APPEARANCES CAN BE DECEIVING
H
LEARNING
OBJECTIVES
After studying this chapter,
you should be able to:
1 Define power and contrast
leadership and power.
2 Contrast the five bases
of power.
3 Explain the role of
dependence in power
relationships.
4 Identify nine power or
influence tactics and their
contingencies.
5 Show the connection
between sexual harassment
and the abuse of power.
6 Identify the causes and
consequences of political
behavior.
7 Apply impression
management techniques.
8 Determine whether a
political action is ethical.
MyManagementLab
Access a host of interactive
learning aids to help strengthen
your understanding of the
chapter concepts at
www.mymanagementlab.com.
410
e led one of the world’s most trusted and prestigious consulting
firms, McKinsey & Company. As a philanthropist, he raised tens
of millions of dollars for health care, education, and AIDS. He was
often mentioned as a business executive-to-philanthropist role model in the
same breath as Warren Buffett and Bill Gates. He collaborated with some of the
world’s most famous leaders, including Gates, former President Bill Clinton, and
leading CEOs.
He served on the boards of directors of some of the world’s most
respected companies, including Goldman Sachs, Procter & Gamble, and
American Airlines, often as chair. He was advisor to many of the world’s
leading business schools, including Harvard Business School, Tsinghua
University, IIT, MIT Sloan School of Management, Wharton’s Lauder Institute,
and Northwestern’s Kellogg School of Management. When President
Obama hosted the Indian Prime minister at a state dinner, he was at the
White House.
People described him as “humble” and “egoless.” His colleagues at
McKinsey admired him for the value he placed on family. He described him-
self as a “servant leader.” Bloomberg Businessweek noted that he was “that
rare businessman whose integrity was beyond reproach.”
Yet this man—Rajat Gupta—appears to have led a double life.
When the FBI and SEC were investigating Galleon Group founder and CEO
Raj Rajaratnam (convicted in 2011 on 14 charges of fraud and insider trad-
ing), they uncovered a “flurry” of phone conversations between Rajaratnam
and Gupta. In wiretapped calls, Gupta appears to have alerted Rajaratnam to
an upcoming $5 billion investment in Goldman by Berkshire Hathaway. On
another occasion, 23 seconds after hanging up on a Goldman conference
call, Gupta called Rajaratnam with news that Goldman would report a quar-
terly loss. All the while, Gupta was investing in and profiting from Galleon’s
profits on these and other trades. Rajaratnam also “loaned” Gupta millions so
he could increase his investments in Galleon.
When these facts became public in 2010 and 2011, the companies with
whom Gupta had a relationship—from McKinsey to Goldman Sachs to
Proctor & Gamble—quietly ended their associations with him. By mid-2011,
not a single company or university still listed Gupta as an advisor.
As of this writing, Gupta has not yet been convicted of insider trading.
Even if he is acquitted, however, the damage has been done. A CEO who
once was as powerful, networked, and admired as any whose names aren’t
Gates, Buffett, or Jobs, Gupta is now a pariah and his power is gone.