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Part – III: Organizational Decision Making in Changing Environment

# Organizational Decision Making:
Decision making is an act of making a choice to solve confronting problems. In an organization,
individuals, especially managers have to make decisions to choose an action from among alternative
course of actions. Organizational decision making is the process of responding to a problem by
searching for and selecting a solution or course of action that will create value (importance) for
organizational stakeholders. Whether the problem is to find the best inputs, to decide which
technology to use, to identify right way to provide a service to customers, or to figure out how to deal
with a competitor, in each case managers must decide what to do. Organizational decisions for which
mangers are responsible to make an optimal choice fall into two broad categories:
I)
Programmed Decisions (routine)
II)
Non-programmed Decisions (non-routine)
I) Programmed Decisions:
Programmed decisions are repetitive and routine in nature. They are bind by rules, routines, and
standard operating procedures. Many of the routines and procedures for selecting an appropriate
solution are formalized in an organization’s rules and standard operating procedures and the values
and norms of its culture. Middle and lower level managers are involved in making routine decisions
at operating levels. For example; hiring policy, purchasing decision, production and selling decisions
etc. are routine in nature.
II) Non-programmed Decisions:
Non-programmed decisions are completely un-structured and novel. No, rules, routines or standard
operating procedures can be developed to handle them. Solutions must be worked out as problems
arise. Non-programmed decisions require much more search activity and judgmental skills. For
example; continues experiments for research and development, creation of an organizations strategy
and structure etc. involve non-programmed decisions. Non-programmed decision force managers to
rely on judgment, intuition, and creativity to solve organizational problems as they cannot rely on
rules and procedures. Non-programmed decisions lead to the creation of a new set of rules and
procedures that would allow other members to make appropriate programmed decisions.
Programmed decision making help an organization to increase efficiency, and reduce costs, provides
stability and increase predictability. Where as, non-programmed decision making allows the
organization to change and adapt to its environment and generate new ways of behaving.
# Models of Organizational Decision making:
There are different models for making organizational decisions. Early models consider decision
making as a rational process in which managers make decisions to adjust perfectly to the
environment. However, modern models recognize that decision making is an inherently uncertain
process in which managers give solutions.
1) The Rational Model:
Decision making is a straight forward three step process, according to this model. It involves:
identifying and defining the problems, generate alternative solutions to the problem and select
solution and implement it.

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- Mukesh Kumar Goit
Kantipur Valley College

Stage – III: Managers compare the possible consequences of each alternative and decide which course of action offers the best solution to the problem they identified in stage 1. They study ways to take advantage of the organization’s skills and resources to respond to opportunities and threats. which the researchers have criticized. they decide on certain criteria that they will use to evaluate possible acceptable solutions. The manager then select one alternative form the range of alternatives that that they have generated. In an attempt to describe the realities of the decision-making process more accurately researchers introduced into decision-making theory a new set of assumptions: Satisfying.Stage-I: Identify and define problem Stage-II: Generate alternative solution to the problem Stage-III: Select solution and implement it Stage – I: Managers identify problems that need to be solved. and accommodation between organizational coalitions and solution chosen is satisfactory for the organization. b) Bounded by Rationality: The rational model assumes that managers possess the intellectual capacity to evaluate all possible alternatives. Thus it involves a much less costly information search and puts far less of a burden on managers than does the rational model. 1) The assumption that the decision makers have all the information they need 2) The assumption that decision makers (managers) are smart and capable 3) The assumptions that decision makers agree about what they need to be done (same preference) 2) The Carnegie Model: Carnegie model is a progressive approach over rational model in organizational decision making. Managers spend a great deal of time and effort analyzing all aspects of their organization’s specific and general environments to identify conditions or problems that call for new action. Carnegie model recognizes that much of decision making is subject to and relies on manager’s prior experience. The Carnegie model assumes that managers are limited by bounded rationality – a limited capacity to process information. The criteria automatically limit the set of possible alternatives. solution is chosen by compromise. it is affected by preferences and values of decision makers. managers resort to satisfying i. managers can conduct such a business as stated. Carnegie model advocates that information is very limited. The rational model ignores the ambiguity and uncertainty that typically increase the complexity in decision making. Stage – II: Managers collectively or individually seek to design and develop a list of alternative solutions and course of actions to the problems they have identified. Thus. bargaining. they most analyze the environment and recognize opportunities and threats it presents.e. In a predictable idle state. 2 . beliefs and intuitions.Mukesh Kumar Goit Kantipur Valley College . decision making is costly. Bounded Rationality and Organizational Coalitions. It is based on the following assumptions. as the rational suggests. The core assumptions involved are: a) Satisfying: Instead of searching for all possible solutions to a problem. In other words.

