POWER AND ORGANIZATIONAL CHANGE Prof. Károly Balaton Institute of Management

THE CONCEPT OF POWER (based on Hatch, 1997) The alternatives to the rational decision-making model suggest that when there is disagreement over goals or over the preferred means for pursuing goals, then the decision-making process will be open to the effect of power and politics. Definition of power: „A has power over B to the extent that he can get B to do something that B would not otherwise do.” Power is generally assumed to be used to attain desired outcomes. Power can involve the use of coercion (the threat of force), rewards (control of material resources), norms (the legitimacy bestowed by cutlural assumptions and values), and knowledge (control of unique and needed information).

SOME COMMON STRATEGIES FOR DEVELOPING AND USING POWER WITHIN AN ORGANIZATION Develop power by: Creating dependence in others Work in areas of high uncertainty Cultivate centrality by working in critical areas Develop non-substitutable skills Coping with uncertainty on behalf of others Prevention Forecasting Absorption Developing personal networks Developing and constantly augmenting your expertise

SOME COMMON STRATEGIES FOR DEVELOPING AND USING POWER WITHIN AN ORGANIZATION - CONTINUED Use power to: Control information flows to others Control agendas Issue definition Order of issues Issue exclusion Control decision-making criteria Long vs. Short term consideration Return vs. Ristk Choose criteria that favor your abilities and contributions

SOME COMMON STRATEGIES FOR DEVELOPING AND USING POWER WITHIN AN ORGANIZATION - CONTINUED Cooptation and coalition building External alliances (e.g., supplier or customer relationships, interlocking boards of directors) Internal alliances Promote loyal subordinates Appoint committees Gain representation on important committees Bring in outside experts (consultants) to bolster your position

THE USE OF POWER Power is the basic energy to initiate and sustain action translation intention into reality, the quality without which leaders cannot lead. Power is at once the most necessary and the most distrusted element exigent to human progress. Power is the basic energy needed to initiate and sustain action or, to put it another way, the capacity to translate intention into reality and sustain it.

A POWER PERSPECTIVE OF THE MANAGEMENT PROCESS – based on Pfeffer: Understanding power in organizations Decide what your goals are, what you are trying to accomplish. Diagnose patterns of dependence and interdependence; what individuals are influential and important in your achieving your goal? What are their points of view likely to be? How will they feel about what you are trying to do? What are their power bases? Which of them is more influential in the decision? What are your bases of power and influence? What bases of influence can you develop, to gain more control over the situation?

A POWER PERSPECTIVE OF THE MANAGEMENT PROCESS - continued Which of the various strategies and tactics for exercising power seem most appropriate and are likely to be effective, given the situation you confront? Based on the above, choose a course of action to get something done.

TYPES OF ORGANIZATIONAL CHANGES FROM A POWER PERSPECTIVE Top management initiated (top-down) changes Changes intiated by the environment Bottom-up changes

TOP MANAGEMENT INITIATED CHANGES Interests of management teams in relation to changes: Acquire power through changes Changes initiated by the envrionment – the top management has a reactive role Changes resulting from decisions made by top managers (e.g.: initiating new strategies for the company) Maintaning power by preserving the status quo in the organization Conflicts and problems related to low level of performance, threatening the position of top managers. Maintaining power in situations of power acquiring intentions of lower level managers.

CHANGES INITIATED BY THE ENVIRONMENT The resource dependency theory of organization power Changes in competitive positons needing responses by the organization Changes related to dynamic changes in the environment Changes in the political, economic and social environment

BOTTOM-UP CHANGES New strategic initiatives emerging from lower levels in the organization Using the bottom-up strategy development process in the formal strategic planning system.

CHANGE MANAGEMENT STRATEGIES Facilitative (helping) strategies Educational strategies Convincing strategies Power-based strategies