Jeffrey Pfeffer on Power and Politics: An Academic Perspective

Everyone is eager to gain some kind of power, whether it is positional or personal power. Over the period, the definition of power is modified/changed or updated. Different scholars and thinkers who belong to different geographical areas explain power in different ways; some connect power with formal authority, and others with personal traits. In this Article, we understand the role and importance of power and politics in the organisational context from the viewpoint of Jeffrey Pfeffer.

Jeffrey Pfeffer is a renowned American business theorist, holding the position of Thomas D. Dee II Professor of Organisational Behaviour at Stanford Graduate School of Business since 1979. Born on July 23, 1946, in St. Louis, Missouri, Pfeffer earned his BS and MS from Carnegie Mellon University and a PhD in Business Administration (Organisational Behaviour) from Stanford University. With a prolific academic career, Pfeffer has authored or co-authored over 16 books and 160 articles and delivered lectures on power, politics and HRM in organisations to over 40 countries, shaping the fields of management, power, and organisational politics.

As a learner in the field of organisational behaviour and development, I found Pfeffer's contribution very interesting and realistic. His vision much resonates with the current realities of organisations.

Knowledge originates from theory, which leads to information, and ultimately, wisdom (mental and thinking ability) emerges. In the same way, Pfeffer’s ideas resonate with the earlier thinkers, or we can say that the theoretical roots and historical connections of Pfeffer’s ideas on power and politics are found in:

• Kautilya’s Arthashastra (India Economist): The saptanga theory (seven limbs of power) in which Kautilya talks about the kingdom's power dynamics in seven limbs like the king, amatya, durga, etc. And mandala theory (circle of state) emphasises positional power, alliances, and networking.
• Francis Bacon (British Philosopher): Famously coined: “knowledge is power.” Someone with pure and sound knowledge must have power, influence, control and authority.
• Michel Foucault (French Historian): Explained that Bacon's “data is the new oil” articulation as informational power. He connects power with knowledge; someone having power directs the flow of information, knowledge and wisdom. He argued that power is not merely repressive, it is also productive, defines behaviour, truth, and social regulations.

After scanning the outlook of earlier and contemporary scholars and thinkers on power and politics, each one, despite belonging to different demographics and fields of study, was persuaded that power and political skills are prime factors in achieving organisational success and effective leadership.

Pfeffer’s Core Arguments on Power: 

Pfeffer argues that power is not related to fundamental authority but to the ability to get things done, despite the resistance of others (Managing with Power: Politics and Influence in Organisation, Book, 1992). When you articulate this argument, you can find the elements of both power and politics. The first part talks about what the real power means, and the latter part highlights the use of political skills by controlling the resistance. For example, in India (2004-2014), while Dr. Singh held the title of Prime Minister, many saw the real power (ability to get things done) resting with Mrs. Gandhi.

Not everybody is born with the power, a real one. Pfeffer argues that power can be built, earned and strategised. Built through personal traits like communication skills, charisma, and confidence. Earned through gaining formal authority or position. Strategised by enhancing one’s current power base for future growth.

Pfeffer defines power as influence and control over outcomes, people in the organisations and resources (information, money, support, access). Power is not always associated with negative or dirty words. It serves organisational success when aligned with group goals; when it serves personal rather than organisational objectives, it makes it “dirty.”

Pfeffer’s Core Arguments on Politics

Based on the data (Understanding Power in the Organisations,1992), Pfeffer stated that politics is inseparable from organisations, and organisations are ultimately a political entity.

So, we can conclude that political skills are critical, and political acumen helps solve conflicts, overcome resistance, and outperform competition by understanding dependence patterns, identifying key actors and assessing power dynamics. Leadership success depends on reading the political map, not avoiding it. Political tactics (networking, credibility, alliances and relationships) often outweigh formal performance metrics. Your achievement or hard work alone does not bring power; it must be visible to key decision makers.

Pfeffer suggests networking both with powerful individuals and weak ties, as weak ties often offer unique opportunities and support. Help them, they owe you their support. Success comes from combining political skill with power management; the combination of both can achieve unimaginable things.

Seven Rules of Power

Jeffrey Pfeffer, in his Seven Rules of Power (2022), gives stress of seven rules that create a path to gain, consolidate and manage power.

