1 Managing Business Relationships Dr. Vesselin Blagoev

2 Power and exchange at interpersonal, organisational and societal levels Power is “the capacity of an individual or group to affect the outcome of any situation so that access is achieved to whatever resources which are scarce and desired within a society or a part of that society” T. J. Watson (2002) in MBR (2004) p.5.

3 or…….. “ The capacity of individuals to overcome resistance on the part of others, to exert their will and to produce results consistent with their interests and objectives. ” D. Buchanan & A. Huczynski (2004) p.828.

4 Power as a property of relationships Power may be seen as deriving from formal sources i.e. outside of personal characteristics, i.e. position power - authority based on organisational post /title. However it is accepted that such power still needs to be legitimated to secure compliance or commitment

5 Sources of power Reward and Coercive Power – You have the ability to administer punishment or reward (one increases bases of power and the other decreases them) Negative Coercive Power – Child doing what told not to do Referent Power – Others want to be like you Legitimate Power – Others believe you have the right Expert Power – Others see you as an expert Information or Persuasive Power – Others see you as persuasive or logical

6 Informal sources of power Are these that derive from relationships but relate more to personal attributes, for example: Expert power Referent power Charismatic power (an extreme version of referent)

7 Power and exchange at interpersonal, organisational and societal levels The interpersonal dimension of power The ways in which some people are able to get other people do things they would not otherwise do I am bigger I am smarter I am richer I have charisma

8 Power and exchange at interpersonal, organisational and societal levels Organisational structural-cultural dimension of power The pattern of relationships within an organisation whereby rules, hierarchy and cultural norms, that people have agreed with by joining the organisation, make it normal or reasonable for some people to do things they would not otherwise do

9 Power and exchange at interpersonal, organisational and societal levels S ocietal structural-cultural dimension of power The pattern of relationships and understandings generally prevailing in a society that mean, 1 st - that certain people have material capacity to exert pressures on others, and 2 nd –there is legitimacy given to practices whereby certain people force other to do …

10 Power and exchange at interpersonal, organisational and societal levels This concept is very complex The essence could be interpreted as the capacity of individuals or groups to affect outcomes of situations to their advantage. It is clear that these outcomes typically relate to the distribution of whatever resources which are scarce and valued by the society

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12 Management Management : The function of forecasting, planning, organising and controlling the organisation into the long term Managing : the regular actions to keep the company into the long-term path achieving the planned goals and overcoming problems Managers : ……

13 People’s goals, etc. The managers and employees have their own goals, priorities and ambitions. How does it reflect in their behaviour in the organisation?

14 Micropolitics-1 Micropolitical conflicts occur as a result of competition for scarce resources (positions, budgets, wages, floor space) Younger employees Woman coalitions Old boys

15 Micropolitics-2 Conflicts are inevitable, because human beings (strategic animals) strive to establish who they are, partly satisfying their material needs They have to cooperate with others and in the same time – compete with them

16 Micropolitics-2 The division of labor in the organizations and the allocation of people in different sub-units (different budgets, importance,...). The people in the unit cooperate to challenge “the other units”. Competition within the sub-units: who’ll be the head of the unit

17 Micropolitics-3 Ambiguity exists when the meaning of the situation is unclear and confuses, and is therefore open to a variety of interpretations. Is my friend best for the job? Uncertainty exists when the understanding of a future situation or an event is unclear or confused and therefore open to a variety of interpretations. This brings strategic dimensions: which strategy to choose?

18 Micropolitics-4 High degree of ambiguity and uncertainty in any organisation’s development. No one has the “full facts” of any situation, no one can predict 100% what will come out after a particular course of actions is taken. So the managers need to cooperate, trade with others in the organisation to get their support and “share of risk”

19 Strategic contingency theory of power The contingency matters : Help the company in difficult times and you’ll have better chances for promotion If the dept helps the company get out of the mess – it becomes “more important” Remember that all these are subject of interpretation

20 Strategic contingency theory of power A sub-unit of an organization will have greater relative power of influence within the organization the more it: (a) is central to the organization’s workflow (b) cannot be substituted by another unit (c) reduces uncertainties perceived to be of strategic significance to the organization

21 Some cases What kind of power they have or they exert : Simeon

22 Some cases What kind of power they have or they exert : Simeon Volen Siderov

23 Some cases What kind of power they have or they exert : Simeon Volen Siderov George W. Bush