Managerial Change, Longevity, and Organizational Effectiveness

Managerial Change, Longevity, and Organizational Effectiveness Author(s): D. Stanley Eitzen and Norman R. Yetman Source: Administrative Science Quarterly, Vol. 17, No. 1 (Mar., 1972), pp. 110-116 Published by: Sage Publications, Inc. on behalf of the Johnson Graduate School of Management, Cornell University Stable URL: http://www.jstor.org/stable/2392099 . Accessed: 13/06/2014 00:48 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. . Sage Publications, Inc. and Johnson Graduate School of Management, Cornell University are collaborating with JSTOR to digitize, preserve and extend access to Administrative Science Quarterly. http://www.jstor.org This content downloaded from 195.34.79.79 on Fri, 13 Jun 2014 00:48:32 AM All use subject to JSTOR Terms and Conditions http://www.jstor.org/action/showPublisher?publisherCode=sage http://www.jstor.org/action/showPublisher?publisherCode=cjohn http://www.jstor.org/action/showPublisher?publisherCode=cjohn http://www.jstor.org/stable/2392099?origin=JSTOR-pdf http://www.jstor.org/page/info/about/policies/terms.jsp http://www.jstor.org/page/info/about/policies/terms.jsp D. Stanley Eitzen and Norman R. Yetman Managerial Change, Longevity, and Organizational Effectiveness College basketball team records were used to examine the effects of coaching changes and length of tenure on team effectiveness. Coaching change and team effectiveness were found to be inversely related but this relationship depended on team performance prior to the change. This led to the conclusion that coaching shifts do not affect performance. The data suggest, however, that length of coach- ing tenure is a significant variable affecting team performance. The relationship is curvilinear: the longer the coaching tenure, the greater the team success, but after a certain length of time (thirteen years or so) team effectiveness begins to decline. This research deals with managerial suc- cession in relation to organizational effec- tiveness.* Interest in this problem began with Oscar Grusky's study of major league baseball teams (1963). Grusky, hypoth- esized that the rates of administrative suc- cession and the degree of organizational effectiveness would be negatively correlated -that is, the higher the turnover rate, the poorer the organizational performance. To test this hypothesis, he used the records of professional baseball teams because, unlike most other organizations, they are identical in size, official goals, and authority structure. Additionally, team winning percentages, or league standings, which Grusky employed, provide a precise measure of team effective- ness. Analyzing the team standing of major league teams for two different periods (1921-41; 1951-58) covering nearly three decades, Grusky's hypothesis was confirmed by a correlation of -0.43 between the rate of managerial change and organizational effectiveness. This article explores not only the relative rates of managerial succession but also the immediate and long-range effects of managerial changes. * An earlier version of this paper was read at the meetings of the Ohio Valley Sociological Society, Cleveland, Ohio, April 22-24, 1971. We wish to express our thanks to Ken Kammeyer, Ronald Cor- win, George Ritzer, Betty Bullock, and Donna Schaefer for their suggestions and criticisms. This study was supported by a grant from the Graduate Research Fund, University of Kansas. There are three possible consequences of a change in key leadership roles: the effec- tiveness of an organization may increase, decrease, or remain relatively the same. When Gouldner described leadership change in a gypsum mine, he showed a de- cline in organizational effectiveness as the new and more bureaucratically oriented manager introduced different rules, made new interpretations, and invoked more nega- tive sanctions than his predecessor (1954). Although this consequence of managerial change is most frequently noted in the litera- ture, the two other outcomes may also occur. Personal qualities or luck, can contribute to success for the new manager, It is also possible that a change in managers may make no difference in organizational ef- fectiveness. Grusky, rejecting the common sense explanation that managers are fired because they are doing poorly, advanced an elaborate explanation, based on the as- sumption that a managerial change is dys- functional to the organization. He argued that managerial changes contribute to de- clining morale and expectations of failure, leading