1. Get out of your way:

Self-doubt, fear of failure, and impostor syndrome are common hurdles that can hold people back from realising their potential. The greatest obstacle to power is often internal. To attain and maintain power in the long run, it's essential to begin by gaining a deep understanding of yourself.

2. Break the rules

Two kinds of people shape the world: those who follow rules and those who break them to forge new ones. Deng Xiaoping exemplifies the latter. As China's leader in the 1970s and 1980s, he defied traditional communist principles by opening the market to foreign industry and enabling Chinese companies to operate abroad. This shift, though contradictory to the ideology of Marx, Lenin, Stalin, and Mao, propelled China to become a global manufacturing hub, driving economic growth and stability.

3. Appear powerful, confident, and attractive

Power without visible impact is futile. Perception is reality, and as the saying goes, 'what is seen is what is sold' (jo dikhta hai, wahi bikta hai). True power must be reflected in actions and behaviour to have any meaningful effect.

4. Build a powerful brand

Brand building involves enhancing visibility and reputation by strategically establishing connections with influential individuals and organising impactful events

5. Network relentlessly

Cultivate a wide network with a mix of weak ties and powerful connections to maximise opportunities.

6. Use your power

Power grows when you use it to act decisively and demonstrate your influence, as this attracts more supporters and opportunities

7. Success excuses almost everything

Once you've achieved power and success, the journey often fades into the background, and focus shifts to effectiveness. Rather than dwelling on potential backlash, prioritise achieving your objectives. The struggles and efforts become worthwhile when you reach your goals and receive recognition.

Cost and Risk Associated with Power

Power, like a double-edged sword, has its pros and cons. Along with benefits, it carries inherent costs and risks:

1. Greater visibility and scrutiny

Those in positions of power are constantly under the microscope, subject to intense scrutiny and surveillance. Every action, gesture, and decision is closely monitored and analysed by others. For instance, public figures like Prime Minister Modi are often under constant observation, with their speaking style, demeanour, habits, and work patterns being closely tracked and critiqued.

2. Loss of autonomy and increased demand

With great power comes great responsibility (Spider-Man Movie), and often, a loss of personal autonomy. As expectations from others rise, individuals in power must exercise caution in their actions and decisions. A notable example is Finland's former Prime Minister Sanna Marin, who faced backlash and ultimately resigned after a video surfaced showing her socialising and drinking with friends. The incident highlights the scrutiny and high standards that come with leadership positions, where personal life can become public fodder.

3. Trust issues and risk of losing power

Those in power often grapple with trust issues, constantly fearing that someone close to them might usurp their authority. This paranoia can lead to drastic consequences, as seen in the case of Saddam Hussein, who ruthlessly eliminated perceived threats, including relatives and friends, in a bid to consolidate his power.

According to Jeffrey Pfeffer, acquiring power within an organisation is crucial, as it correlates with improved health, longevity, and overall well-being. Conversely, a lack of power can lead to anxiety and feelings of helplessness. The dynamics of power are inherent to human nature, making it a game that organisations play, where you either participate or lose by default.

In the pursuit of organisational effectiveness, leadership, and influence, understanding and leveraging power are essential. Power is a key driver of change and implementation. To wield power effectively, one must be relentless and focused, avoiding the waste of political capital on non-essential issues.

As the adage goes, "He who has the gold makes the rules." (jiski lathi uski bhains) This timeless principle underscores the importance of power in shaping outcomes and achieving success.

- submitted by Sparsh Verma (Ph.D. Scholar)

HIERARCHIES, CLANS AND THEORY Z

Ouchi, W. G., Price, R. L. (1978), Hierarchies, Clans, Theory Z : A new perspective on organizational development, Organizational Dynamics, AMACOM, 25-43

The research paper starts with the introduction of bureaucratic hierarchies which is defined as the use of legitimate authority in which employees grant their superiors the rights to tell them what to do which is not as indispensable to industrialized settings as is commonly assumed. Secondly, organizational development (OD) has been discussed. In fact, the industrialized organizations share many of the properties of the organizations described by Elton Mayo, Chris Argyris, Douglas Mc-Gregor and Rensis Likert, the founding fathers of humanistic organizational development.

