Power, Politics, Conflict, and Negotiation Understanding and Managing Organizational Behavior Chapter 13 Sixth Edition Jennifer M. George & Gareth R. Jones Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 13-1

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Learning Objectives Understand the nature of power and explain why organizational politics exists and how it can help or harm an organization and its members Differentiate between the main sources of formal and informal power people can use to engage in organizational politics as well as sources of functional and divisional power Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Learning Objectives Discuss the nature of organizational conflict and the main sources of conflict in an organizational setting Describe a model of the conflict process that illustrates how the conflict process works Explain how negotiations can be used to manage the conflict process and resolve disputes between people and groups Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Using Power and Politics to Increase Performance Why do managers use their power to influence organizational performance? To keep up with competition Get better results Pfizer’s John Mackay felt that too many managers and committees resulted in too much conflict between managers who were actively lobbying other managers and the CEO to promote the interests of their own product groups—and the company’s performance was suffering as a result. Mackay’s plan to change this situation involved slashing the number of management layers between top managers and scientists from 14 to 7 that resulted in the layoff of thousands of Pfizer’s managers. He also abolished the scores of product development committees he believed were slowing down decision making and the process of transforming innovative ideas into blockbuster drugs. After streamlining the hierarchy of authority, he focused his efforts on reducing the number of bureaucratic rules scientists had to follow, many of which he thought unnecessary. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

The Nature of Power and Politics Principal means of directing and controlling organizational goals and activities Ability to get others to do something they might not otherwise do Power is oftentimes necessary to get things accomplished. Politics are useful for increasing power. Power and politics often have negative connotations because people associate them with attempts to use organizational resources for one’s personal advantage and goals at the expense of the goals of other’s. The next slide discusses ways that power and politics can help organizations. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall The Good Side of Power Improve decision-making quality Promote change Encourage cooperation Promote new organizational goals Power and politics can help organizations. When managers use power to promote different solutions to problems, the debates over the best action can improve quality of decision making. This is called political decision making. Different perspectives can promote change and allow organization to adapt to its environment. For instance, when coalitions, groups of managers who have similar interests, lobby for an organization to pursue new strategies or change its structure, the use of power can move the organization in new directions. Managers can use power to control people and resources so that they cooperate to achieve an organization’s current goals. Managers can also use power to engage in politics and influence the decision-making process to help promote new, more appropriate organizational goals. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Sources of Individual Power Exhibit 13.1 Individual Power Formal Power Legitimate power Reward power Coercive power Information power Informal Power Expert power Referent power Charismatic power Most individuals in an organization have some ability to control the behavior of other individuals or groups. They get this power from both formal and informal sources. Formal individual power is the power that stems from a person’s position in an organization’s hierarchy. Formal power is a reflection of an individual’s legitimate, reward, coercive, and information power. Legitimate power confers on an individual the legitimate authority to control and use organizational resources to accomplish organizational goals. It is the ultimate source of an individual’s power in an organization. Reward power is the power to give pay raises, promotion, praise, interesting projects, and other rewards to subordinates. These rewards can be both intrinsic and extrinsic. Coercive power is the power to give or withhold punishment. Punishments range from suspension to demotion, termination, unpleasant job assignments, or withholding of praise and goodwill. Information power is power stemming from access to and control over information. The greater a manager’s access to and control over information, the greater is his or her information power. Power stemming from personal characteristics is informal individual power. Sources of informal power are expert, referent, and charismatic power. Expert power is informal power that stems from superior ability or expertise in performing a task. People who gain power and influence in a group because they are liked, admired, and respected have referent power. Charismatic power is an intense form of referent power. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

