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Tesla Motors Inc.

Power and Influence

In this section, it will be analysed how the concepts of Power and Influence are embedded in
social and organization structures inside TESLA Motors organization.

Firstly, lets put the concepts of Power, Authority and Influence clearly:

1) Power: Is the ability to exert actions that either directly or indirectly cause change in the
behaviour and/or attitudes of another individual or group. In an organization, power can
be seen as the ability to mobilize resources (human and material) to get things done.

2) Authority: Is the right to direct others and ask them to do things which they would not
otherwise do, but it is legitimate and is exercised in the working of organizations.
Authority is different from power because of its legitimacy and acceptance in an
organizational context and leadership is broader than power and indicates a willingness
on the part of the follower to follow in the absence of authority.

3) Influence: Is conceived as more broader and it is the ability to alter actions of other
people in general ways by changing their satisfaction criteria and thus improve their
performance.

Secondly, it will be analysed the power and influence capabilities that the CEO Elon Musk
possesses in TESLA Motors through applying the:

A) Dependence model of power


B) Sources of power in organizations
C) Contingencies of power
D) Influent Tactics and it consequences

This models will be discussed specifically in relation to TESLA Motors vision of organization.

Finally, it will be discussed the most effective and least effective influence tactics getting to a
conclusion of which ones are used for the good of the company and which ones can be changed or
improved to improve the way management is driven in the organization.
Firstly, within TESLA Motors organization there are two sources of power; one is the union of
workers which has the ability to challenge the CEOs power and on the other hand, there is the
power of the managers represented by CEO Elon Musk, who struggles to manage all the
subordinates

The following chart demonstrates the dependence model of power. Elons position, as CEO of
TESLA Motors, gives him some power over his subordinates and the employees accept their
subordination in order to get his resourced desired.

A) Dependence model of Power

The next chart represents the Model of Power in TESLA organization applied for the CEO Elon Musk:
B) Sources of power in organizations for Elon Musk

Using these five powers; legitimate, reward, coercive, expert and referent, Elon and managers at
TESLA Motors had and has to manage his workers. In the following table, will explain each source of
power that Elon uses most frequently as a CEO of TESLA. Then, will explain the contingencies of
power and its relevance to generate power over the subordinates.

Source of Power Elon Musk Behaviour Meaning in Organizational Structure

Legitimate It is based on position and mutual agreement.


(authority, Both the agent and target agree that the agent
This type of power is used continuously by
obligation to has the right to influence the employees. It is in
Elon Musk.
accept) the form of authority which is delegated to the
FORMAL positions of organizational members.

It is based on the agent's/manager's ability to


control rewards the target/employee wants. The
Reward This type of power is not commonly used common, e.g., of it are managers control rewards
FORMAL by Elon Musk. of salary increases, bonuses and promotions. This
power is based on old saying that 'wealth is
power'.
It is opposite of reward power. It is based on a
manager's ability to cause an unpleasant
Coercive
This type of power is not commonly used experience for its people. In organizational
(punishment
by Elon Musk. situation, it may be in the form of action for or
power) PERSONAL threat for dismissal, suspension, or demotion, for
the people working in organization.

This type of power is used continuously by


It is an elusive power that is based on
Elon Musk, he tries often to be an example
interpersonal attraction. Charismatic individuals
Referent for his employees.
are often thought to have referent power. Here,
PERSONAL So, in that way he can easily manage to get
people take somebody as ideal and behave
his workers to do what he asks to meet the
accordingly upto a certain stage.
goals of the company.

It exists when the agent has information or


knowledge that the target needs. It is based on
This type of power is used frequently by
the proverb, "knowledge in power". Three
Elon Musk. He is always reading and
conditions to be fulfilled are:
studying in order to enrich his knowledge.
Expert (1) The target must trust that the information
This is helpful for him because it helps him
PERSONAL given by the agent is accurate and correct.
to understand better the engineering
(2) The information should be relevant and useful
process of the company and his employees
to the target.
and his peers sees him as an expert.
(3) The target must consider the agent as an
expert.
C) Contingencies of power

The following four forces of contingencies of power; substitutability, centrality, discretion and
visibility will determine whether power will be converted to influence

Contingencies Elon Musk's ability to influence


Factors
of Power others increases when

Is the degree to which people have there are no substitutes for the rewards
Substitutability
alternatives in accessing resources. or resources Elon controls.

Represents how important a


person's job is and how many he's role is important and interdependent
Centrality
people depend on that person to with others in the organization.
accomplish their tasks.
Is the degree to which managers he has the freedom to make his own
Discretion have the right to make decisions on decisions without being restrained by
their own. organizational rules (head boarder rules).

