Economics and Organisations - Week 8

1. Economics and Organisations - Week 8 Power and conflict in organisations Best readings are: Gareth Jones Mary Jo Hatch Morgan – Images of Organisation Reading pack on networks

2. Defining Power in Organisations • Robert Dahl “A has power over B to the extent that he can get B to do something that B would not otherwise do” • “Organisation power is the mechanism through which conflict gets resolved” • It is “the ability of one person or group to overcome resistance by others and to resolve conflict and achieve a desired outcome” • “Power is control of relevant resources” • “To increase power an individual or group must: • Decrease dependence on others • Increase others dependence on self (group)”

3. Power and Authority • Pfeffer has a resource-based view of power, in which organisation structure determines who controls critical resources. • ‘Authority’ derives from an individual’s position in the hierarchy. • Authority is thus directed downwards in an organisation whereas other forms of power are multidirectional. • Authority is power that is legitimised by the legal, structural and cultural foundations on which an organisation is based.

4. Authority in Practice • The exercise of authority has fewer costs; organisation members implicitly accept the authority relationships when joining. • Where other forms of power are needed by those in authority the organisational structure is under threat • Authority usually visible by symbols, such as: • Titles and ways by which people are addressed • Location, size, furnishings etc of office • Scale of perks, salaries, bonuses etc.

5. Theories of Power in Organisations • Sociological approaches – who holds power • Political approaches – how a particular decision was made • Population ecology and Institutional theory – concerned with the distribution of power • Network approach to power – centrality • Consider four political approaches

6. Strategic Contingencies Theory • Power derives from the ability to provide something that the organisation values highly, such as a particular skill, valuable contacts, knowledge • Pfeffer views this as control over uncertainty, Hickson, Hinings et al, stress power comes from control of uncertainty not uncertainty itself • See example in Hatch re maintenance engineers in cigarette factory

7. Resource Dependence Theory • Power is control over key resources – an extension of Strategic Contingencies • An organisation may increase its power by controlling more of its resources – buying a supplier; making itself not buying – vertical integration • Resource Dependence Theory views power as a ‘distribution of opportunities to manage uncertainty’

8. Hidden Power or the ‘power to set the agenda’ • Power is ‘controlling the premises of decision making’ – ‘unobtrusive’ power • Bacharach and Baratz argue one aspect of power is the ability to ensure that certain issues are not raised – power is used to suppress certain issues. • E.g. Profits could be increased by cutting costs either/or by increasing sales. If Sales Dept are powerful they ignore the possibility of cutting costs – they want their lavish expenses!

9. Feminist Critique of Power • Feminists drawing on Marx argue that power is used to marginalise the powerless • Postmodernists attack this position by attempting to ‘give voice to the silenced’ • Feminist view sees power being exercised in all situations of domination/submission • Gender seen as the ‘patterned, socially produced distinctions between male and female’ • Power seen to be exercised on basis of gender and stereotypes of male/female

10. Male/Female Stereotypes Male Female Logical Intuitive Rational Emotional Aggressive Submissive Exploitative Empathetic Strategic Spontaneous Independent Nurturing Competitive Co-operative “Leader and decision “Loyal supporter and maker” follower”

11. Power and Networks • Organisations seen as ‘Networks’ • Network ‘is a set of relations or ties among actors’ – individuals or organisations • All the actors in an organisation can be represented in various networks, such as: work flow, communication, friendships

12. Background to Networks Three factors have greatly increased the interest in network analysis in last 20 years • The emergence of ‘New Competition’ – e.g. Third Italy • Recent technological advances – instant data exchange, new production techniques, ERPS • Maturing theoretical study of networks – mathematical and conceptual

13. Substantive Themes within network Analysis • Power within organisations can be understood in terms of relationships within a network • Power between organisations, particularly where there are many small organisations • Relationships between companies, suppliers, customers – not simply ‘arms-length’ contracts – strategic alliances • As a means of structuring within an organisation, particularly for developments and new initiatives – flatter structures

