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Managing Through Power, Influence, and Negotiation 15 chapter Managing Through Power, Influence, and Negotiation McGraw-Hill/Irwin Principles of Management © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

Learning Objectives Explain why power and influence are necessary to get things done in organizations. Identify the main sources of managerial power. Discuss the contingencies that influence the magnitude of the manager’s power. Outline the various tactics managers can pursue to increase their influence in an organization. Describe what a manager can do to increase the chance of negotiating effectively.

Power Power – the potential of a person , team, or organization to require others to do certain things. Potential is emphasized because people may not have to exercise it in order to get things done A prerequisite – another person or group must believe that it is dependent on another person or group Countervailing power – power that subordinates have over their superiors Learning Objective 1: Explain why power and influence are necessary to get things done in organizations. See Text Page: 378

Question The possession of power always corrupts the power holder. Do you agree? Explain. See Learning Objective 1: Explain why power and influence are necessary to get things done in organizations. Question Students should be able argue against this position. It is not true for all. It is not the case of absolute power here.

Organizational Power There’s no doubt that there are many greedy executives. Some are obsessed with money while others with power. But the lure of power attracts people who often prove to be extremely poor leaders. Those who amass the most power do not necessarily prove to be the best performers. Very many leaders are simply not effective in basic leadership tasks. According to one survey, between 30 and 40 percent of managers failed to give credit to their staff for work, criticized employees behind their back and even blamed them to cover up their own mistakes. Learning Objective 1: Explain why power and influence are necessary to get things done in organizations. The Realities of Organizational Power This slide presents some realities of organizational power. It argues that people who get into the power positions do not necessarily have the skills and many are simply inappropriate for the position. According to one survey in 2005, almost half wanted to fire their boss whereas a third thought that their boss needs to be assessed by a psychologist. Ask the students – Have they faced a job situation where the manager did not have the leadership skills but cane be described as obsessed with power due to his/her position? Explain. Source: www.slowleadership.org, December 6, 2006 Source: www.slowleadership.org, December 6, 2006

Power Dependence Person A Person B Power Person B’s goals Countervailing power Power Valuable resource Learning Objective 1: Explain why power and influence are necessary to get things done in organizations. See Text Page: 378 Person B Person B’s goals

Why is Power Important to management Effectiveness? Organizations are political entities in which different people or units control scarce resources To meet goals, a manager must realize that he/she is dependent upon others Managers must work to create power of his/her own in order to influence others to get things done Learning Objective 1: Explain why power and influence are necessary to get things done in organizations. See Text Page: 379

Different Perspectives Sun Tzu Bhagavad Gita GREED IS GOOD BE TOUGH ATTACK ONLY WHEN VICTORY IS LIKELY BEAT THE ENEMY << >> On Financial Incentives GRRED IS BAD BE FAIR ACT RATHER THAN REACT SEEK HIGHER CONSCIOUSNESS << >> On Managing Underlings << >> On Initiative Learning Objective 1: Explain why power and influence are necessary to get things done in organizations. Different Perspectives This slide presents two different and quite opposing perspectives on several fronts that can be viewed from power and influence in organizations. To Sun Tzu, author of The Art of War, winning the battle is all about unyielding discipline. Some of Sun Tzu’s key ideas: Greed is good, Be tough, Attack only when victory is likely, and Beat the enemy. The Bhagavad Gita, a Hindu text contains the wisdom of Lord Krishna. It suggests that one should focus on their thoughts and actions, rather than the outcome. Key ideas: Greed is bad, Be fair, Act rather than react, and Seek higher consciousness. Ask the students – which of these two philosophies have the heard in different contexts? Which do they relate to? It appears that more and more there is a shift emerging from Sun Tzu to Bhagawad Gita’s philosophy. Could following the ideals of Sun Tzu lead to the situation of power corrupting the position holder? Source: Business Week, October 30, 2006 << >> On the Ultimate Goal Source: Business Week, October 30, 2006