The OD programs rely on small group techniques especially T-training and team building. OD is people and a process oriented approach and is not reliable as per Porres and Berg. The theories by the four authors mentioned are as follows. Elton Mayo: The Social Problems of an Industrial Civilization (1945) which included Hawthorne studies at western electric company. He stated that in simple communities, there is a stability of the social order that has ceased to characterize highly developed industrial centers. Chris Argyris: Integrating the individual and the organization (1957, 1964) which focuses on the psychology of the individual. He stated that psychological success and effectiveness is not possible in a pyramidal structure. Douglas Mc Gregor: Human side of the enterprise. He suggested three basic means, which include the development of; a) A climate or philosophy that leads to the humanistic utilization of a hierarchy, b) Interpersonal skills through the use of T-groups, c) The improved effectiveness of small working groups (the inevitable basic links between interdependent individuals in organizations). Rensis Likert: The human organization. Likert maintained it is the consistency with which the parts mesh together that is more important the character of any of the specific techniques of management or organization. He promoted common culture and matrix organisation. He also suggested that highly productive organizations are tightly knit social systems.

A lack of clarity in the relationships among industrialization, hierarchy, alienation, and small group formation when all these four theories are considered. After these theories are covered, the social organization mechanisms are considered which includes markets, bureaucratic hierarchies and clans. Bureaucratic hierarchies are said to overshadow the markets and the clans. Types of organizations have been discussed including Type Z (Long-term employment, Slow evaluation and promotion, Moderately specialized careers, Consensual decision making, Individual responsibility, Implicit, informal, Holistic concern) and Type A organization (Short-term employment, Rapid evaluation and promotion, Highly specialized careers, Individual decision making, Individual responsibility, Explicit, formal control, Segmented concern). Striking example of Japan has been taken to make the understanding of Type Z organization. 

Lastly, the solution to the industrialised settings is given in the form of organizational philosophy (OP) which is defined as primarily a mechanism for integrating an individual into an organization and linking individual goals to the organizational goals which can ultimately help in decision making of the companies. The companies do not use it because of little incentive or benefit to itself. People do not have the luxury to start a company themselves. OP should be formed at the top organisational unit which is autonomous. OP has to be practiced when it is in the context of long term goals whilst taking care of the short run changing conditions and when it can be practically implemented.

Submitted by: Srijana Singh, OBD group

RE-ENERGIZING THE MATURE ORGANIZATION

Beatty, R.W. and Ulrich, D.O. (1991). Re-energizing the Mature Organization. Organizational Dynamics, Vol.20(1). 16-30

Organizations evolve through a life cycle with each evolving phase raising change challenges. The challenge for mature organizations is to renew the mind sets on which it has based its past success to meet the demand of the dynamic environment and recreate its culture consistent with changing customer requirements.

The purpose of this paper is to explore how mature firms can be re-energized; unique challenges of creating change in mature firms; detailed principles that can guide the change; identifying the leadership and work activities required to accomplish change. Here, hourglass analogy has been used to portray the organizational life cycle and challenges associated with each life stage.

The study focuses on the organizations in their maturity stage. These mature organizations face significant renewal change challenge where competitors offer similar products and services at comparable costs. The greatest effort involved is to replace the long established norms of stability and security with new values- speed, simplicity, unparalleled customer-service, self- confident and empowered workforce. These efforts at the renewal stage, still under way, will determine which firms will survive. The organization that fails this renewal change challenge enters the decline stage in which it loses its market share to firms that have renewed.

This study entails four broad principles, which if managers adhere to, the probability of renewal increases. These principles are based upon customer-centred activity, changing capacity, organizational activities- hardware and software, and empowered employees who act as leaders at all levels of the organization. Sooner or later organizations will have to face the renewal change challenge and then managers and leaders will have to help employees accept change in culture; shared vision and values and to enable them to be more customer-centric, cost conscious, adaptable and teamwork-oriented. The organization that overcomes the renewal change challenge moves to the other side of the hourglass where there is the ability to be re-energized.

The study proposes five steps of re-energizing mature organizations based on the proposed four principles. In the re-energised organization, the leader must be an encouraging model to commit energy and accept changed culture. The study advocates that leaders must also learn that sharing power enables employee empowerment, a salient demand of the changing environment where power and authority doesn’t come from position and status but from relationships, trust and expertise.

Submitted by: Angel Lakra, OBD group

Organizational Culture and Transformation

Armenakis, A., Brown, S., & Mehta, A. (2011). Organizational culture: Assessment and transformation. Journal of Change Management, 11(3), 305–328.