to a deterioration of team perfor- mance. In a critique of Grusky's article, William A. Gamson and Norman A. Scotch chal- lenged his theory that frequent managerial changes will induce greater team failure (1964). More consistent with his data, they maintained, is the common sense notion, 110 This content downloaded from 195.34.79.79 on Fri, 13 Jun 2014 00:48:32 AM All use subject to JSTOR Terms and Conditions http://www.jstor.org/page/info/about/policies/terms.jsp Eitzen & Yetman: MANAGERIAL CHANGE 111 which Grusky rejected (1964), that man- agerial changes will improve organizational effectiveness. Their own analysis of mid- season changes of baseball managers sup- ported their contention that managerial change has little effect on team performance. One of the major limitations of Grusky's study was the size of his sample (n = 16) and the limited number (135) of managerial changes that occurred during the nearly thirty years that comprised the two periods he examined. Grusky admitted that in each of the time periods examined the magnitude of the correlations he obtained was in- fluenced by two atypical cases, the Philadel- phia Athletics 1921-41 and the New York Yankees 1951-58, each of which experienced no managerial changes. Furthermore, the limited size of Grusky's sample precluded his controlling for turnover rate by degree of team effectiveness. Data were needed to broaden the sample substantially. As part of a larger study examining the social characteristics that affect the perfor- mance of college basketball teams, we sought information on the coaching records of college basketball teams of the 522 NCAA member colleges and universities listed in the 1970 Official Collegiate Basketball Guide. This information was requested from Sports Information Directors and 417, or 80 percent, of the schools listed in the Guide responded with some information after two follow-ups. Of these, 129 (or 25 percent of the original sampling frame) provided in- formation on past team records involving 657 coaching changes. This does not mean that there is a systematic bias in the teams that did provide the data. The data were obtained from the team brochures and many of these did not include the year-by-year record of wins and losses with the coach's name. Furthermore, a number of schools were excluded because they did not field teams during all of the years selected for inclusion. Coaching Turnover and Team Effectiveness The period between 1930 and 1970 was chosen for analysis. Two statistics were ob- tained for each basketball team: the overall winning percentage and the number of coaching changes. Calculation of the school's overall winning percentage began with the first year after the initial coaching change in the period and counted the next coaching change as the first. This procedure provided a new coaching tenure as the common base from which calculations for the period could be made. The length of time for which coaching changes and winning percentages were computed varied according to the number of years after 1930 that the initial coaching change in the school occurred. So full rather than interrupted tenure was calculated for each coach. Given the length of the period covered and the number of coaching changes on the teams in the sample (a range of one to eleven), this method of calculation has not apparently affected the analysis of the data. A correla- tion was obtained of -0.16 (Pearsonian r) between the turnover rate (the number of years covered in the period divided by the number of coaching changes) and winning percentage. In other words, there was some tendency for schools with high winning per- centages to have lower rates of coaching turnover, although the size of the correla- tions was considerably less than that ob- tained by Grusky (-0.43). As the data employed in the computation of this correlation were based on records that included the incumbent coach of 1970, the analysis was further refined by eliminat- ing the records of those individuals still coaching at the school at the end of the sur- vey period. So analysis was restricted to the full-time records of those who had com- pleted coaching tenure at a particular school. When computed on this basis, a cor- relation of -0.24 between turnover rate and winning percentage was obtained. Finally, as a forty-year period might be too lengthy and therefore insensitive to shorter periods of team success or failure, as well as to coaching stability or instability, a ten-year period 1960-1969, was also selected to test the