A Power Struggle at Gucci This box describes the power struggle at Gucci that resulted in Tom Ford and Domenico De Sole leaving the company. Domenico De Sole, Gucci’s CEO, hired Tom Ford in 1990. Ford’s designs led Gucci to unprecedented success. “Tom and Dom” were admired and respected for their expertise. In 2004, the head of Pinault-Printemps-Redoute (PPR)—Gucci’s parent company—hired Serge Weinberg to run the PPR empire. While Tom and Dom had total control of Gucci decisions under past PPR leadership, Weinberg exerted his authority by requiring final say on major business decisions at Gucci. Tom and Dom wanted to maintain their autonomy. In March 2004, Tom and Dom left Gucci. The question for Gucci now is can it be successful without Tom and Dom? Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Sources of Functional and Divisional Power Exhibit 13.2 Ability to control uncertain contingencies Irreplaceability Centrality Ability to control and generate resources Managers in particular functions or divisions can take advantage of other sources of power to enhance their individual power. A division or function becomes powerful when the tasks that it performs give it the ability to control the behavior of other divisions or functions, to make them dependent on it, and thereby increase its share of organizational resources. This Exhibit identifies the sources of divisional power. A function or division has power over others if it can reduce the uncertainty they experience or manage the contingency or problem that is troubling them. A function gains power when it is irreplaceable—when no other function or division can perform its activities. The power of a function also stems from its importance, or centrality, to the organization. Centrality is how central the function is to the organization’s operations and the degree to which it lies at the center of information flows. The ability to control and generate resources for an organization is another source of functional and divisional power. Functional or divisional power Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Organizational Politics Organizational politics are activities that managers engage in to increase their power. They can use the power to influence organizational decisions that favor their individual, functional, and divisional interests. One reason why many people engage in organizational politics is that jobs are a scarce resource. The higher a manager rises in a hierarchy, the more difficult it is to continue to rise because fewer and fewer jobs are available at the upper levels. To compete for these scarce jobs and to increase their chances of promotion and share of organizational resources, employees try to increase their power and influence. Without constant vigilance, organizational politics can get out of hand and prevent the organization from achieving its goals. For this reason, it must try to manage the politics to promote positive effects and prevent negative ones. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Tactics for Increasing Individual Power Tap sources of functional and divisional power Recognize who has power Control the agenda Bring in an outside expert Build coalitions/alliances Managers can use many kinds of political tactics to increase their power. The way in which functions and divisions gain informal power suggests several tactics that managers can use to increase their individual power. Managers can make themselves irreplaceable. They can specialize in an area of importance to the organization. They can make themselves more central in the organization. Another way to increase individual power is to develop the ability to recognize who has power in the organization. There are five factors to assess in order to determine the relative power of different managers in an organization. These factors are listed on the next slide. Determining what issues and problems decision makers will consider is another source of power. Managers can bring in outside experts who are considered neutral observers and then use the “objective” views of the expert to support his or her position. Managers may form coalitions with other managers to obtain the power they need to influence the decision-making process in their favor. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Factors of Relative Power Sources of power Consequences of power Symbols of power Personal reputations A manager should assess the source of various managers’ power to learn whom to influence to obtain his or her objectives. The people who have the most power can be identified by an assessment of who benefits the most from the decisions made in an organization. Many symbols of prestige and status are generally associated with power in an organization. Examples include job titles, desirable offices, and a chauffeured car. A person’s reputation within an organization is likely to indicate the person’s power to influence decision making. The organizational roles a person or subunit plays and the responsibilities they possess are indications of power. By focusing on these five factors, a person new to an organization can assess which people or groups have the most power. Representational indicators Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Organizational Conflict Organizational conflict is the self- interested struggle that arises when the goal- directed behavior of one person or group blocks the goal-directed behavior of another person or group Organizational politics give rise to conflict as one person or group attempts to influence the goals and decision making of an organization to advance its own interests—usually at the expense of some other person or group. Organizational conflict can be dysfunctional but it can also increase organizational performance if it is carefully managed. Exhibit 13.4 illustrates the effect of conflict on organizational performance. This exhibit is on the next slide. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

The Effect of Conflict on Organizational Performance Exhibit 13.4 At first, conflict can increase organizational performance because it exposes weaknesses in organizational decision making and design and prompts the organization to make changes. Managers realign the organization’s power structure and shift the balance of power in favor of the group that can best meet the organization’s current needs. At point A in the Exhibit, an increase in conflict leads to a decline in performance because conflict between managers gets out of control, and the organization fragments into competing interest groups. The job of top managers is to prevent conflict from going beyond point A and to channel conflict in directions that increase organizational performance. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Sources of Conflict Differentiation Task relationships Differentiation in an organization occurs when people and tasks are grouped or split up into functions and divisions to produce goods and services. The splitting of the organization into functions or divisions produces conflict because it makes the differences in functional orientations and status inconsistencies apparent. Different functions commonly develop different orientations toward the organization’s major priorities. Over time, some functions or divisions come to see themselves as more vital than others to an organization’s operations and believe that they have higher status or greater prestige in the organization. Task relationships generate conflict between people and groups because organizational tasks are interrelated and affect one another. Overlapping authority, task interdependence, and incompatible evaluation systems may stimulate conflict among functions and divisions. Competition for scarce resource produces conflict. Scarcity of resources Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Conflict Evolving from Task Relationships Overlapping authority Task interdependence Task relationships generate conflict between people and groups because organizational tasks are interrelated and affect one another. Overlapping authority, task interdependence, and incompatible evaluation systems may stimulate conflict among functions and divisions.  If two different functions or divisions claim authority for the same task, conflict may develop. Such confusion often arises when a growing organization has not yet fully worked out relationships between different groups. The development or production of goods and services depends on the flow of work from one function to another; each function builds on the contributions of other functions. If one function does not do its job well, the ability of the function next in line to perform is compromised, and the outcome is likely to be conflict. Inequitable performance evaluation systems that reward some functions but not others sometimes create conflict. Typical problems include finding ways to jointly reward sales and production to avoid scheduling conflicts that lead to higher costs or dissatisfied customers. Incompatible evaluation systems Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Pondy’s Model of Organizational Conflict Exhibit 13.5 Stage 1: Latent Conflict Stage 2: Perceived Conflict Stage 3: Felt Conflict Stage 4: Manifest Conflict Pondy views conflict as a dynamic process that consists of five sequential stages. In the first stage, there is no actual conflict. The potential is there, but latent. The stage of perceived conflict begins when one party—individual or group—becomes aware that its goals are being thwarted by the actions of another party. Each party searches for the origins of the conflict and analyzes the events leading to the conflict. The conflict typically escalates in Stage 2. During the felt conflict stage, the parties develop negative feelings about each other. Cooperation declines in this stage. The significance of the disputed issue is likely to be blown out of proportion. In the stage of manifest conflict, one party decides how to react or deal with the party that it sees as the source of the conflict and both parties try to hurt each other and thwart the other’s goals. Manifest conflict can take many forms. These are listed on the next slide. Managers should try to prevent manifest conflict from becoming dysfunctional. If they cannot prevent the breakdown in communication and coordination, the conflict advances to the final stage of conflict aftermath. Every conflict leaves an aftermath that affects the way both parties perceive and respond to future episodes. Stage 5: Conflict Aftermath Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Forms of Manifest Conflict Open aggression Violence Infighting Sabotage Physical intimidation Lack of cooperation Manifest conflict can take several forms. These are some of those possible forms. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