This paper explains the Organizational culture as a system of shared beliefs held by all members and created by the top leaders. Authors stated that organization’s culture can be described in terms of a cultural elements’ framework, comprising artefacts, espoused beliefs/values and underlying assumptions. Culture being an integral part of an organization, needs to be aligned with its environmental needs and if not, then change is required. The transformation consists of Change content and change process. For this, authors explained two models, one for creating Readiness for change, called the Readiness model and other for adoption of organisational change, called the Institutionalisation model. Readiness models suggest that organisations should first create readiness with the help of change agents through communicating the change message to the change recipients. This change message should influence the five beliefs of change recipients namely, Discrepancy, Efficacy, Appropriateness, Principal support and Valence. For that certain strategies are suggested in the model like, Persuasive Communication, Active Participation and Management of External Information. 

Lastly, Assessment is done that includes measurement of beliefs of change recipients to evaluate how ready they are to begin the implementation process. If recipients still resist change then more resources can be allocated to increase the efforts spend on one or more of the strategies. After creating readiness, next step is the institutionalization/implementation of change and for this, Institutionalization model is proposed. This model is used to plan and guide the Change Implementation. Seven strategies for change implementation are suggested in the model to reinforce the belief of change recipients. Strategies includes, Human Resource Management, Persuasive, Symbolism, Diffusion, Formalization, Active participation and Management of Internal and External Information. Then finally, the Assessment is done by evaluating the extent to which the change recipients have incorporated the values and behaviours associated with the transformation.  

The researchers analysed a case study of a family owned fertilizer company called PFC (Pursell Family Corporation) with the help of the Organizational Ethical Practices Audit (OEPA), open-ended questionnaire comprising major ethical practices that emerged from the analysis of the Baldrige award summaries. It was a company that successfully transformed its organizational culture in accordance with the Cristian principles. Changes embraced by the company explained in this paper are as follows; The mission statement included its obligations and responsibilities towards God and mentioned that the company will contribute at least 10% of its profits to charities, the selection, training and performance appraisal process was also altered in accordance with the Christian principles where candidates were assessed by the interviewer on the basis of their cultural fit and no formal performance appraisal was done by the company but whenever someone did something unacceptable or praiseworthy it was addressed immediately. Likewise, no reward was given to people for ethical behaviour because it was considered to be a part of life. Formal training for safety, finance and R&D was a part of the training programme and instead of formal ethical training, the devotionals were initiated by the company that anyone could attend, the company also acknowledged the rights of all the stakeholders and thus produced environment friendly fertilizer, followed technologically advanced procedures to ensure employee safety and contributed to charity on a regular basis. 

Therefore, it was concluded that the PFC was indeed an ethical company that transformed its culture successfully through the readiness and implementation model by changing and reinforcing the belief of the change recipients and this change process was analysed with the help of Organizational Ethical Practices Audit (OEPA).

Submitted By: Simrah Ahmed, OBD group

Considering Planned Change

Bartunek, J. M., Balogun, J., & Do, B. (2011). Considering Planned Change Anew:

Stretching Large Group Interventions Strategically, Emotionally, and Meaningfully. The

Academy of Management Annals, 5(1), 1–52.

The research paper tries to conduct a review that combines Scholarly Literature and Skilled Practice and thereby tries to initiate a dialog between them. Authors try to bridge the gap between a popular organization development practice called Large Group Interventions and contemporary academic organizing regarding strategy, emotion & sense-making. Large Group Interventions are the methods for involving “the whole system” i.e. both internal and external systems in a planned change process. Practitioners know about Large Group Interventions but they have very little knowledge about theorizing regarding strategy, emotion, & sense-making. Whereas, researchers have not much knowledge about Large Group Interventions but they are familiar with theorizing regarding strategy, emotion, and content. This research paper tries to establish linkages between OD practice and theory. The paper is divided into five sections. The first section gives a brief historical overview of links between practice, theory, and research. The second section describes Large Group Interventions. The third section summarizes theory in strategy, emotion, & sense-making. The fourth section explains LGIs with two big exemplars. And the fifth section answers various scholarly questions (about strategy, emotion; sense-making) related to large scale changes and then make conclusions. 

