Chapter 13: Conflict, Power, and Politics 499

indicating that Hicks had power within the organization. Eventually, Hicks was put
in charge of running Discovery Channel Online.32
The concept of formal authority is related to power but is narrower in scope.
Authority is also a force for achieving desired outcomes, but only as prescribed by the
formal hierarchy and reporting relationships. Three properties identify authority:
1. Authority is vested in organizational positions. People have authority because
of the positions they hold, not because of personal characteristics or resources.
2. Authority is accepted by subordinates. Subordinates comply because they
believe position holders have a legitimate right to exercise authority.33 In most
North American organizations, employees accept that supervisors can legiti-
mately tell them what time to arrive at work, the tasks to perform while they’re
there, and what time they can go home.
3. Authority flows down the vertical hierarchy.34 Authority exists along the for-
mal chain of command, and positions at the top of the hierarchy are vested with
more formal authority than are positions at the bottom.
Formal authority is exercised downward along the hierarchy. Organizational
power, on the other hand, can be exercised upward, downward, and horizontally in
organizations. In addition, managers can have formal authority but little real power.
Consider what happened when Bill Gates turned the CEO job at Microsoft over
to Steven Ballmer. Although Ballmer got the title and the formal authority, Gates
retained the power. He continued to hold sway over many day-to-day business deci-
sions, and sometimes his personal power would undermine Ballmer in front of other
executives. Though Gates has now fully stepped aside from management of the
company and publicly supports Ballmer’s decisions, insiders say the power struggle
left the company in a weakened position, without a clear strategic direction.35 In
the following sections, we will examine how employees throughout the organization
can tap into both vertical and horizontal sources of power.

Vertical Sources of Power

All employees along the vertical hierarchy have access to some sources of power.
Although a large amount of power is typically allocated to top managers by the
organization structure, people throughout the organization often obtain power dis-
proportionate to their formal positions and can exert influence in an upward direc-
tion, as Tom Hicks did at the Discovery Channel. There are four major sources of Briefcase
vertical power: formal position, resources, control of decision premises and infor- As an organization
mation, and network centrality.36 manager, keep this
guideline in mind:

Formal Position. Certain rights, responsibilities, and prerogatives accrue to top

Understand and use
positions. People throughout the organization accept the legitimate right of top the vertical sources
managers to set goals, make decisions, and direct activities. This is legitimate power, of power in organiza-
as defined earlier. Senior managers often use symbols and language to perpetuate tions, including formal
their legitimate power. For example, the new administrator at a large hospital in the position, resources,
control of decision
San Francisco area symbolized his legitimate position power by issuing a newsletter
premises and infor-
with his photo on the cover and airing a 24-hour-a-day video to personally welcome mation, and network
patients.37 centrality.
The amount of power provided to middle managers and lower-level participants
can be built into the organization’s structural design. The allocation of power to
middle managers and staff is important because power enables employees to be
500 Part 5: Managing Dynamic Processes

productive. When job tasks are nonroutine, and when employees participate in self-
directed teams and problem-solving task forces, this encourages them to be flexible
and creative and to use their own discretion. Allowing people to make their own
decisions increases their power.
Power is also increased when a position encourages contact with high-level
people. Access to powerful people and the development of a relationship with them
provide a strong base of influence.38 For example, in some organizations an admin-
istrative assistant to the president might have more power than a department head
because the assistant has access to the senior executive on a daily basis.
The logic of designing positions for more power assumes that an organization
does not have a limited amount of power to be allocated among high-level and low-
level employees. The total amount of power in an organization can be increased
by designing tasks and interactions along the hierarchy so everyone can exert more
influence. If the distribution of power is skewed too heavily toward the top, research
suggests that the organization will be less effective.39

Resources. Organizations allocate huge amounts of resources. Buildings are con-

structed, salaries are paid, and equipment and supplies are purchased. Each year, new
resources are allocated in the form of budgets. These resources are allocated down-
ward from top managers. Top managers often own stock, which gives them property
rights over resource allocation. However, in many of today’s organizations, employees
throughout the organization also share in ownership, which increases their power.
In most cases, top managers control the resources and, hence, can determine
their distribution. Resources can be used as rewards and punishments, which are
additional sources of power. Resource allocation also creates a dependency rela-
tionship. Lower-level participants depend on top managers for the financial and
physical resources needed to perform their tasks. Top management can exchange
resources in the form of salaries and bonuses, personnel, promotions, and physical
facilities for compliance with the outcomes they desire.

Control of Decision Premises and Information. Control of decision premises means

that top managers place constraints on decisions made at lower levels by specifying
a decision frame of reference and guidelines. In one sense, top managers make big
decisions, whereas lower-level participants make small decisions. Top management
decides which goal an organization will try to achieve, such as increased market share.
Lower-level participants then decide how the goal is to be reached. In one company,
top management appointed a committee to select a new marketing vice president. The
CEO provided the committee with detailed qualifications that the new vice president
should have. He also selected people to serve on the committee. In this way, the CEO
shaped the decision premises within which the marketing vice president would be
chosen. Top manager actions and decisions such as these place limits on the decisions
of lower-level managers and thereby influence the outcome of their decisions.40
The control of information can also be a source of power. Managers recognize
that information is a primary business resource and that by controlling what infor-
mation is collected, how it is interpreted, and how it is shared, they can influence
how decisions are made.41 In many of today’s companies, information is openly and
broadly shared, which increases the power of people throughout the organization.
However, top managers generally have access to more information than do other
employees. This information can be released as needed to shape the decision outcomes
of other people. In one organization, Clark Ltd., the senior information technology
Chapter 13: Conflict, Power, and Politics 501

