BUS603: Managing People

In addition to the control of critical resources, subunits can also attain power by gaining control over activities that are needed by others to complete their tasks. These critical activities have been called strategic contingencies. A contingency is defined by Miles as "a requirement of the activities of one subunit that is affected by the activities of other subunits". For example, the business office of most universities represents a strategic contingency for the various colleges within the university because it has veto or approval power over financial expenditures of the schools. Its approval of a request to spend money is far from certain. Thus, a contingency represents a source of uncertainty in the decision-making process. A contingency becomes strategic when it has the potential to alter the balance of interunit or interdepartmental power in such a way that interdependencies among the various units are changed.

Perhaps the best way to illustrate this is to consider the example of power distribution in various organizations attempting to deal with a major source of uncertainty - the external environment. In a classic study by Lawrence and Lorsch, influence patterns were examined for companies in three divergent industries: container manufacturing, food processing, and plastics. It was found that in successful firms, power distribution conformed to the firm's strategic contingencies. For example, in the container-manufacturing companies, where the critical contingencies were customer delivery and product quality, the major share of power in decision-making resided in the sales and production staffs. In contrast, in the food-processing firms, where the strategic contingencies focused on expertise in marketing and food sciences, major power rested in the sales and research units. In other words, those who held power in the successful organizations were in areas that were of central concern to the firm and its survival at a particular time. The functional areas that were most important for organizational success were under the control of the decision makers. For less-successful firms, this congruence was not found.

The changing nature of strategic contingencies can be seen in the evolution of power distribution in major public utilities. Many years ago, when electric companies were developing and growing, most of the senior officers of the companies were engineers. Technical development was the central issue. More recently, however, as utilities face greater litigation, government regulation, and controversy over nuclear power, lawyers are predominant in the leadership of most companies. This example serves to emphasize that "subunits could inherit and lose power, not necessarily by their own actions, but by the shifting contingencies in the environment confronting the organization".

To better understand how this process works. This diagram suggests that three factors influence the ability of one subunit (called A) over another (called B). Basically, it is argued that subunit power is influenced by (1) A's ability to help B cope with uncertainty, (2) the degree to which A offers the only source of the required resource for B, and (3) the extent to which A's contributions are central to organizational success. Let us consider each of these separately.

Exhibit 13.8 A Strategic Contingencies Model of Subunit Power

Ability to Cope with Uncertainty. According to advocates of the strategic contingencies model of power, the primary source of subunit power is the unit's ability to help other units cope with uncertainty. In other words, if our group can help your group reduce the uncertainties associated with your job, then our group has power over your group. As Hickson and his colleagues put it:

Uncertainty itself does not give power; coping gives power. If organizations allocate to their various subunits task areas that vary in uncertainty, then those subunits that cope most effectively with the most uncertainty should have most power within the organization, since coping by a subunit reduces the impact of uncertainty on other activities in the organization, a shock absorber function.

As shown in Exhibit 13.8 above, three primary types of coping activity relating to uncertainty reduction can be identified. To begin, some uncertainty can be reduced through steps by one subunit to prevent or forestall uncertainty for the other subunit. For example, if the purchasing group can guarantee a continued source of parts for the manufacturing group, it gains some power over manufacturing by forestalling possible uncertainty surrounding production schedules. Second, a subunit's ability to cope with uncertainty is influenced by its capacity to provide or collect information. Such information can forewarn of probable disruptions or problems, so corrective action can be taken promptly. Many business firms use various forecasting techniques to predict sales, economic conditions, and so forth. The third mechanism for coping with uncertainty is the unit's ability to absorb pressures that actually impact the organization. For instance, if one manufacturing facility runs low on raw materials and a second facility can supply it with needed materials, this second facility effectively reduces some of the uncertainty of the first facility - and in the process gains influence over it.