Organizational Development is a systemwide application and transfer of behavioral science knowledge to the planned development, improvement, reinforcement of the strategies, structures, and processes that lead to organizational effectiveness. The term OD was founded by Kurt Lewin and he believed that there is nothing as practical as a good theory. Historical studies show that OD interventions encouraged scholarly thinking and scholarly thinking fostered OD interventions. But the recent study does not show any linkages between OD practice and theory and is of the view that LGI has little impact on Organizational scholarship. This paper aims to establish links between the two.

Large Group Interventions are a whole system approach to organizational change. Organizations are open systems, future-oriented, with large networks are meaning-making systems. These four strands led to the evolution of LGIs or OD interventions. Large Group Interventions can be classified into three categories namely:

1) Focused on proactively creating a desired future together, 

2) Redesigning work together as a whole system, 

3) the Whole scale participative work. 

The “Future Search” “Whole Scale Change” are two important interventions used in organizational processes. They are well known by practitioners but academics are not aware of this. But a lot of issues are there in large scale interventions which academics & researchers are now concerned about for example Strategic element of creating future together in LGI, individual and collective sense-making of the intervention & feelings of participants. Therefore, there is a need that these practitioners become familiar with academic research that is relevant to these interventions. Academic research helps us to see those dimensions which we might have skipped earlier.

Human beings are involved in strategies i.e. there is strategizing of activities and practices by people, this led to research in strategizing activities & practices or strategy as practice (SAP). This research focuses not only on what organizations do but what people do. It focuses on day to day work activities and practices of strategists. SAP is the implementation of strategy as a “translation into collective action”. SAP research suggests certain questions like Do LGI address change of the complexity, scale & scope that characterizes strategy process research? Can LGI change the intended and realized strategy of an organization? Does LGI succeed in effecting change in the strategic direction of an organization and whether they can develop a new intended strategy and implement it? What is the role of political, cultural & social processes in the design and enactment of LGIs and their implementation? Are there any patterns in the sequencing that lead to successful change? Whether there is modularity? Are there any linking activities to ensure that all organization components are realigned? Are there any overlapping issues during the implementation of change? What are the different roles of the multiple actors involved in LGI? What are the patterns of behavior, interventions, relationships between different stakeholders as a result of LGI?

Since 1990’s academic interest in the cognitive and emotional processes of individuals in an organization has increased. Studies relating to sense-making and emotions have become more prominent and wider. Academic investigation of emotions and sense-making of change recipients suggests few questions like What various emotions are experienced by planners and participants in LGI? How are these emotions managed? How collective emotions and emotional contagion is manifested during and after the change? How do change agents work with these? What are the different occasions in which participants make sense during LGIs? How do sense-giving & sense-making interact during and after the interactions? How do positive emotions or positive meanings arise during LGI? How do they affect the outcomes of intervention & change? Two Large Group Interventions Future Search and Whole-Scale Change are addressed in this research paper. Future Search is a future-oriented planning conference developed in the 1980s by Marvin Weisbord, Sandra Janoff, and their colleagues. Its purpose is to “explore possible agreements between people with divergent views and interests and to do consensus planning with them”. It is based on the theory of action research regarding problem-solving and planning. Future Search usually takes place in three days conference with an average size of 60-80 people.

Six major tasks take place during the three-day Future Search conferences. 

1. The first task is for participants to focus on the past concerning the Future Search topic and other events. (Individually create timelines of key events in the world, in their own lives, and the history of the Future Search topic).

2. The second task is to focus on the present. The whole assembly makes a “mind map” of trends currently affecting the Future Search topic and identifies the trends most important for it.

3. The participants form stakeholder groups in which they discuss what they are doing now about these key trends and what they want to do in the future. (They report what they are proud and sorry about dealing with future research topic).

4. Forth task focus on future, diverse group’s imagines and describe their preferred future as if it has already been accomplished. 

5. The fifth task is based on hearing the preferred future, the groups post themes and discuss and agree on the common ground for everyone. 

6. The sixth and final step is action planning. After action plans are developed, volunteers sign up to implement them over the coming months.

Future Search conferences may bring a wide range of emotions both positive and negative. It is being used successfully by large organizations around the globe. For example- Boeing used a version of it in the design of its 777 aircraft; IKEA used Future Searches that started with a single product (a sofa) and that led to a review of the entire system and Future Search intervention helped 3M carry out union-management joint planning. An extended illustration of how Future Search was used with the United States Federal Aviation Administration (FAA) to address a crisis had been discussed in the research paper. 