OB Today: Fighting for Control at CIC Inc. CIC Inc. was founded by two partners, David Hickson and Glenn S. Collins III, in College Station, Texas. Each founder took a 50–50 stake in the small business. CIC’s strategy was to maintain and service high-tech equipment like CT scanners, X-rays, and lasers, in hospitals and universities across the United States. Hickson’s and Collin’s new venture proved very successful, business increased very rapidly, and by 2000 the company had more than 200 employees. Hickson, on vacation with his family, returned to College Station to find that in his absence, Collins had staged a coup. He found that he had been replaced as president by a CIC manager who was one of Collin’s closest friends, that CIC managers and workers who had been loyal to Hickson had been fired, and that all the keys and security codes to CIC buildings had been changed. Hickson immediately sought and obtained a legal restraining order from a judge that allowed him back into the company and reinstated fired employees. The judge also issued an order preventing the two men from taking any actions that were not part of their normal job duties. Apparently, this extraordinary situation had occurred because the two owners had not been able to agree on the company’s future direction—a problem that had resulted in a deteriorating personal relationship between them. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Negotiation Initial Offer Compromise Counteroffers Concessions Negotiation is a process in which groups with conflicting interests meet together to make offers, counteroffers, and concessions to each other in an effort to resolve their differences. Through negotiating, the parties to a conflict can try to come up with an acceptable solution by considering various ways to allocate resources. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Individual-Level Conflict Management Manager meets with employees in conflict; all understand facts of conflict Manager summarizes dispute in written form Manager discusses facts in report with each employee separately and works out a common solution Manager gets commitment to resolving dispute The management of conflict between individuals is directed at changing the attitudes or behavior of those involved in the conflict. If the conflict is due to a basic disagreement about how the work should be performed or about the performance of the other party, managers can use a step-by-step negotiation approach to help resolve a dispute between employees. The steps are listed in the slide. If the conflict cannot be negotiated successfully, another solution is to move people to new positions where they will not be in contact. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Group-Level Conflict Management Compromise Collaboration Accommodation Avoidance Competition Group-level conflict management is aimed at changing the attitudes and behaviors of groups and departments in conflict. Direct negotiations between groups are held either with or without a third-party negotiator—an outsider who is skilled at handling bargaining and negotiation—who facilitates the bargaining process and helps the parties in dispute find a solution to their problem. If the third party plays the role of mediator, he or she takes a neutral stance and helps the parties to reconcile their differences. If the parties cannot find an equitable solution, the third party may act as arbiter, or judge, and impose a solution. There are five basic forms that negotiation may take as groups handle conflict. These are listed on the slide. Compromise usually involves bargaining and negotiation to reach a solution that is acceptable to both parties. In collaboration, both parties try to satisfy not only their own goals but the goals of the other side. Accommodation is a style of handling conflict in which one party simply allows the other to achieve its goals. With avoidance, both parties refuse to recognize the real source of the problem and act as if there were no problem. Competition leads to the greatest and most visible conflict because each party is looking out for its own interests. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Ways of Handling Conflict Exhibit 13.6 High Low Interest in helping others Accommodation Collaboration Compromise The horizontal axis of the exhibit measures the degree to which a person or group is concerned with obtaining its own goals. The vertical axis measures the extent to which the person or group is concerned with helping some other person or group to achieve its goals. Using this model, it is possible to compare the different ways of handling conflict during the felt stage. Avoidance Competition Low High Interest in achieving individual goals Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Promoting Compromise Emphasize common goals Focus on the problem, not the people Focus on interests, not demands Create opportunities for joint gain Focus on what is fair There are five specific tactics that managers can use to structure the negotiation and bargaining process to make compromise and collaboration more likely. These tactics are listed on the slide. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

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