Sources and Contingencies of Power Sources of power: Hierarchical position Expertise Control over information Network of allies Individual attributes Influence over organizational outcomes Contingencies of power: Substitutability Centrality Discretion Visibility Learning Objective 2: Identify the main sources of managerial power. See Text Page: 380

Hierarchical Power Legitimate Power – Power deriving from an implicit agreement that people higher in a hierarchy can request certain behaviors of their subordinates Power over Rewards and Sanctions – Managers can reward behavior that they deem consistent with company goals and punish those whose performance is below par Power over the Allocation of Scarce Resources – “He who has the gold makes the rules.” Learning Objective 2: Identify the main sources of managerial power. See Text Pages: 380-381

Scarce Resources Work Space Capital People Plant Equipment Learning Objective 2: Identify the main sources of managerial power. See Text Page: 381 Plant Equipment

Power Through Information Control Wheel formation (centralized information flow) All-channel formation (decentralized information flow) Learning Objective 2: Identify the main sources of managerial power. See Text Page: 382 High information control

Attributes for Acquiring and Holding Power Energy, endurance, and physical stamina The ability to focus one’s energy and avoid wasted effort Empathy, which makes it possible to read and understand others Flexibility, particularly with respect to selecting various means to achieve one’s goals The willingness, when necessary, to engage in conflict and confrontation Eloquence-the ability to make points in a logical and evocative fashion Integrity Learning Objective 2: Identify the main sources of managerial power. See Text Page: 383

Individual Attributes as Sources of Power Learning Objective 2: Identify the main sources of managerial power. See Text Page: 384

Contingencies of Power Substitutability – the availability of alternative resources Centrality – the degree and nature of interdependence between the power holder and others Discretion – freedom to exercise judgment Visibility – the extent to which a power holder is known, or visible, to others Learning Objective 3: Discuss the contingencies that influence the magnitude of the manager’s power. See Text Pages: 385-386

Influence Tactics Silent Authority – occurs when someone complies with a request because of role expectations and the requester’s legitimate hierarchical power Assertiveness – applying hierarchical power to influence others Network Building – actively seeking and establishing relationships with people who may prove useful in the future Exchange – the promise of benefits or resources in exchange for another party’s compliance with your request Learning Objective 4: Outline the various tactics managers can pursue to increase their influence in an organization. See Text Pages: 387-388

Influence Tactics (cont.) Coalition – a group of people that comes together to cooperate in attaining a certain goal Ingratiation – attempts to increase the extent to which someone likes you Impression Management – the process of actively shaping one’s public image Persuasion – the use of reason through factual evidence and logical arguments Inoculation Effect – warning an audience you are trying to influence about opposing arguments Learning Objective 4: Outline the various tactics managers can pursue to increase their influence in an organization. See Text Pages: 388-391

Question Dave consistently works on flattering his boss in front of others, helping and volunteering for additional work when the boss or coworkers needed, and seeking his boss’s advice on actions. It appears that Dave is utilizing which of these influence tactics? Exchange Appealing to a higher authority Assertiveness Ingratiation See Learning Objective 4: Outline the various tactics managers can pursue to increase their influence in an organization. See text page: 389 Answer: D

A Taxonomy of Influence Tactics Reward Punishment Positive Expertise Negative Expertise Liking, Ingratiation Gifting, Pre-giving Debt Aversive Stimulation Moral Appeal Positive Self-feeling Positive Altercasting Negative Altercasting Altruism Positive Esteem of Others Negative Esteem of Others Learning Objective 4: Outline the various tactics managers can pursue to increase their influence in an organization. Maxwell & Schmitt’s Taxonomy of 16 Influence Tactics This slide presents Maxwell & Schmitt’s Taxonomy of 16 influence tactics. There are several similar lists and expanded and contracted taxonomies developed. These is another list of 53 tactics. However, this list can be used to show a basic starting point in addition to the ones identified in the text. Many of them are similar to ones identified in the text. Ask the students – How many of these have they used at different point in time? Explain. Source: www.workingpsychology.com

