp.2012.03.002
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    References listed on IDEAS

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    Cited by:

    1. Øglend, Atle & Osmundsen, Petter & Lorentzen, Sindre, 2016. "Cost Overrun at the Norwegian Continental Shelf: The element of surprise," UiS Working Papers in Economics and Finance 2016/3, University of Stavanger.
    2. Osmundsen, Petter & Roll, Kristin Helen, 2016. "Rig rates and drilling speed: reinforcing effects," UiS Working Papers in Economics and Finance 2016/4, University of Stavanger.
    3. Fehr, Dietmar, 2017. "Costly communication and learning from failure in organizational coordination," European Economic Review, Elsevier, vol. 93(C), pages 106-122.
    4. Chatman, Jennifer A. & Sherman, Eliot L. & Doerr, Bernadette M., 2015. "Making the Most of Diversity: How Collectivism Mutes the Disruptive Effects of Demographic Heterogeneity on Group Performance," Institute for Research on Labor and Employment, Working Paper Series qt7vq6w0gk, Institute of Industrial Relations, UC Berkeley.
    5. Daniels, David P. & Neale, Margaret A. & Greer, Lindred L., 2017. "Spillover bias in diversity judgment," Organizational Behavior and Human Decision Processes, Elsevier, vol. 139(C), pages 92-105.

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