intuitive way. but uncertainty force it to adopt an unstructured way of making decisions. Under garbage can model. The managers must then generate new solutions and find new strategies that help the organization adapt to and modify its environment. Carnegie model views an organization as a coalition of different interests. 3) The Incrementalist model: According to incrementalist model of organizational decision making. sequential process but a process that may evolve unpredictably in an unstructured way. 4) The Unstructured Model: The unstructured model of organizational decision making describes how decision making takes place when uncertainty is high. This model emphasizes the unstructured nature of decision making: Managers make decisions in a haphazard. This model argues that decision making is not linear. managers use an incremental selection process – judgment and intuition. This model implies that mangers rarely make major decisions that are radically different from decisions they have made before.c) Organizational Coalitions: Unlike the assumption of same preference among different managers and stakeholders regarding the evaluation of alternatives in the same way. the Carnegie model explicitly recognizes that the preferences and values of managers differ and the conflict between managers and other stakeholders is inevitable. In an environment that changes suddenly or abruptly. The incrementalist model works best in a relatively stable environment where managers can accurately predict movements and trends. or incrementally different from those used in the past thus lessening their chance of making mistakes. 5) The Garbage Can Model: The extreme level of unstructured decision making process is represented by the Garbage Can model. Decision making may be constantly interrupted because uncertainty in the environment alters managers’ interpretations of a problem. and uncertainty force them to constantly adjust and find new ways to behave in the constantly changing situation. In other words new decisions are made in an incremental structure. bargaining. bargaining and other methods to reach a final decision. in which decision making takes place by compromise. and negotiation between managers and other stakeholders. b) Development stage: In this stage. The major three stages involved in this model are: a) Identification stage: In identification stage. Thus the unstructured model tries to explain how organizations make the non-programmed decisions. they search for and design alternatives to solve the problems they have identified. Managers correct or avoid mistakes through a succession of incremental changes. which may lead to completely new course of action. c) Selection stage: In the selection stage.Mukesh Kumar Goit Kantipur Valley College . The organization tries to make the best decisions it can. decision making arises in the following ways: 3 . managers select the alternative course of action that are only slightly. This model turns the decision making process around and argues that organizations are likely to start making decisions from the solution side rather than problem side. decision makers may pose solutions to problems that do not exist. managers develop routines to recognize problems and understand what is happening to the organization. the incrementalist approach might prevent managers from changing quickly enough to meet new conditions. In other words. hence they create a problem that they can solve with solutions that are already available.

There are two principal types of organizational learning that can be pursued: Exploration and Exploitation. Organizations are racing to develop new and improved core competences and fighting to respond to the low-cost competitive challenges. # Organizational Learning: Organizational learning is the process by which an organization gains new knowledge about its environment. decision making becomes like a “garbage can” in which problems. Hence.a) An organization has a set of solutions. Hence. goals. It is the process through which managers seek to improve organization members’ desire and ability to understand and manage organization and its environment so that they make decisions that continuously raise organizational effectiveness. It is an important process that helps managers to make better nonprogrammed decisions – decisions that allow adopting to modify and change the environment to increase an organization’s chances of survival. Thus. Learning that involves exploitation might involving implementing a total quality management program to promote the continuous refinement existing operating procedures. it is revolutionary in nature. Hence.Mukesh Kumar Goit Kantipur Valley College . or skills with which it can solve certain problems b) Mangers create problems or decision making opportunities in the way that the skills and solutions they possess can be used c) The solutions they possess are used to solve the problems and taken the advantage of superiority In an organization different coalitions of managers may champion different alternatives and compete for resources to implement their own chosen solutions. and the preference of different individuals and coalitions all mix and contend with one another for organizational attention and action. 4 . it is more evolutionary in nature. and processes. a) Exploration: Exploration involves organizational members searching for and experimenting with new kinds or forms of organizational activities and procedures to increase effectiveness. or developing an improved set of rules to perform specific kinds of functional activities effectively. b) Exploitation: Exploitation involves organizational members learning ways to refine and improve existing organizational activities and procedures in order to increase effectiveness. managers must understand how organizational learning occurs and the factors that can promote and impede it. For these said purposes. Learning that involves exploration might involve finding new ways of managing the environment – such as experimenting with the use of strategic alliances and network organizations – or inventing new kinds of organizational structure for managing organizational resources – such as product team structure and cross-functional terms. Organizational learning can be defined as a relatively permanent change in behavior that occurs as a result of experience. they must learn new ways to operate more efficiently if they are to survive. Hence. They are searching for every opportunity to use advanced materials. Organizational learning is vital process today for organizations to manage because of rapid pace of change affecting every organization. technology and information system to more effectively pursue their strategies and manage their structures. solutions.