relationship between turnover rate and winning percentage. The correla- tion of -0.28, like the other two, was in the direction predicted by Grusky, but, again, not as large as he obtained. Although the correlations we obtained were substantially lower than those Grusky found, they do provide support for his hy- This content downloaded from 195.34.79.79 on Fri, 13 Jun 2014 00:48:32 AM All use subject to JSTOR Terms and Conditions http://www.jstor.org/page/info/about/policies/terms.jsp 112 ADMINISTRATIVE SCIENCE QUARTERLY pothesis that turnover rates and organiza- tional effectiveness are negatively correlated. One disadvantage of the data is that they did not include the reasons for a coaching change. The data did not enable us to dis- tinguish between the case in which the coach was fired and the one in which he resigned after a successful tenure to assume a more lucrative coaching position at an- other school. Although there are other fac- tors affecting the turnover rate of collegiate coaches, team performance, positive or negative, undoubtedly is crucial. It seems to us that college basketball coaches tend to move up much more than major league baseball managers. Examples of winning baseball managers leaving their clubs for more lucrative managing positions are al- most nonexistent (Johnny Keane's replace- ment of Yogi Berra as manager of the Yankees in 1964 is a notable recent excep- tion). As Gamson and Scotch noted, there appears to be a pool of former major league managers who have been fired and are fre- quently hired later by another club. The situation for college basketball coaches is somewhat different. Coaching success seems to be a significant variable in generating up- ward mobility. Without an analysis of the full career patterns of the coaches them- selves, however, it is impossible to ascertain the impact of upward mobility on the turn- over rate. A limitation of Grusky's analysis was his inability to control for the relative level of team effectiveness. To accomplish this, the schools were divided according to their team's overall winning percentage into categories of less than 45 percent, 45-54 percent, and more than 55 percent. The average length of coaching tenure for each school was computed and teams were divided at the median (5.9 years); high and low turnover teams were then compared as to overall winning percentage. Table 1 shows that the distribution is in the ex- pected direction once again (losing teams are more likely to be characterized by high turnover), although the relationship is rela- tively weak (-0.21). Tenure and Organization Effectiveness Grusky studied the effect of rates of managerial succession. Using his finding as a point of departure, we examined whether organizational effectiveness declined when a new coach took over the team, whether it increased, or whether it stayed relatively the same. Thus, the new coach's first year was compared with the last year of the preceding coach. The coach was judged to have an improved performance over his predecessor if his winning percentage was more than five points better, and to have worsened if it was more than five percentage points less. Table 2A1 shows the comparison of the coaches' first-year records relative to the previous year's performance. These data indicate that a coaching change tends to im- prove team performance. Upon closer examination, however, such a conclusion may not be warranted. The validity of the generalization is made prob- lematic because, as in Grusky's analysis, the relative success of the teams was not con- sidered. We examined this variable by splitting the data according to the relative performance of coaches: those who inherited winning teams (50 percent or better) and those that had losing records (less than 50 percent), during the year before a coaching change. These data are presented in Table 2A2. The striking feature of these data is that TABLE 1. TURNOVER RATES AND TEAM EFFECTIVENESS BY WINNING PERCENTAGES FOR THE ENTIRE PERIOD (IN PERCENTAGES) Winning Percentage Turnover Rate Less than 45% 45-54% 55 or more S High (above median) 60.9 (14) 51.1 (23) 43.3 (26) Low (below median) 39.1 (9) 48.9 (22) 56.7 (34) Totals 100.0 (23) 100.0 (45) 100.0 (60) This content downloaded from 195.34.79.79 on Fri, 13 Jun 2014 00:48:32 AM All use subject to JSTOR Terms and Conditions http://www.jstor.org/page/info/about/policies/terms.jsp Eitzen & Yetman: MANAGERIAL CHANGE 113 TABLE 2. COMPARISONS WITH TEAM RECORD OF PRECEDING YEAR Record of new coach is Better Same Worse % N % N % N A. With coaching changes 1. Overall 42.2a (272) 22.2 (143) 35.6 (229) 2. By previous success Team success in preceding year was: Above 50% 19.6 (64) 20.5 (67) 59.9 (196) Less than 50% 57.9 (179) 20.4 (63) 21.7 (67) B. With no coaching change Team success in preceding year was: Above 50% 23.2 (321) 18.5 (256) 58.3 (806) Less than 50% 57.2 (418) 21.5 (157) 21.3 (156) aThe proportion with "better" records differed significantly from the proportion with "worse" records at the .01 level. if a team had a winning season the previous year, the record of the succeeding coach was likely to be poorer. If the previous year's record was a losing one, performance im- proved. This gives credence to the common sense view that poor performance necessi- tates a change and that the change will have a positive effect. Where a team has been successful on the other hand, it is unlikely that coaching changes will improve the previous winning record. Is it plausible to expect that the findings noted in Table 2A would have occurred with- out a coaching change? In order to evaluate the previous table, the winning percentages of adjacent years were calculated (that is first year with second, second with third, and so on) for the individual coaches in the sample (2,114 comparisons) where no coaching changes had taken place. We ex- amined 2,114 succeeding years to ascertain whether team effectiveness improved or de- teriorated without a coaching change. These data are reported in Table 2B. Comparison of the data found in Table 2 shows that when the preceding coach's winning percentage is taken into account, a change in coaches makes no difference. In other words, poor teams tend to improve the following year and successful teams tend to deteriorate strictly as a matter of probability. There is a regression to the mean for at least two reasons. First, success or failure by a team may have resulted from chance factors, all of which worked in one direction. It is not probable in the next sea- son that these chance factors will again work in one direction, so the team will be less successful or will improve upon the previous year's record. In this way, teams toward the extreme in a given year will tend toward the mean (a 50 percent won-lost record) the next year. A second basis for expecting a re- gression to the mean is that it is virtually impossible for highly successful teams to improve. They can either match their pre- vious record or become less successful. Simi- larly, extremely poor teams will remain poor or improve. These data confirm the contention of Gamson and Scotch that a coaching change makes no difference in team effectiveness. If this conclusion holds in other types of organizations as well, one key assumption underlying the studies of leadership must be discarded. The discussion above was limited to a comparison of a coach's first year with the last year of his predecessor. A reasonable objection to this procedure is that a coach's first year is based upon the skills of the pool of talent that was almost exclusively re- cruited by his predecessor (the exceptions being his recruitment of junior college players or in colleges where they are eligi- ble, the recruitment of freshmen). To coun- ter this objection, a coach's cumulative record for his first five years was compared with the school's previous five years as well as his first ten years with the previous ten. This content downloaded from 195.34.79.79 on Fri, 13 Jun 2014 00:48:32 AM All use subject to JSTOR Terms and Conditions http://www.jstor.org/page/info/about/policies/terms.jsp 114 ADMINISTRATIVE SCIENCE QUARTERLY TABLE 3. COMPARISON OF THE COACHES' RECORDS FOR FIVE AND TEN YEARS WITH THE EQUIVALENT NUMBER OF YEARS PRIOR TO HIS INCUMBENCY Record of the present coach is Better Same Worse % N % N % N A. Number of years compared For five years: 41.8 (117) 27.1 (76) 31.1 (87) For ten years: 41.4 (41) 30.3 (30) 28.3 (28) B. Controlling for the effects of team effectiveness in prior years Winning: 26.4 (47) 30.9 (55) 42.7 (76) Prior record for five years Losing: 68.6 (70) 20.6 (21) 10.8 (11) Winning: 28.6 (22) 35.1 (27) 36.4 (28) Prior record for ten years Losing: 86.4 (19) 13.6 (3) 0.0 (0) C. Comparison of coaches' early years with their later years by number of years coached* Average winning 8-9 years 56.9 (33) 3.4 (2) 39.7 (23) percentage for 10-12 years 47.9 (23) 6.3 (3) 45.8 (22) last years com- 13 + years 22.8 (13) 7.2 (4) 70.0 (40) pared with first years * X2 = 11.82; df = 2 (collapsing "better" and "same" categories into one in order