1. Chapter 13 Power, Politics, Conflict, and Negotiation

2. Opening Case: A Power Struggle at Gucci
Domenico De Sole (CEO) hired Tom Ford as head designer in1990
Conflict over who should lead company in 2004
Tom and Dom OR
Serge Weinberg – head of parent company PPR
Tom and Dom left in March 2004
The opening case 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 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?

3. 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
Organizational politics
Activities designed to increase power
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.

4. 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 to 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.

5. Figure 13.1 Sources of 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.

6. Figure 13.2 Sources of Functional and Divisional Power
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 figure 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

7. 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.

8. Factors of Relative Power
Sources of power
Consequences of power
Symbols of power
Personal reputations
Representational indicators
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.

9. What is Organizational Conflict?
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.
Figure 13.4 illustrates the effect of conflict on organizational performance. This figure is on the next slide.

10. Figure 13.4 The Effect of Conflict on Organizational Performance
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 figure, 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.

11. Sources of Conflict Differentiation Task relationships
Differences in functional orientations
Status inconsistencies
Task relationships
Overlapping authority
Task interdependencies
Incompatible evaluation systems
Scarcity of resources
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.

12. Figure 13.5 Pondy’s Model of Organizational Conflict
Stage 1:
Latent Conflict
Stage 2:
Perceived Conflict
Stage 3:
Felt 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 4:
Manifest Conflict
Stage 5:
Conflict Aftermath

13. 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.

14. 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.
Concessions

15. 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.

16. 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.
The web link links to the Conflict Management Group – an international nonprofit dedicated to improving the methods of negotiation, conflict resolution, and cooperative decision-making as applied to issues of public concern.

17. Figure 13.6 Ways of Handling Conflict
High Low
Interest in helping others
Accommodation
Collaboration
Compromise
The horizontal axis of the figure 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

18. 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.

19. Union-Management Negotiations
Distributive
Bargaining
Attitudinal
Structuring
One of the most common types of negotiation and bargaining takes place between unions and management during contract talks.
Distributive bargaining occurs when parties bargain over how to divide resources, deciding who gets what and how much. Attitudinal structuring occurs when parties try to influence their opponent’s attitudes.
Union and management negotiators often develop long-term relationships with one another.