(IT) manager controlled information given to the board of directors and thereby influ-
enced the board’s decision to purchase a sophisticated computer system.42 The board
of directors had formal authority to decide from which company the system would
be purchased. The management services group was asked to recommend which of six
computer manufacturers should receive the order. Jim Kenny was in charge of the
management services group, and Kenny disagreed with other managers about which
system to purchase. As shown in Exhibit 13.3, other managers had to go through
Kenny to have their viewpoints heard by the board. Kenny shaped the board’s thinking
toward selecting the system he preferred by controlling information given to them.
Middle managers and lower-level employees may also have access to informa-
tion that can increase their power. An assistant to a senior executive can often
control information that other people want and will thus be able to influence those
people. Top executives depend on people throughout the organization for informa-
tion about problems or opportunities. Middle managers or lower-level employees
may manipulate the information they provide to top managers in order to influence
decision outcomes.

Text not available due to copyright restrictions

Network Centrality. Network centrality means being centrally located in the organiza-
tion and having access to information and people that are critical to the company’s
success. Managers as well as lower-level employees are more effective and more influ-
ential when they put themselves at the center of a communication network, building
connections with people throughout the company. For example, in Exhibit 13.4,
Radha has a well-developed communication network, sharing information and assis-
tance with many people across the marketing, manufacturing, and engineering depart-
ments. Contrast Radha’s contacts with those of Jasmine or Kirill. Who do you think
is likely to have greater access to resources and more influence in the organization?
502 Part 5: Managing Dynamic Processes

EXHIBIT 13.4
An Illustration of Network
Centrality

People at all levels of the hierarchy can use the idea of network centrality to
accomplish goals and be more successful. A real-life example comes from Xerox
Corporation. Several years ago, Cindy Casselman, who had little formal power and
authority, began selling her idea for an intranet site to managers all over the com-
pany. Casselman had a well-developed network, and she worked behind the scenes,
gradually gaining the power she needed to make her vision a reality—and win a
promotion in the process.43
People can increase their network centrality by becoming knowledgeable and
expert about certain activities or by taking on difficult tasks and acquiring special-
ized knowledge that makes them indispensable to managers above them. People
who show initiative, work beyond what is expected, take on undesirable but impor-
tant projects, and show interest in learning about the company and industry often
find themselves with influence. Physical location also helps because some locations
are in the center of things. Central location lets a person be visible to key people and
become part of important interaction networks.

ASSESS
YOUR
ANSWER
2 A factory worker on the assembly line is in a low power position and
should accept that he or she will have little influence over what happens.
ANSWER: Disagree. Although an assembly line worker typically has little formal
power and authority, all employees have access to some sources of power. It is
up to the individual to network or gather information to expand his or her power
in the organization. In addition, when employees band together, they can have a
tremendous amount of power. Managers can’t get anything done unless employ-
ees cooperate and do the work they’re supposed to do.
Chapter 13: Conflict, Power, and Politics 503

People. Top leaders often increase their power by surrounding themselves with a
group of loyal executives.44 Loyal managers keep the leader informed and in touch
with events and report possible disobedience or troublemaking in the organization.
Top executives can use their central positions to build alliances and exercise sub-
stantial power when they have a management team that is fully in support of their
decisions and actions. Briefcase
Many top executives strive to build a cadre of loyal and supportive executives to As an organization
help them achieve their goals for the organization. For example, former New York manager, keep these
Stock Exchange Chairman Dick Grasso placed his friends and allies in critical posi- guidelines in mind:
tions and pushed favored candidates for board posts. As another example, the U.S.
government handpicked the advisers and committee members who would influence Do not leave lower
organization levels
decisions made by the interim Iraqi government.45
powerless. If vertical
This idea works in the opposite direction too. Lower-level people have greater power is too heavy in
power when they have positive relationships and connections with higher-ups. By favor of top manage-
being loyal and supportive of their bosses, employees sometimes gain favorable ment, empower lower
status and exert greater influence. levels by giving people
the tools they need to
perform better: infor-
mation, knowledge
The Power of Empowerment and skills, and the
power to make sub-
stantive decisions.
In forward-thinking organizations, top managers want lower-level employees to
have greater power so they can do their jobs more effectively. These managers
intentionally push power down the hierarchy and share it with employees to enable
them to achieve goals. Empowerment is power sharing, the delegation of power or
authority to subordinates in an organization.46 Increasing employee power height-
ens motivation for task accomplishment because people improve their own effec-
tiveness, choosing how to do a task and using their creativity.47
Empowering employees involves giving them three elements that enable them to
act more freely to accomplish their jobs: information, knowledge, and power.48

1. Employees receive information about company performance. In companies

where employees are fully empowered, all employees have access to all financial
and operational information.
2. Employees have knowledge and skills to contribute to company goals.
Companies use training programs and other development tools to help people
acquire the knowledge and skills they need to contribute to organizational
performance.
3. Employees have the power to make substantive decisions. Empowered employ-
ees have the authority to directly influence work procedures and organizational
performance, such as through quality circles or self-directed work teams.

Many of today’s organizations are implementing empowerment programs, but

they are empowering workers to varying degrees. At some companies, empow-
erment means encouraging workers’ ideas while managers retain final authority
for decisions; at others it means giving employees almost complete freedom and
power to make decisions and exercise initiative and imagination.49 The continuum
of empowerment can run from a situation in which front-line workers have almost
no discretion, such as on a traditional assembly line, to full empowerment, where
workers even participate in formulating organizational strategy. One organization
that pushes empowerment to the maximum is Semco.