14. Power and centrality in networks • Power can be represented by position within the net work – ‘Centrality’ • Within an organisation many networks can exist, e.g. information flows, work flows, friendships, senior executives • Centrality can be an analytical tool to identify and measure power • For measures of centrality in more detail, see John Scott

15. Centrality? B A C G D A B C H I J D F E

16. Measures of Centrality - Degree • Degree – the number of points to which a point is adjacent • A central point has high degree • This is a measure of local centrality • Multiple points with same degree • Can be modified into a relative measure • Degree of 25 out of 100 nodes • Degree of 25 out of 50 nodes

17. Measures of Centrality - Closeness • ‘Geodesic’ represents the shortest path between two points on a sociograph • Closeness is the sum of all the geodesics for one point • Closeness – This measures the shortest distance between one point and every other point • The point that has the lowest closeness measure is most central

18. Measures of centrality - Betweenness • Betweenness – The extent to which a particular point lies between all the other points in the sociograph • ‘A point is dependent on another if the paths that connect it to other points pass through this point’ • Betweenness reflects being a broker or ‘gatekeeper’ • Calculation is techically complex – powerful computer programs

19. Test of Centrality and Power • Study by Brass and Burkhart of 140 non-supervisory workers, their supervisors and high level managers • All three measures of Centrality were calculated • Power also measured by direct questioning • Three ‘units of reference’ used: sub-unit, department and entire organisation

20. Results from Brass & Burkhart • All degree measures correlated significantly with supervisors’ power ratings • Most of closeness and betweenness measures also significantly correlated • Department was most significant unit of reference • Simple degree measures performed better than more complex measures

21. Tactics for playing power politics • Increasing Indispensability • Increasing non-substitutability • Increasing centrality • Associating with powerful managers • Building and managing coalitions • Influencing decision making • Controlling agenda • Bringing in an outside expert

22. Conflict in Organisations • Conflict is ‘the clash that occurs when the goal-directed behaviour of one groups blocks or thwarts the goals of another’ • Organisation conflict “is an overt struggle between two or more groups in an organisation… It usually centres on a state or action that favours one social actor over others”

23. Brief History of Conflict • Conflict is Dysfunctional. Early theorists argued that conflict is wholly dysfunctional. Conflict should be overcome, and theorists suggested means to do this • Conflict is Natural. Lou Pondy (1967) Conflict may be unpleasant but it is an inevitable part of any organisation • Conflict is Functional. Pondy further suggested that some aspects of conflict can be positive, e.g. conflict is psychologically healthy

24. Optimal Levels of Conflict Optimal conflict Stimulate conflict Reduce conflict Performance level Low level of conflict high

25. Interunit Conflict • Humans employ psychological defence mechanisms to avoid open conflict • Many opportunities for open conflict are not taken • Walton and Dutton have a model for identifying/predicting interunit conflict

26. Walton and Dutton Model Context Local Conditions Observable indices environment group characteristics open hostility Strategy goal incompatibility distrust/disrespect technology task interdependence info distortion social culture rewards and performance ‘we v they’ rhetoric culture common resources lack of cooperation physical structure status incongruity avoid interaction jurisdictional ambiguitycommunication obstacles individual differences

27. Pondy’s Model of Organisational Conflict Stage 1: Latent Conflict Stage 2: Perceived Conflict Stage 3: Felt Conflict • Sources of Conflict: • Interdependence • Difference in goals • Bureaucratic factors • Incompatible performance criteria • Competition for resources Stage 4: Manifest Conflict Stage 5: Conflict Aftermath

28. Other Theories for Conflict • Marxist theories - class-based - workers v capital(ists) • Leads to Braverman - ‘deskilling’ hypothesis i.e. systematic fragmentation and specialisation of work giving more power to management • Labour-market theories - Primary and Secondary markets for labour. In primary wages and conditions are good; whereas in secondary, both are poor • Organisational contradictions - units adapting to different environments; contradictions with past

29. Concluding Comments • Power and conflict are vast and complex subjects • Vital to an understanding of how organisations operate • Different theories interpret ‘facts’ in different ways • Need to read!!