Ingratiation and Influence High Low Influence High ingratiation efforts produces resistance and declining influence Moderate levels of ingratiation produce the most influence Learning Objective 4: Outline the various tactics managers can pursue to increase their influence in an organization. See Text Page: 389 Low High Extent of ingratiation

Consequences of Influence Tactics Resistance Learning Objective 4: Outline the various tactics managers can pursue to increase their influence in an organization. See Text Page: 391 Commitment Compliance

Conflict & Negotiation Conflict– a situation that arises when one party perceives that its interests are being opposed or negatively influenced by another party Negotiation – an interpersonal decision-making process by which two or more parties try to reach an agreement over an issue that is being disputed Learning Objective 5: Describe what a manager can do to increase the chance of negotiating effectively. See Text Pages: 392-393

Negotiation Do’s and Don’ts Bone up Be prepared to bail Fly solo Find the kahuna Be afraid to ask for the moon Disclose salary info Burn the bridges Overdo it Learning Objective 5: Describe what a manager can do to increase the chance of negotiating effectively. Negotiation Do’s and Don’ts This slide offers tips on do’s and don’ts of negotiation. Do’s: Bone up: Advance research is one of the biggest keys to successful negotiation. Be prepared to bail: Remember the power is in your hand, so don’t be afraid to say no. Fly solo: Bringing a friend or significant other to tag along is a bad idea. Find the kahuna: Who’s in charge. Find the person in a position to make a decision and talk with them. Don’ts Be afraid to ask for the moon: It can pay to be aggressive to a proper degree. Still, it is important to stay realistic. Disclose salary info: In hiring situations, avoid giving out information until you’ve received an offer. Burn the bridges: Most negotiations result in a relationship that is going to have to last. Overdo it: Novice negotiators try to keep haggling even when they have received a fair deal, possibly because they haven’t prepared enough to know what’s fair. Source: Playbook: Best Practices; Business Week Online Source: Playbook: Best Practices; Business Week Online

Negotiating Initial Salary Know the going rate Settle on a range, not a number Understand what they’re buying Don’t make the first move Make your case Offer options Learning Objective 5: Describe what a manager can do to increase the chance of negotiating effectively. Negotiating Initial Salary This slide presents tips for tewntysomethings for negotiating initial salaries. With a little preparation and the right questions at the job interview, even entry-level job seekers can get a raise before they get started or at least get a better deal than accepting the first offer on the spot. There are salary information on various different web sites that can give you average pay for your region and type of job: salary.com or payscale.com. A range for salary gives you flexibility but one should be realistic. For entry-level positions, employers are not paying as much attention to your technical skills but more to your qualities such as energy, enthusiasm, etc. Avoid being first to bring up the money issue. Once you have the number, stay positive. Ask, not demand. Take a day o r two to think it over. Make your case for increment with legitimate items, such as, moving to a higher cost of living city, or greater commute time and expense, etc. You may be able to negotiate benefits instead of salary. Explore. Source: The Wall Street Journal, August 22, 2006 Source: The Wall Street Journal, August 22, 2006

Bargaining Zone Model of Negotiation Your resistance point Your initial offer point Your target point Area of potential agreement Learning Objective 5: Describe what a manager can do to increase the chance of negotiating effectively. See Text Page: 393 Opponent’s resistance point Opponent’s target point Opponent’s initial offer point

Negotiating Effectively Situational Factors Behavioral Factors Depends On Learning Objective 5: Describe what a manager can do to increase the chance of negotiating effectively. See Text Pages: 394-395 Power and Negotiation

Importance of Concessions with Negotiations Enable the parties to move toward the area of potential agreement Symbolize each party’s motivation to bargain in good faith Tell the other party about the relative importance of the negotiating items Learning Objective 5: Describe what a manager can do to increase the chance of negotiating effectively. See Text Page: 395