managers need to encourage learning by promoting the use of various kinds of groups – such as self managed groups. a) Individual level learning: At the individual level managers need to use their effort to facilitate the learning of new skills. An adoptive culture of an organization promote higher learning because managers can quickly introduce in a new way the organization operate that allow the organization to adapt to change occurring in the environment. A learning organization can encourage employees to form complex mental models and develop a sense of personal mastery by providing them with the opportunity to assume more responsibility for their decisions. redesigning the job. Organizations should empower individuals and allow them to experiment and create and explore what they want. By encouraging and promoting organizational learning at each of these four levels – by looking at organizational learning as a system – managers can create a learning organizations that facilitate a quick response to the changes in the environment that are constantly taking place around it. c) Organizational level learning: At the organizational level. b) Group level learning: At group level. creation of empowered work teams can take over full responsibility for measuring. The mimetic. organizational culture is equally influencing factor for learning.Mukesh Kumar Goit Kantipur Valley College . Organization’s structure can be designed to inhibit or facilitate intergroup communication and problem solving. and values so that individual can increase their own personal skills and abilities and thereby help build the organization’s core competencies. Many scholars have argued that team learning is important than individual learning because most important decisions are made in subunits such as groups. cross-functional teams – so that individuals can share or pool their skills and abilities to solve problems. and divisions. reengineering etc. providing cross training. which may increase the level of organizational learning as the worker finds new ways to get the job done. The design of a mechanistic structure seems likely to facilitate exploitive learning where as the design of an organic structure seems more likely to facilitate explorative learning.# Levels of Organizational Learning: In order to create a learning organization. At this level learning organizations can improve their effectiveness by copying and imitating each others’ distinctive competencies. Organizations can also encourage explorative and exploitive learning by cooperating with their suppliers and distributors to find new and improved ways of handling inputs and outputs. d) Inter-organizational level learning: A linkage between organization leads to inter-organizational level learning. norms. 5 . Hence. such as. managers generally need to create learning at four levels in an organization. monitoring and controlling their own behavior to find ways continuously to increase performance. managers can promote organizational learning through the way of creating an organization’s structure and culture. functions. Group is helpful to join individual efforts and create synergy (the whole is more than the sum of individual) – which can enhance organizational effectiveness. coercive and normative processes encourage organizations to learn from each other in order to increase their legitimacy and also increase their effectiveness. Similarly. Both mechanistic and organic structures encourage different approaches to learning. The goal is to give employees the opportunities to develop an intense appreciation for their work that may lead to distinct competence for the organization. This can be done in variety of ways.