Whole Scale Change was developed by Kathy Dannemiller, Robert Jacobs, and others. One of the distinguishing features of the approach is its flexibility in dealing with large and small groups and in addressing a wide variety of systems issues. Whole-Scale thinking can be used to unite and mobilize people in organizations and communities around nearly any kind of convening issue. It is based on the adaptation of Gleicher’s formula for change D X V X F R(DVF). This rubric posits that if an organization wants to accomplish system-wide change, it must work with a critical mass of the organization to uncover and combine member dissatisfaction (D) with the present state, uncover and combine yearnings for their Vision (V) of the future and the first steps (F) towards reaching the mission. The value of D, V, and F needs to be greater than zero to be greater than people’s resistance (R) to change. Whole-Scale Change steps include building a common database of information, determining what the data mean for the organization, agreeing on change goals, committing to specific actions, and taking time to check and measure what was agreed upon. Whole-Scale Change assumes that while emotions may be difficult at first, they will, as a result of the process, end up being very positive. Whole-Scale Change has been used in other settings, including the U. S. Central Intelligence Agency, HomeCare, a comprehensive home care services organization, and Ferranti-Packard Transformers, Ontario. The use of Whole scale change by Best Animal Society to create structure and professional management is discussed in detail in the research paper.

Although after understanding both Future Search and Whole Scale Change, they appear to have much in common like short term, careful intense and planned two- or three-days meetings and including stakeholders as participants. But they are not identical, and the differences between them are central to their designers’ conceptions. Whole-Scale Change focuses on the past year, while Future Search focuses on a longer time horizon. Future Search explicitly alternates diverse group experience with individuals working in similar stakeholder groups. This may or may not happen in Whole-Scale Change, depending on the type of issue being addressed. Future Search events are very democratic. Thus, leaders need to decide in advance what is on the table for discussion or not. In Whole-Scale Change, there is more opportunity for lower-level organizational members to interact with leaders. Planning takes place in both types of interventions. However, in Future Search the whole group develops something new, while in Whole-Scale Change a leadership group develops draft plans to which the whole assembly responds and the leadership group has the final say. 

The next segment of the research paper talks about Questions that are applied to Large Scale Changes. It has been evident that despite the many reported successes of Large Group Interventions, it is evident that organizational change often runs into problems, especially when it is major. It raises issues regarding their scope of change, the relationship between their formulation and implementation, and the experiences associated with various types of roles and timing issues. They begin with questions about the extent to which Large Group Interventions address strategically complex change such as that studied by strategy scholars. There are also questions about the implications of Large Group Interventions for what scholars know about the possibility of planned interventions affecting shifts in both the intended and realized strategies in organizations. The use of social, cultural, and political methods in the change process is also questioned. Doubt is also raised on the assumption of linearity in these change processes.

Questions about emotion and sense-making are also raised in a research paper that addresses a variety of experiences of change recipients. The questions also address the participants’ sense-making, including how it evolves and how it comes to be shared. First, there are questions about the relationship between Large Group Interventions and change recipients’ emotions, particularly the way the interventions generate, influence, and benefit from their participants’ emotional experiences. Another question is that, how do change agents work with collective emotions, especially if the shared emotions are not what would seem most desirable? How do Large Group Interventions contribute to decreased cognitive dissonance between old and new schemata? Do shared meanings of change emerge among participants through an iterative process between sense making and sense giving? 

Theoretical material presented in the research paper opens up several questions about the strategic processes accompanying the change efforts and the affective and sense-making experiences of participants in them. For future research, it would be obvious in the relationship between Large Group Interventions and academics for academics to study the effectiveness of Large Group Interventions. A second step might be joint academic-practitioner forums. Third, it is important to connect individual practitioners and academics. Fourth, it is important to create joint academic-practitioner communities for action and to have a sense of urgency about them concerning joint goals. Fifth, it is important to make sure that academic-practitioner interactions are fair, that one “side” does not have unjust advantages.

Submitted by: Shivangi Dhawan & Charu Sehgal, M.Phil. Research Scholars [OBD area]

The Role of Power and Politics in the Repricing of Executive Options

[Timothy G. Pollock, Harald M. Fischer and  James B. Wade, (2002) The Role of Power and Politics in the Repricing of Executive Options, The Academy of Management Journal, 45 (6), 1172-1182]

This paper aims at developing a framework explaining why certain firms reprice options while others do not. The focus of the paper is to explore the moderating role of CEO’s power, the power of external stakeholders and the visibility of the firm and it’s CEO on the primary relationship between negative spread (difference between strike price of stock options and the market price) and the likelihood to reprice options.