In short, subunit A gains power over B subunit if it can help B cope with the contingencies and uncertainties facing it. The more dependent B is upon A to ensure the smooth functioning of the unit, the more power A has over B.

Nonsubstitutability of Coping Activities. Substitutability is the capacity for one subunit to seek needed resources from alternate sources. Two factors influence the extent to which substitutability is available to a subunit. First, the availability of alternatives must be considered. If a subunit can get the job done using different products or processes, it is less susceptible to influence. In the IBM-compatible personal computer market, for example, there are so many vendors that no one can control the market. On the other hand, if a company is committed to a Macintosh and iPad computing environment, only one vendor (Apple Computer) is available, which increases Apple's control over the marketplace.

Second, the replaceability of personnel is important. A major reason for the power of staff specialists (personnel managers, purchasing agents, etc). is that they possess expertise in a specialized area of value to the organization. Consider also a reason for closed-shop union contracts: they effectively reduce the replaceability of workers.

Thus, a second influence on the extent of subunit power is the extent to which subunit A provides goods or services to B for which there are no (or only a few) substitutes. In this way, B needs A in order to accomplish subunit objectives.

Centrality of Coping Activities. Finally, one must consider the extent to which a subunit is of central importance to the operations of the enterprise. This is called the subunit's work centrality. The more interconnected subunit A is with other subunits in the organization, the more "central" it is. This centrality, in turn, is influenced by two factors. The first is workflow pervasiveness - the degree to which the actual work of one subunit is connected with the work of the subunits. If subunit B cannot complete its own tasks without the help of the work activities of subunit A, then A has power over B. An example of this is an assembly line, where units toward the end of the line are highly dependent upon units at the beginning of the line for inputs.

The second factor, workflow immediacy, relates to the speed and severity with which the work of one subunit affects the final outputs of the organization. For instance, companies that prefer to keep low inventories of raw materials (perhaps for tax purposes) are, in effect, giving their outside suppliers greater power than those companies that keep large reserves of raw materials.

When taken as a whole, then, the strategic contingency model of intergroup power suggests that subunit power is influenced when one subunit can help another unit reduce or cope with its uncertainty, the subunit is difficult to replace, or the subunit is central to continued operations. The more these three conditions prevail, the more power will become vested in the subunit. Even so, it should be recognized that the power of one subunit or group can shift over time. As noted by Hickson and his colleagues, "As the goals, outputs, technologies, and markets of organizations change, so, for each subunit, the values of the independent variables [such as coping with uncertainty, nonsubstitutability, and centrality] change, and the patterns of power change". In other words, the strategic contingency model suggested here is a dynamic one that is subject to change over time as various subunits and groups negotiate, bargain, and compromise with one another in an effort to secure a more favorable position in the organizational power structure.

Managerial Leadership

The Politics of Innovation

A good example of the strategic contingencies approach to the study of power and politics can be seen in a consideration of organizational innovation. It has long been recognized that it is easier to invent something new from outside an organization than to innovate within an existing company. As a result, a disproportionate share of new products originates from small businesses and entrepreneurs, not the major corporations with all the resources to innovate. Why? Much of the answer can be found in politics.

When a person or group has a new idea for a product or service, it is often met with a barrage of resistance from different sectors of the company. These efforts are motivated by the famous "not-invented-here syndrome," the tendency of competing groups to fight over turf, and the inclination to criticize and destroy any new proposal that threatens to change the status quo. Other groups within the company simply see little reason to be supportive of the idea.

This lack of support - indeed, hostility - occurs largely because within every company there is competition for resources. These resources can include money, power, and opportunities for promotion. As one consultant noted, "One person's innovation is another person's failure". As a result, there is often considerable fear and little incentive for one strategic group within a company to cooperate with another. Because both groups usually need each other for success, nothing happens. To the extent that politics could be removed from such issues, far more energy would be available to capitalize on an innovative idea and get it to market before the competition.

Concept Check

1.  What is politics and political behavior in organizations?