It opens up the possibility of achieving scale in knowledge reuse and thus growing the business. Role of instructors and learners in the learning-scenario and how technology changes these roles # Knowledge Management and Information Technology: Knowledge management was initially defined as the process of applying a systematic approach to the capture. structuring. illusion of control. a) Codification Approach: With a codification approach. Cognitive structure 2. Illusion of control 4. knowledge (idea) is carefully collected. 6 . It is a form of bureaucratic control that can result in major gains in technical efficiency and allow an organization better manage its environment. It involves developing a network for linking people so that tacit knowledge can be shared person-to-person. motivation level. frequency and repetitiveness. Frequency and repetitiveness 5. Individual motivation 6.There are several factors that inhibit learning and lead to organizational inertia. and dissemination of knowledge throughout an organization to work faster. It involves dialogue between individuals rather than knowledge stored in the database. It involves sharing and integrating of expertise within and between functions and divisions through real-time interconnected information technology. Cognitive dissonance 3. codification approach results in collection of standardized organization best practices and rules that can be drawn upon by anyone who needs them. Unlike more rigid bureaucratic organizing methods. Information is transfer through one-to-one conversation. Knowledge management is a kind of IT-enabled organizational relationship that has important implications for both organizational learning and decision making. It is an approach to provide analytically rigorous advice on high level strategic problems by channeling individual expertise. there are two approaches for knowledge management. the successful standards and procedures. b) Personalization Approach: In a personalization approach. learning context etc. Following are the major reasons to affecting learning. cognitive dissonance. Learning context 7. Essentially. and reduce cost.Mukesh Kumar Goit Kantipur Valley College . cognitive structure. The most important benefit from utilizing knowledge management system is the development of synergies between people and groups which may result in competitive advantage in the form of product or service differentiation. information systems are designed to show employees who in the organization might possess the knowledge they might need or who might have confronted a similar problem in the past. and stored in database where it can be retrieved easily by users who input organization-specific commands and key-words (codes). If an organization achieves success. analyzed. IT-enabled organizational structure allows for new kinds of tasks and job reporting relationships among electronically connected people that promote superior communication and coordination. management. 1. fear of unknown. IT-enabled organizations can respond more quickly to changing environmental conditions such as increased global competition. are common factors affecting learning and make an organization passive in learning and acquiring knowledge. reuse best practices. Basically.

Mukesh Kumar Goit Kantipur Valley College .  Develop an electronic document system that codifies stores. a) Quantum innovations b) Incremental innovations a) Quantum innovations: New products or operating systems that incorporate a quantum technological improvement are referred to as quantum innovations. it is also associated with a high level or risk because the outcomes of research and development activities are often uncertain. and in conformance with predetermined performance standard. disseminates. # Methods for Managing Innovation: There are several methods that can be used to manage innovation in an organizational setting.  Investment in once in knowledge assets. c) Incremental innovations: Incremental innovations refer to the change brought by an incremental technological change.  Invest heavily in IT. Generally speaking. Quantum technological change refers to a fundamental shift in technology that revolutionizes products or the way in which they are produced. Following are the most widely used methods to raise the level of both quantum and incremental innovation.# How firms manage their knowledge? Codification  Provides high quality. Although innovation brings about change. reliable and fact information using codified knowledge. Personalization  Provides analytically rigorous advice on high level strategic problems by channeling individual expertise. These methods also serve to overcome the resistance to the change. a) Project Management: A project is a subunit whose goal centers on developing the products or service on time. The goal is to connect people with reusable codified knowledge. and at present the world is characterized by a rapid rate of technological change. Changes in technology are at the heart of the innovation process.  Invest moderately in IT.  Charge high fees for high customized solution to unique problems  Develop network for linking people so that tacit knowledge can be shared (person to person). Flexible manufacturing. The introduction of Intel’s 4004 Microprocessor. The goal is to facilitate conversation and exchange of tacit knowledge. use of TQM are examples of incremental innovations. and allows reuse of knowledge (people-topeople). there are two types of innovation brought by technological change. Incremental change represents that technological change which involves a refinement of some base technology. the first “computer on a chip” is an example of quantum product innovation. # Innovation: Innovation is the process by which organizations use their resources and competencies to develop new or improved goods and services or to develop new production and operating system so that they can better respond to the needs of their customers and other stakeholders. Project management enables the process of leading and controlling the project so that it results in the effective creation of new or 7 . within budget. reuse it many times.