Ownership sources of power resulting from concentration of stocks in the hands of both the institutional investors as well as the CEO results in reduced likelihood to reprice options. Institutional investors can mitigate the power of executives either directly or indirectly by virtue of their large shareholding and hence can keep a check on the self-serving behaviour of management. CEO who also owns shares of his company might not undertake activities that have the potential to raise organisational risk of a negative backlash from the shareholders subsequent to options repricing even when such acts may reduce individual risks.

However, the structural source of power enhances the ability of the CEO to engage in option repricing and hence mitigate their losses. CEO who is also the chairman of the company enjoys much greater power to reprice options. When there are barriers to hostile takeovers such that the market loses its effective corporate control and the management has no fear of being ousted, then its ability to engage in unpopular activities rises. His ability to nominate people on the board who are either his loyalist or are dependent on him for board seats can significantly enhance his ability to make these directors function in the interest of the CEO.

But, when the board of directors perceive that their actions to reprice options will be visible and discussed publically then their incentive to reprice options goes down. They are more concerned about impression management rather than serving the interests of the CEO so that they do not lose out on their credibility and legitimacy regarding other claims.

The paper has articulated how the struggle of power, whether its ownership power or structural power between the shareholders and management gets reflected in the decision of the company to reprice options. The party having more power tends to make a decision that is in its own self-interest. The study gives suggestions to use restricted stock awards in place of stock options that gives ownership to the CEO but at the same time preventing him from selling the stock for a stipulated period of time.

[submitted by Anisha, M Phil Scholar, 2017]

The roles of departmental and position power in job evaluation

[Welbourne, T. M., & Trevor, C. O. (2000). The Roles of Departmental and Position Power in Job    Evaluation. The Academy of Management Journal, Vol. 43, No. 4 , pp. 761-771]

Power may be defined as an ability to influence the decisions or outrightly control the behaviour of people. In organisations, it is nowadays used as a tool which can lead to positive or negative outcomes depending on how it is used. Such use of power to attain desirable outcomes gives rise to another term i.e. ‘politics’. Studies have shown that almost all the departments and processes are under the huge influence of organisational power and politics, and job evaluation process is no exception to that. Job evaluation may be defined as a process of systematic comparison between jobs to access their relative worth for the purpose of establishing a rational pay structure. The researcher, in this paper has attempted to test whether the job evaluation outcomes are affected by the departmental power in a university setting.

The researcher has successfully proposed a political perspective on job evaluation wherein it is believed that the job evaluation is based on the worth of a position and not on the worth of its incumbent, due to which the position holders use influence tactics in the job evaluation committees. This has made the researchers suggest that job evaluation procedures are not accurate and reliable because power and politics come in between and influence the job evaluation outcomes.

Further, the coalitional view or the political view of the organisation suggest that firms can be characterised as groups of subunits, each with its own agenda, which might or might not be consistent with organisational goals and thus this gives rise to the ‘departmental power’ which becomes an important determinant for resource allocation decisions. The literature suggests that more powerful departments are better at acquiring what they want and thus they have positive effect on favourable job evaluation outcomes. However, the researcher proposes that such positive effect will be greater when the position power of the jobs being evaluated or upgraded is high. Thus, the researcher posits that it is not only the departmental power but also the position power within the department that influence the job evaluation outcomes. Also, a clear distinction has been made between the position power and personal power wherein the position power signifies the incumbent’s ability to influence others through position held in an organisation’s hierarchy rather than through personal characteristics.

The results suggest that departmental power definitely affects resource allocation, however such effects become more substantial when the power associated with resource recipients is high. Also, the effects of departmental power on the number of new positions and position upgrades are greater when the position power associated with the jobs being evaluated is high. Thus, both departmental power and position power strongly influence the job evaluation outcomes. However with regard to politics in job evaluation, the researchers hold mixed views. While some researchers view this politics positively since it ultimately improves the department’s and firm’s performance, others contend that such job evaluation (under the influence of power and politics), does not accurately access the worth of the job.

[submitted by Mansi Babbar, Ph D Scholar, 2017]