Is how aware others are of a leader's others know about him and the resources
Visibility
power and position. he can provide.

This tables shows that the CEO Elon Musk uses more of his personal powers than his
formal powers.

The uses of this personal powers has been appreciated in many ways, e.g. He treats his
subordinates with interpersonal attraction and charismatic in order to finally become a referent for
them. In addition, he always tries to be well prepared by going to courses and engineering
conferences to be at the vanguard of the engineering industry, Elon uses this to be considered as an
expert on the engineering field toward his subordinates.

On the other hand, when he must use his legitimate power he doesnt hesitate and a clear
example is the following:

In 2007 he converted 8 million preferred shares into common in order to control enough
votes to remove Martin Eberhard as CEO, and then also participated in a bridge loan to avoid an
attempt by Vantage Partners to dilute him with a new round.

He was then the sole investor in their $40M Series E round in mid-2008, during the financial
crisis, and arranged a $40M bridge loan in late 2008, saving the company from bankruptcy; and took
the reigns as CEO. Finally, Musk put so much of his own wealth into Tesla, that in 2009 he was living
off of personal loans from friends till the company got profits.
Musk is the kind of boss where day to day you dont know if you have a job or not.
Once hes convinced that you cant do the job, theres no way you can convince him back
again,. That happened many times to many people, and thats what happened with Martin.
Once he determined that Martin couldnt be the CEO of Tesla any longer, that was it. He was
fired. Harrigan, work of TESLA, said.

This behaviour demonstrates that Elon Musk had used and uses his legitimate power till now
a day. After he became the CEO of TESLA Motors, he provided the direction of the company and held
formal authority over employees, contractors, service providers (through service agreements) and
even customers. The magnitude of legitimate power increases with trust in the holder and perceived
fairness of their decisions.

In the following table, we are going to show the influence tactics he used to control his
employees and company.
D) Influent Tactics and it consequences

Type of Influence Meaning in Organizational


Elon Musk Behaviour Consequences
Tactics Structure
Using logic, facts, emotional appeals to
Persuasion This type of influence is used gain acceptance. Present relevant This type of behaviour develops a commitment

Commitment
Soft Influence Tactics incessantly by Elon Musk. information in support and explain the among his subordinates.
reasoning behind his request.

Make the request politely and humbly. He doesn't use this type of behaviour because of his
Ingratiation and
This type of influence is not Act in a friendly way and be personality and the position he has in the company.
Impresion managemnt
used by Elon Musk. complimentary before asking. Sympathize It doesn't make a big difference of the way his
Soft Influence Tactics with any hardships they may face. subordinates look at him.

This type of influence is not


His position in TESLA allow him not to use this type
commonly used by Elon in Offer an exchange of favours mutual
Exchange of behaviour frequently. However, he uses it in a
TESLA. However, it is known backscratching. Remind them of favours
Hard Influence Tactics global form by giving bonuses by achieve
that he uses it to manage his you have provided them in the past.

Compliance
production's goals.
companies contracts. (lobby)

He has not necessity to use this type of behaviour at


TESLA. However, in politics he is known to use this
Get higher level management to intervene
Upward Appeal This type of influence is not type of behaviour and it has brought him
in your support. Send the person to speak
Hard Influence Tactics used by Elon Musk. satisfactions in the past by winning loans from the
to your boss.
government and having achieve the opportunity of
developing TESLA industries in foreign countries.
This type of influence is used Common in high power distance cultures.
Silent authority /
frequently by Elon Musk Based on legitimate power, role This type of behaviour develops some type of
Centrality

Resistance
toward his subordinates as well modelling. Following requests without resistance from his subordinates.
Hard Influence Tactics as his immersionists. overt influences.

Order the person to do it. Point out that


Assertiveness This type of influence is used
the rules demand it. Keep reminding them Failure to use this type of tactic will not generate
Hard Influence Tactics incessantly by Elon Musk.
about what is required. resistance among employees.
Type of Influence Meaning in Organizational
Elon Musk Behaviour Consequences
Tactics Structure
Threaten to stop working with the person.
Information control /
This type of influence is not Ignore the person and stop being friendly.
Blocking Failure to use this type of tactic will not generate

Resistance
used by Elon Musk. Withhold collaboration until they do what
Hard Influence Tactics resistance among employees.
you want.
Get the support of colleagues to support This type of behaviour is not used by Elon, however
This type of influence is not
Coalition formation your request. Make the request at a his subordinates use it and the prove is the existence
used by Elon Musk, however is
Hard Influence Tactics formal meeting where others will support of the "Union", its ability relies on challenge the
used by the subordinates.
you. CEOs power and force disruptions through strike.