which is created to expedite new product design and promote innovation by coordinating the activities of functional groups. or researchers employed by existing companies engage in intrapreneurial activity. are another important means of managing high-tech innovations. Values and norms can reinforce the entrepreneurial spirit and allow an organization to respond quickly and creatively to a changing environment. d) Joint Ventures: Joint ventures between two or more organizations. Entrepreneurs are on the other hand. are equally influencing factors for innovation and ability of organization to introduce new products. marketing. This setting provides the opportunity for the intensive face-to-face interaction necessary to generate successful innovation. They assume the risk and receive many of the returns associated with the new business venture. In the race to produce advance technological products quickly. and to the final manufacturing or – in service – setup phase. Increasing organizational size. employees who notice opportunities for either quantum or incremental product improvements and responsible for managing the product development process to obtain them. people who start new business ventures and found organizations. Many managers. b) Cross-functional Product Team: In a structured new product development effort cross-functional product team is critical element.Mukesh Kumar Goit Kantipur Valley College . Effective project begins with a clearly articulated plan that takes a product from its concept phase. manufacturing and marketing. When both the companies share returns. There 8 . and manufacturing personnel become the core members of successful new product development teams. process reengineering. Hence skunk works – as a small-organization-type setting in which team members have the opportunity and motivation to bring a new product to the market quickly. often at a location away from the rest of the organization. risks and costs this often can result in the development of a stream of profitable new products. c) Skunk Works: A skunk work is a task force. its age. This task force consists of members of engineering and research and developments and other support functions such as marketing and is assigned to other facilities. # Entrepreneurship and Creativity: The leaders for innovation and new product development in established organization are intrapreneurs. to the modification phase. A project comprises a team of experts who possess skills and qualities to design and develop innovative products.improved products. creating the right setting is important to fostering an innovation. Organizational culture also plays important role in shaping and promoting innovation. engineering. Effective leadership is assigned to coordinate and manage the cross functional diversified personnel effectively. scientists. flexibility. material management. An organization involves in research and development (R&D) activity where cross functional employees meet together with high level of coordination in product reengineering. A joint venture allows organizations to combine their skills and technologies and pool their resources to embark on risky R&D projects. level of growth etc. a project has been proved as an effective and efficient tool. temporary team. to its initial test phase. e) Innovation supportive structure and culture: Organizational structure influences the way people behave. which jointly put their effort. Hence.

They set the parameters and make sure that projects follow that path. they should start it themselves. They have overarching strategies and outline the tactics to accomplish them. Successful entrepreneurs are disciplined enough to take steps every day toward the achievement of their objectives. They are disciplined self starters. If you have ideas. 2. They are confident and optimistic. All innovation begins with creative ideas. It is important to realize. you are imaginative but not creative. Creativity is no more than going beyond the current boundaries. Many intrapreneurs become dissatisfied with their employers and set their own business and become entrepreneur. not waiting for someone to give them permission. They exude that confidence in everything they do. to find hidden patterns. They have the ability to look at everything around them and focus it toward their goals. and to generate solutions. Ideas are constantly being generated about workflows and efficiency. # Characteristics of an Entrepreneur: Successful businesspeople have many traits in common with one another. then producing. to make connections between seemingly unrelated phenomena. however. that creative ideas are not just those that lead to major new inventions or achievements: Creative ideas are any that take existing practices a step farther than the norm. people skills and potential new businesses. Creativity is characterized by the ability to perceive the world in new ways. Here are ten traits of the successful entrepreneur. 3.Mukesh Kumar Goit Kantipur Valley College . They are open to any new ideas which cross their path. They are confident with the knowledge that they will make their businesses succeed. 5. Self Starter Entrepreneurs know that if something needs to be done. knowledge. 1. Creativity involves two processes: thinking. They are proactive. but don’t act on them. Creativity is the act of turning new and imaginative ideas into reality. 4. Confidence The entrepreneur does not ask questions about whether they can succeed or whether they are worthy of success.is an interesting relationship between entrepreneurs and intrapreneurs. where those boundaries are technology. Open Minded Entrepreneurs realize that every event and situation is a business opportunity. Disciplined These individuals are focused on making their businesses work. Competitive 9 . and eliminate any hindrances or distractions to their goals. social norm or beliefs.

They are very good at highlighting the benefits of any situation and coaching others to their success. 10 . whether they are in or out of the workplace. Stakeholders need to cooperate with one another to jointly contribute for the organization. and shareholders. compete over their share of the rewards and resources that the organization generates. It is the state of disagreement in the interest between stakeholders. researcher suggests that some level of conflict is good for an organization and can improve organizational effectiveness. They need to win at the sports they play and need to win at the businesses that they create. Strong people skills The entrepreneur has strong communication skills to sell the product and motivate employees. each of which contributes to the organization in return for rewards. Their mind is constantly on their work. preferences. Conflict arises when one group of stakeholder pursues its own interest at the expense of other groups. 7. 6. They are willing to put in those extra hours to make the business succeed because there is a joy their business gives which goes beyond the money. 8. Passion Passion is the most important trait of the successful entrepreneur.Many companies are formed because an entrepreneur knows that they can do a job better than another. The successful entrepreneur will always be reading and researching ways to make the business better. Strong work ethic The successful entrepreneur will often be the first person to arrive at the office and the last one to leave. so will try and try again until it does. Because the goals. They are determined to make all of their endeavors succeed.Mukesh Kumar Goit Kantipur Valley College . 10. Most successful entrepreneurs know how to motivate their employees so the business grows overall. They look at defeat as an opportunity for success. Successful entrepreneurs do not believe that something cannot be done. Creativity One facet of creativity is being able to make connections between seemingly unrelated events or situations. # Organizational Conflict: An organization consists of different stakeholders. They will repurpose products to market them to new industries. Entrepreneurs often come up with solutions which are the synthesis of other items. and interests of stakeholder groups differ. They genuinely love their work. They will come in on their days off to make sure that an outcome meets their expectations. management. however. conflict is inevitable in organizations. Determination Entrepreneurs are not thwarted by their defeats. Stakeholders such as employees. Although conflict is often perceived as something negative. An entrepreneur will highlight their own company’s track record of success. 9.

