THE POWER-CONTROL MODEL

1. THE POWER-CONTROL MODEL

2. POWER OF CONTINGENT VARIABLES “At best, the four contingent variables (size, technology, environment and strategy) explain only 50 to 60 percent of the variability in structure. It is proposed that power and control can explain a good portion of the residual variances.”

3. MAJOR POWER-CONTROL VARIABLES Power Politics Conflict Network Centrality Dominant Coalitions Satisficing Bounded Rationality

4. POWER Power is usually defined as a personal characteristic based upon one’s ability to influence or dominate another person. The typical types of power ascribed to individuals are: 1. Legitimate position power (authority) 2. Coercive power 3. Reward power 4. Expert power 5. Referent (normative) power

5. ORGANIZATIONAL POWER Power in organizations is usually the result of structural characteristics. There is a formal hierarchy of positions that differ in the importance of the tasks to be performed. Some positions also have access to more resources or are more mission-critical to the organization. Power based upon organizational relationships is vested in the position, not the individual, and comes from both vertical and horizontal relationships.

6. VERTICAL SOURCES OF POWER • Formal Position: Occupants of a position accrue • certain rights, prerogatives, and responsibilities • legitimately based upon the priority of the position • in the hierarchy. Rights include goal-setting, • decision making and directing activities of • prescribed others.

7. VERTICAL POWER II 2. Resources: Organizational resources are allocated downward by top management. Resource allocations can be used for rewards or punishments (also sources of power), or to create dependency 3. Control of Decision Premises and Information: Top managers place constraints on decisions made at lower levels, by defining the decision frame of reference and guidelines for making the decision. They also routinely have access to more information for decision making, and control it.

8. VERTICAL POWER III 4. Network Centrality: the degree to which a person/ position is located centrally in the organization so as to have greatest access to information and people that are critical to success of the company. Many top executives surround themselves with a network of loyal subordinates with access to a high degree of company information and form alliances with other significant people to wield considerable power in the organization.

9. HORIZONTAL SOURCES OF POWER • Strategic Contingencies: Events and activities that • are critical for achieving organizational goals. Units • involved with strategic contingencies tend to have • more power because they provide strategic value to • the organization. For example, if the organization • is threatened by significant lawsuits, the legal staff • would have significant power and influence over • organizational decision making.

10. HORIZONTAL POWER II 2.Dependency: A unit gains power based upon its relative dependency to other units. The more another unit needs it to complete it mission successfully, the more power the latter has relative to the former unit.

11. HORIZONTAL POWER III 3.Financial Resources: “The person with the gold makes the rules.” Modern Axiom. Money is a scarce resource that can be converted to many other resources. Control over money is a big source of power to units. It also creates dependencies. Usually departments that generate income for the organization have more power.

12. HORIZONTAL POWER IV 4. Centrality: degree to which a department’s role is in a primary activity of the organization, especially one that affects the final output. 5. Non-Substitutability: the degree to which a unit’s work cannot be duplicated by another contributes significantly to it’s power in the organization and enhances it’s role in the organization.

13. HORIZONTAL POWER V 6. Coping with Uncertainty: Many environmental variables can be volatile and change rapidly, creating high levels of uncertainty for the organization. The degree to which the work of a unit contributes to reducing that uncertainty for other units, the more power accrues to the unit. This is usually accomplished by: (1) obtaining important information for others, (2) preventing problems before they occur, and (3) absorption of uncertainty.

14. ORGANIZATIONAL POLITICS Organizational politicsinvolves those activities taken within organizations to acquire, develop, and use power and other resources to obtain one’s preferred outcomes in a situation in which there is uncertainty or (a lack of consensus) about choices.

15. ORGANIZATIONAL CONFLICT Organizational conflict develops between individuals and groups for the following reasons: 1. Goal incompatibility 2. Differentiation 3. Task interdependence 4. Limited resources

16. USES OF POLITICAL MODELS • When intergroup conflict is low – a rational decision • making process will be followed. That model is • characterized by: • Monitoring the decision environment • Defining the decision situation • Specifying decision objectives • Diagnosing the problem • Developing alternative solutions • Evaluating alternatives • Choosing the best alternative • 8. Implementing the chosen alternative

17. USES OF POLITICAL MODELS II When intergroup conflict is high, the Carnegie model of decision making prevails. The model suggests explicitly recognizes that the preferences and values of managers differ and that conflict between managers and different stakeholder group is inevitable. Decision making occurs in an uncertain environment where information is often incomplete and ambiguous. Decisions are made by people who are limited by bounded rationality, who satisfice, and who form coalitions to pursue their own interests.

18. CARNEGIE MODEL Bounded Rationality: Managers try to be as rational as possible but are faced with very complex problems, many of which are ambiguous or require shared support by other organizational members. Managers are limited by time constraints, incomplete information, and insufficient resources. Satisficing: managers accept “satisfactory” solutions to organizational problems rather than pursue “optimal” solutions. They talk to other managers to reduce uncertainty, conduct simple, local searches for alternatives, and use established procedures if appropriate.

19. COALITIONS The Carnegie model sees the organization as a coalition of different interests, in which decision making occurs through compromise, bargaining and negotiation between managers from different functions and areas of the organization. Any solution chosen must meet the approval of the Dominant Coalition.

20. DOMINANT COALITIONS Many managers form coalitions to secure their power bases, and to protect their occupancy of powerful, central positions in the organization. The most powerful of these coalitions are called Dominant Coalitions, and wield the highest amounts of power in the organization. Over time, as interests change, the makeup of the dominant coalition changes and so does the decision making.

21. DECISION MAKING The decision will be made by the dominant coalition The criteria & preferences in the decision will reflect the self- interest of the dominant coalition Constraints Strategy, Size Technology, Environment + Satisficing level of organizational effectiveness Structural alternatives Emergent structure

22. DECISION DISCRETION IN THE POWER-CONTROL MODEL Organic Decision Mechanistic Discretion A