This table exposes the different types of influences Elon Musk uses to manage his subordinates, these behaviours generate responses from part of
his subordinates translating them on different reactions like commitment, compliance and resistance, shown on the right side of the table.
Within Tesla, exists a unification of employees which is called the union, this aggrupation
holds referent power. This kind of power bring together employees with shared values and negatives
experiences with management and attempted to gain the attention of management by arranging
strikes

Referent power in this regard is used by the union to gain benefits within organisation, in
most cases, to turn a profit through membership fees. The magnitude of referent power increases as
the diversity and number of workers within the group increases (to increase the identity) and where
the cause which they are fighting for is substantial.

The unions also held some legitimate power with the fact that they are a legal entity with certain
legal rights within an organisation; this allows them to get demands on the table like:

maintaining as 8 the maximum number of hours per shift


dental care for the employee and the family and insurance for the entire family of the
worker until $1,000.00 dollars
Respect among the managers toward the employees (the way of speaking)

So far, in the era of Elon as a CEO, there has been no meaning strikes caused by workers within
TESLA.

However, when legitimate power and referent power oppose each other, as often is the case in
organisations, an influence tactic is required to bring about the change of one side. Is conceived as
more broader and it is the ability to alter actions of other people in general ways by changing their
satisfaction criteria and thus improve their performance. (Jeffry Pfeffer).

To manage the workers, there are numerous influence tactics that one can use to adjust the
behaviour of others, e.g. Silent Authority, which is derived by having legitimate power, the deep
seeded influence of hierarchy; Information Control, where the flow of information is controlled to
manipulate behaviour; Coalition Formation, where the voice of many is stronger than the voice of
one; among other tactics that are presented on the table above.

In TESLA seams that the behaviour of Elon has been good enough to manage their subordinates.
The uses of Assertiveness; where an individual makes his legitimate power, clear and changes the
behaviour of others as a result; Silent authority, based on legitimate power and, role modelling;
Persuasion, using logic, facts, emotional appeals to gain acceptance; Exchange, offer an exchange of
favours mutual backscratching.

The use of these tactics gained empathy from the workers and managers; this empathy helped
solidify his decisions while running TESLA and also helped with the support of the union in all the
way till now.

Finally, we can say that balancing both Personalized and Socialized power (Pennsylvania
State, 2014), Elon Musk works for the betterment of TESLA and progress of the human sense of
adventurism with some very selfish actions by using his Legitimizing Tactics (Pennsylvania State,
2014) to coarse many decisions in his company.
Conclusion

The primary source of Elon Musks power is his money. He has personal wealth, and has
accumulated a collection of investors that now include NASA. What Musk does with his money is not
unlike others who are wealthy and successful; he hires brilliant and talented individuals that can
design and develop his products. But what separates Elon Musk from most of those venture
capitalists is his vision.

Elon Musk uses his power to influence individuals and organizations, even governments, to
change their perception on space travel (Junod, 2012). Instead of focusing on what humanity can do,
Elon wants Americans to look at what they should do. Musk works to change the behaviors and
attitudes of innovators, engineers, and investors. It is not enough for him to inspire Americans; he
needs somehow to stand for them to stand for more than himself if he wants to restore this
countrys explorers heart, its willingness to endure risk. (Junod, 2012).

Expert power is the primary taxonomy of social power that Elon Musk uses. With advanced
knowledge in engineering as well as business and social interactions makes Musk very adept to lead
his organizations. Beyond that, Musk uses inspirational appeals as an influence tactic to motivate his
engineers to innovate and find something new, and motivates his investors to keep giving him
money even in the face of failure.
References:
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published.
2) Tesla web page: http://ir.tesla.com/management.cfm
3) Harvard business report: https://hbr.org/1970/05/power-and-politics-in-organizational-life
4) Fred Luthans, Organizational Behaviour, 9th Edition, McGraw-Hill International
5) Modern concept of power as a social and economic theory
http://www.ejournalnet.com/Contents/Issue_2/4/4_2002.htm
6) The Concept of Power: A Critical Defence by Roderick Martin
The British Journal of Sociology
Vol. 22, No. 3 (Sep., 1971), pp. 240-256
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Management SE-100 44 STOCKHOLM - Open Innovation in EVs: A Case Study of Tesla Motors
Achilleas Karamitsios
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https://www.quora.com/How-did-Elon-Musk-become-CEO-of-Tesla
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