Functional Outcomes: • Conflict may stimulate innovation. Several types of conflicting situations confront organizations. burnout. Conflict between stakeholder groups can improve decision making and organizational learning by revealing new ways of looking at a problem putting together the constructive ideas. • Individuals and groups may be forced to search for new approaches. extreme conflict can hurt organizational performance. • Individual and group performance may be enhanced. • Communication between individuals and groups may be reduced. Conflicts are of various types. and growth. • Relationships may be damaged. • A climate of distrust and suspicion can be developed.Mukesh Kumar Goit Kantipur Valley College . • Organizational commitment and loyalty may be affected. • Individuals and groups may be required to articulate and clarify their positions. creativity. It can be both functional and dysfunctional as visualized in the figure. Understanding how these types of conflicts differ can help managers to deal with them. The various types of conflict that might take place in an organization are as following: a) Intrapersonal conflict b) Interpersonal conflict c) Intrateam conflict d) Interteam conflict e) Intra-organizational Conflict 11 . • Alternative solutions to a problem may be found. Dysfunctional Outcomes: • Conflict may cause job stress. • Job performance may be reduced. • Organizational decision making may be improved. and dissatisfaction. • Conflict may lead to synergistic solutions to common problems. Conflict can be beneficial because it can overcome organizational inertia and lead to organizational learning and change.Beyond some point however. • Resistance to change can increase.

preferences and perceptions lead to organizational conflict. functional unit’s desire for autonomy leads to conflict between groups. a) Interdependence: As organizations differentiate. allocations have to be made. machines. or to R&D to meet their objectives. each functional unit develops a desire for autonomy and begins to pursue goals and interests that it values over the goals of other units. Expanding resources as a resolution technique is extremely successful because it leaves the conflicting parties satisfied and create a win-win situation.). and functional units have to compete for their share. d) Incompatible performance criteria: Sometimes conflict arises between functional units not because their goals are incompatible but because of the organization’s way of monitoring. the potential for conflict arises because the goals of one subunit may affect negatively the ability of another to achieve its goals. # Conflict resolution strategies and techniques: There are different strategies and techniques that can be used to manage and resolve conflict. e) Competition for scarce resources: When resources go scarce. Following are most commonly used strategies and technique to reduce and manage conflicts.Mukesh Kumar Goit Kantipur Valley College . Different scholars have presented various strategy and techniques to manage conflict. Because the activities of different functional units are interdependent. A classic type of bureaucratic conflict occurs between line and staff functions. functions promote their interest and importance often at one another’s expense. everyone gets the required amount of resources to get the assigned job done. and rewarding different units brings them into conflict. Thus. a) Expansion of Resources: When conflict is predicted upon the scarcity of resources (money. Over time. evaluating. Once goals become incompatible. to increase access to resources. For example the reward to sales function only for achieving sales target may hinder the manufacturing function (there is a common thought that sales are possible due to timely production). materials. the most suitable technique to resolve the conflict is through the expansion of these resources. there can be conflict over the amount of funds to allocate to sales. If the resource base is expanded. conflict can occur because of status inconsistencies between different groups in the organization’s bureaucracy. Understanding conflict management techniques and strategies help management to work out a creative solution for it. office space etc.f) Inter-organizational Conflict # Sources of Conflict: Mainly horizontal and vertical differentiation with the establishment of organizational subunits (functions) with different goals. c) Bureaucratic factors: The way in which relationships develop in organizations can also be a potential source of conflict. b) Difference in goals: Difference in functional unit’s orientation affect the way each function or division views the world and cause each subunit to pursue different goals that are often inconsistent or incompatible. If there is limited budget. b) Avoidance: 12 . The five main sources of organizational conflict can be discussed as following. or to manufacturing.