to eliminate the cells with less than five cases); P < .01; Gamma = .40. These comparisons were made irrespective of the number of coaching changes that had occurred in the previous periods. The data in Table 3A show these comparisons. This table suggests that coaches lasting five and ten years, respectively, tend to have records better than those for the same time periods before their arrival. But once again these data should be divided on the basis of whether or not the team was a winner or loser prior to the coaching change, so Table 3B also presents the data controlled for the effects of team effective- ness prior to the present coach (as we did in Table 2). These data show that although succeed- ing to a position on a winning or losing team continues to make a difference over time, the longer the tenure the greater the likeli- hood that a coach will improve upon the long term record of his predecessors. The improvements in coaching performance over time should be evaluated with caution, however, for even after five years the im- provement is only 10 percent for previously losing teams and thirteen percentage points for winning teams. It is only after ten years, a lengthy tenure in the coaching profession, that the improvement is substantial. As the substantially reduced number of cases in both the five and ten year categories indicate, a distillation process is involved. The more successful coaches are more likely to be retained. Therefore, coaching changes can be beneficial in that they provide an op- portunity for the organization to replace the less talented individuals. Longevity of Tenure and Team Effectiveness The data have shown that for college basketball teams the longer coaches remain, the more successful they tend to be. This finding raises the question as to whether coaching effectiveness continues to increase throughout the coach's tenure at a given school. Folk wisdom and in some cases or- ganizational policy assume that university administrators, police chiefs, ministers, pro- fessors, and others may lose their effective- ness over time because they are taken for granted, coast on previous laurels, or be- come complacent. A shift to another posi- This content downloaded from 195.34.79.79 on Fri, 13 Jun 2014 00:48:32 AM All use subject to JSTOR Terms and Conditions http://www.jstor.org/page/info/about/policies/terms.jsp Eitzen & Yetman: MANAGERIAL CHANGE 115 tion, however, may rekindle the competi- tive flame because once again they must prove themselves. This question was raised about the college basketball coaches in this sample. The last years of a coach's tenure at a school were compared with his first to see if his teams had improved, stayed the same, or declined in winning percentage. For coaches remain- ing at a school ten years or more, the last five years were compared with his first five. For those persons coaching eight or nine years, the comparison years were the last four with the first four. Since the problem involved longevity, analysis was limited to coaches who remained at one school eight years or more. These data are shown in Table 3c. The breakdown in section c of Table 3 was determined by the patterns found in the data. Coaches who left after eight or nine years tended to leave as winners in comparison with their early years. Coaches whose tenure lasted ten, eleven, or twelve years were split evenly into those whose records were improving and those whose records were deteriorating. For those coaches whose longevity at one post ex- ceeded twelve years (the longest tenure was twenty-eight years), every year but one showed a disproportionate number of coaches ending their career at a school with last-half records poorer than their first (com- paring five year segments in each case). The significant chi-square and the moderately high gamma coefficient support the conclu- sion that tenure in the role of head basketball coach beyond twelve years leads to dimin- ished effectiveness. These findings, while provocative, are ex post facto. The decline in effectiveness may be due to the coach's age or nearness to retirement (Saleh and Otis, 1964; and Tur- ner, 1955). A more adequate test would also assess whether a coach who declined in his effectiveness with one team experienced success or continued decline after a change to another team. To our knowledge, the effects of longevity on effectiveness have not been systemati- cally examined for any occupational cate- gory. These findings suggest that longevity may, indeed, be a significant variable affect- ing