To remedy increased costs, employees are laid off, and the remaining staff is pushed to work even harder. Stress increases as workers are expected to accomplish more with less. Depression and other stress-related illnesses run rampant throughout the organization. As a result, inefficiencies increase and overhead rates do not drop as significantly as planned. Finally there is a catharsis.
Executives realize their future is in jeopardy unless urgent action is taken.
Stage Three . After visiting with consultants and industry experts, executives perceive a renewed commitment to efficiency is the answer. To trim unnecessary costs, they decide to adapt one of the current reorganizational methods currently in vogue to analyze and reinvent their business operations. Assuming a successful implementation of this process, the company will follow one of two possible paths after reorganization. Either the company becomes more gazelle-like, reverts to a revised Stage One and starts the process all over again, or as part of its Stage Three process, company executives realize that committing only to improved business efficiency will eventually lead back to a repeat of the previous cycle.