conciliator. the loser can appeal the decision to a higher court. rank. mediator or arbitrator/s can be brought in to solve the conflict. each party to the conflict gives up something. Power can influence. Power bases refer to individuals’ resources that constitute the foundation to control other individuals. It is also important for managers to be aware of the relationship between the use of power and subordinate satisfaction and organizational commitment. or persuasive ability. # Organizational Power: Power is an attribute of an individual’s influence over other individual. c) Force/ power: People who tend towards a forcing (competing) style take a firm stand. The belief of some managers is that with the passes of time. expertise. one must be 13 . this technique uses a “lose-lose” strategy. To be an effective manger. shape or control the behavior of others. e) Third party intermediary: When the conflict cannot be solved internally. conflicts of trivial nature are automatically resolved. Organizational power is defined as the capacity to produce intended effects in the organization. when the decision is unpopular. Organizational power is the mechanism through which conflicts gets resolved. They usually operate from a position of power. This technique is widely used in solving labour-management conflicts. discovery and presentation of evidence must be followed. or when defending against someone who is trying to exploit the situation selfishly. neutral outside negotiator. A negotiated agreement can become a contract and be enforceable.” Negotiations are held for the settlement of issues and conflicts usually through the intervention of managers. They try to facilitate negotiated solutions. f) Legislation/ Appeals: Litigation is the use of the courts and civil justice system to resolve legal controversies. Specific rules of procedure. d) Compromise: It is based on the principal: “I sacrifice a little so do you. It can be noted as:  the ability to control the behavior of another person  capacity to mobilize people and resources to get things done  reflects actions of any individual or organizational system that controls the behavior or beliefs of an organizational member  power is the capacity or ability to influence organizational outcomes  relationships in the workplace affect one’s power to mobilize employees and resources to get things done # Sources of Power: There are various sources or bases of power in the workplace. This style can be useful when there is an emergency and a decision needs to be made fast.Mukesh Kumar Goit Kantipur Valley College . drawn from things like position. That verdict or decision can conclude the litigation process and be enforceable. In compromising. either the judge or a jury will decide the dispute. The decision is made by applying the facts of the case to the applicable law. This approach is based on “no winner. however. if appropriate. Power in the workplace is an important concept to managers because they must mobilize employees and resources to get things done. Hence.Conflict of minor nature are ignored and avoided. This technique generally follows “win-win” strategy. Organizational power is the ability of A to cause B to do something that B would not otherwise have done. It begins by filing a lawsuit in a court. If the parties cannot agree how to settle the case.no looser” strategy. No attention is paid to such conflicts. It can be defined as the ability of one person or group to overcome resistance by others to achieve a desired objective or result.

and coalitions often engage in political activity and behavior to enhance the power and influence they have. verbal reprimands. codes. or promotions) to his subordinates. The term “Be Like Anil” is an example of the referent power. skills. praise. Referent Power Referent Power is based upon others’ desire to emulate the manager. Coercive power is used when employee actions are incongruent with workplace policies. and illegitimate ways of overusing power to attain one’s objectives. e. Even if organizational members or 14 . or demotions) to his subordinates. Managers with referent power likely have an ability or quality that subordinates identify with. advantages. develop. an employee may perceive his manager’s respect. and engage in an appropriate strategy to use the power base/s. his subordinates may emulate his characteristics in order to gain the same admiration and respect. Reward Power Reward Power is based on the manager’s ability to control and administer rewards (such as money. This behavior was frequently associated with manipulation. The formal organizational structure provides the framework to enact legitimate power because it defines the rights and responsibilities within the organization. and it establishes the hierarchy. For example. and it is considered a source of personal power within the workplace. c. defamation. A common example is the “employee of the month. expert. Sources of power are categorized as: legitimate. b. expertise. d. activities taken within organizations to acquire. and expertise. There are positive relationships between referent and expert power in part because they both can lead to admiration and emulation.aware of his base/s of power.Mukesh Kumar Goit Kantipur Valley College . subversiveness. autonomy. and personal approval as a result of exemplary performance. # Organizational Politics: Organizational politics is defined as. Rewards may also be formal. Expert power is independent of hierarchal position and job title. referent. Expert Power Expert Power is based upon the manager’s knowledge. reward. attitude. Expert power is apt to be accomplished through reasoning and empowerment activities. select the appropriate base/s of power given the situation. One may infer that these positive relationships suggest that referent power is independent of hierarchal position and job title. Coercive Power Coercive Power is based on the ability of the manager to control and administer punishment (such as pay cuts. individuals. To mange the change process and to get conflict resolved in their favor. or abilities concerning his job. and coercive power. a) Legitimate Power Legitimate Power is based on the manager’s position in the organization and is validated by the members of the organization. subunits. and use power and other resources to obtain one’s preferred outcomes in a situation in which there is uncertainty or disagreements about choices. OP is usually defined as behavior strategically designed to maximize self-interests and therefore contradicts the collective organizational goals or the interests of other individuals. For example. as well. Organizational politics is perceived as self-serving behavior by employees to achieve self-interests. that exist as a perception of the employee. and benefits at the expense of others and sometimes contrary to the interests of the entire organization or work unit. informal and in this case. if a manager is admired and respected (for numerous reasons).” who is selected for his diligence. and procedures and with organizational expectations.