performance in a single role in an or- ganization. Although the length of time after which effectiveness declines may vary, the validity of this general principle might fruitfully be examined in other organiza- tional contexts. CONCLUSION Grusky, in his analysis of major league baseball teams, found a negative correlation between turnover rate and organizational effectiveness. This replication using college basketball teams noted the same relation- ship, although the association was weaker. Furthermore, coaches of previously success- ful teams (those winning half or more of their games) were found to be less successful than their predecessors. On the other hand, coaches hired at schools where the previous team had won less than 50 percent of their games, tended to improve on the previous year's record. Since coaching changes are more likely to occur after an unsuccessful season, more coaches will be relatively suc- cessful in their first year. However, the data demonstrate that poor teams will probably improve their record with or without a coach- ing change. Thus, the conclusion that turn- over and team performance are inversely related, but that this relationship depends upon the team's performance prior to the change. Although a coaching change appears to have little effect upon initial team perfor- mance, the introduction of a new coach provides a possibility for long-term change and improvement that might not have been possible if a coaching change had not oc- curred. The longer the coaching tenure, the greater the likelihood that a coach will be successful, but according to these data there is a certain length of time (thirteen years or more) beyond which effectiveness begins to decline. D. Stanley Eitzen is a professor of sociol- ogy at the University of Kansas; Norman R. Yetman is a professor of sociology and American Studies. REFERENCES College Athletics Publishing Service 1970 1970 Official Collegiate Basketball This content downloaded from 195.34.79.79 on Fri, 13 Jun 2014 00:48:32 AM All use subject to JSTOR Terms and Conditions http://www.jstor.org/page/info/about/policies/terms.jsp 116 ADMINISTRATIVE SCIENCE QUARTERLY Guide. Phoenix: College Athletic Pub- lishing Service. Gamson, William A., and Norman A. Scotch 1964 "Scapegoating in baseball." American Journal of Sociology, 70: 69-72. Gouldner, Alvin W. 1954 Patterns of Industrial Bureaucracy. Glencoe: Free Press. Grusky, Oscar 1963 "Managerial Succession and Organiza- tional Effectiveness." American Journal of Sociology, 69: 21-31. 1964 "Reply to Gamson and Scotch." Amer- ican Journal of Sociology, 69: 21-31. Saleh, Shoukry D., and Jay L. Otis 1964 "Age and level of job satisfaction." Per- sonnel Psychology, 17: 425-430. Turner, A. N. 1955 "The older worker: new light on em- ployment and retirement problems." Personnel, 32: 246-257. This content downloaded from 195.34.79.79 on Fri, 13 Jun 2014 00:48:32 AM All use subject to JSTOR Terms and Conditions http://www.jstor.org/page/info/about/policies/terms.jsp Article Contents p.110 p.111 p.112 p.113 p.114 p.115 p.116 Issue Table of Contents Administrative Science Quarterly, Vol. 17, No. 1 (Mar., 1972), pp. 1-161 Front Matter A Garbage Can Model of Organizational Choice [pp.1-25] Technology and Organizational Structure: A Reexamination of the Findings of the Aston Group [pp.26-43] Causal Inference Analysis: A Seductive Process [pp.44-55] Reply to Hilton: Seduced and Abandoned [pp.55-57] Erratum: Toward a Theory of Political Participation of Public Bureaucrats [p.57] How Do I Know My Data? Let Me Count the Ways [pp.58-61] Allocation of Authority in Land Reform Programs: A Comparative Study of Administrative Processes and Outputs [pp.62-75] An Examination of the Blau-Scott and Etzioni Typologies: A Critique [pp.76-78] Reply to Weldon [pp.79-80] A Theory of Organization and Behavior in Batch Production Factories [pp.81-98] Field Administration and Political Change: The Case of Northern Nigeria [pp.99-109] Managerial Change, Longevity, and Organizational Effectiveness [pp.110-116] A Typology for Participation in Organizational Decision Making [pp.117-125] A Longitudinal Assessment of Management by Objectives [pp.126-138] Book Reviews untitled [pp.139-140] untitled [pp.141-142] untitled [pp.142-144] untitled [p.144] untitled [pp.144-146] untitled [pp.146-147] untitled [pp.148-149] untitled [pp.149-150] untitled [pp.151-152] untitled [pp.152-153] untitled [pp.153-154] untitled [pp.154-155] untitled [pp.156-157] untitled [pp.157-158] Publications Received [pp.159-161] Back Matter