The ability to control the agenda is similar to the ability to control the premises of decision making. It can improve the choices and decisions that an 15 . to lobby for their interest. Coalitions form to control the premises behind decision making. it possible to create a good relationship with powerful managers. politics plays important role to control the scarce resources. Similarly. Politics is not aside in the course of changing organization structure and strategy. and units around some common issue is a political tactic that a manger can use to obtain the power to resolve a conflict in her or his favor. c) Association with Powerful Managers: Another political way of getting power is by attaching owenself to powerful managers who are clearly on their way to the top. # Tactics for playing organizational politics: Individuals or units in an organization use different strategies and tactics to increase their chance of winning the political game. b) Increasing Centrality: Taking positions at a central level can enhance their personal reputation and that of their function. By supporting a powerful manager and making oneself indispensable to that person. Individuals and subunits that use these tactics are often called in to solve problems as they arise. This tactic gives space to play politics and gain personal interest. increase and use power. between various functions. to control the path or organizational change and to resolve conflict in their own favor.Mukesh Kumar Goit Kantipur Valley College . d) Building Coalition: Forming a coalition of different interests. divisions. status. stakeholders. Not only possessing power. but also knowing how and when to use it is equally important. and the ability to come up with solution increases their status and prestige. managers are able to control the issues and problems to be considered by important decision makers. By being central. f) Controlling the Agenda: Controlling the agenda. A good level of coordination and sharing is important to create powerful coalition to employ for politics.units have no personal desire to play politics. and so on. # Effects of Organizational Politics: Organizational politics is an integral part of decision making in an organization. such as knowledge of computers that allow them to solve problems for other managers. Politics actively plays its role in every major organizational decision and may have positive impacts upon organization. such as supply of scare resources. and between important external or internal stakeholders. The reward for success in change that gives them greater shares of organizational resources –authority. they may also enhance their ability to obtain information that they can use to make themselves and their functions non-substitutable pursue personal goals. e) Influencing Decision Making: Important and influencing decision making is an important political tactic a manager. Influencing and important decisions of managers prove managers non-substitutability. money. a) Increasing Non-substitutability: Will managers deliberately engage in behaviors and actions that make them non-substitutable? They may develop specialized organizational skills. group or divisional unit can pursue to acquire. they still must understand how politics operates because sooner or later political member gets benefited personally than the non-political member. Coalitions can be built through many levels in an organization. individual.

16 . When powerful managers can suppress the views of those who oppose their interests. an organization must establish a balance of power in which alternative views and solutions can be offered and considered by all parties and dissenting views can be heard. checks and balances fade. debate becomes restricted.organization makes. but harm an organization if not managed properly. When stakeholders or units do not force the allocation of resources to where they can best create value. There should a proper balance the power and politics in an organization to produce positive outcomes. an organization can improve the quality of decision making by encouraging useful and productive debate about alternatives. To manage organizational politics and gain its benefits. organizational effectiveness suffers. bad conflict increases. The politics can improve organizational effectiveness if it results in change that allocates resources to where they can produce more value. toward those who can promote the changes that will help it the most can take advantage of the political process to improve the quality of organizational decision making. but it can also produce problems and promote conflict if it is not managed skillfully. An organization that confers power to shift over time. Hence. By allowing managers to use their power to advance their future objectives. and organizational inertia increases. politics and power benefit if managed well.Mukesh Kumar Goit Kantipur Valley College .