1. MANAGING ORGANIZATIONS
Session 8: Organization Conflict, Power & Politics
Sourav Mukherji
PGP 2012-14 Section C & E
Associate Professor of Organization & Strategy
Term 1:June-September 2012 Indian Institute of Management Bangalore, India

2. 2
CASE DISCUSSION: MERGER (MIS)MANAGEMENT
What went wrong in the merger between
Fraser Dow (Dow) and Burnett & Stone (B&S)?
Who were the key players and what roles were
they playing?
Were there mistakes committed
by different players and organizations?
Why did they commit such mistakes?
What would you have done differently if you
were in their positions?
© S Mukherji

3. 3
TALE OF TWO MERGERS AND SOMETHING IN BETWEEN
Merger between GFI Rapid decline in B&S takes over, drives
& KW failed Dow’s business rapid integration
performance
Mismatch of expectation Assumption that B&S taking over a troubled
arising out of difference “international size company with a history of
in size and nature of was irrelevant” resisting merger
business turned out to be
wrong Commitment to business advisory
GFI India independent services questionable. Greater
and successful business, Expectations that formalization necessary for audit
not taken into confidence clients will stick to firm, ambition to scale
during merger decision Dow was belied
Strikes deal with Wadhwa, gets
Roots of apprehension Billing loss and Dinshaw to put the house in order,
about large international employee attrition take-it-or-leave-it for Dow
audit firm sown in GFI employees
(India) psyche Wadhwa desperate to
be bailed out, changes
GFI India declares tactics
independence,
becomes Dow Fraser
© S Mukherji

4. 4
PLAYERS: WHAT THEY DID AND WHAT THEY COULD HAVE
Over-dependence on Wadhwa Establish credibility and confidence before
partners from B&S. Utilize goodwill from
Failed to anticipate realities both within customers to prove his utility to the company
and outside the organization
R Maitra Make efforts to establish rapport with Dinshaw
Did not play politics or make any effort
to establish communication with new Set clients’ expectation about potential changes
partners
Mistake in anticipating the power of an Could have acknowledged mistake and explained
international brand - overestimated own realities of business to other employees.
capability in client retention
R Wadhwa Maintained transparency
Did not take into confidence others during
deal with B&S. Left others in the lurch
Centralized operations, assumed complete Could have taken a more humane approach to
charge of the integration process integration in order to retain committed and
talented individuals
Dinshaw Exuded a “could not care less” attitude that
alienated Dow employees
© S Mukherji

5. 5
 Why do conflicts happen in organizations?
 Are conflicts desirable?
 Are conflicts inevitable ?
 Are conflicts structural or are they behavioral?
 What is the relationship between conflict, power and politics in
organizations?
Conflicts are inherent in organization design.
When conflicts are not / cannot be resolved rationally, but are dealt
with by overt or covert usage of power, a political process is said to be operating.
In common parlance, politics refers to self serving behaviour that often involves
deception and dishonesty.
In organization theory, politics is an organizational process that involves usage of power
to obtain preferred outcome when there is uncertainty or disagreement about choices
© S Mukherji

6. 6
ORGANIZATION DESIGN INHERES SITUATIONS FOR CONFLICT
Organizations distribute authority and responsibilities
 Goal incompatibility
 Differences over purpose of the organization
 Differences over means to achieve the stated purpose
 Specialization and differentiation
 Departments are created to leverage benefits of specialization
 Departments carry sub-goals
 Sub-goals can be incompatible
 Resource limitation and interdependencies
All the above are likely to increase under conditions of uncertainty
or when the organization is going through major changes
© S Mukherji

7. THERE ARE SEVERAL SOURCES OF POWER IN ORGANIZATIONS 7
Potential / ability of an individual or organizational unit to make another individual
or another organizational unit to do something that they would not have otherwise done
Power typically arises in situations of resource dependency
Source of resource dependency …or they may be a result of
can be hierarchical… individual competencies or
characteristics
Formal position / authority to
take decisions, reward or punish Expert power / non-substitutability
people
Referent power – respect ,
Control of key resources – finance, admiration
information, people
Building networks, maintaining
Proximity to powerful people relationships
Network centrality
Ability to cope with uncertainty /
Strategic contingencies control of critical information
© S Mukherji

8. THERE ARE FIVE KEY DRIVERS OF POLITICAL 8
PROCESSES IN ORGANIZATIONS
Uncertainty
Pressures of time
Incomplete
information
Hierarchy & Opportunistic
differentiation behaviour
Conflict
Self serving behaviour
Exercise of
power Biases
Resource Bounded
dependency rationality / predictive
irrationality
© S Mukherji

9. 9
Should you enhance the political
process in organizations, or
should you try to reduce it ?
When, why and how will you increase
the political process?
When, why and how will you reduce the
political process ?
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10. 10
Should you enhance the political You might not be in a position to
process in organizations, or control the political process
should you try to reduce it ?
Yet, you cannot avoid being
When, why and how will you increase part of it in organizations
the political process?
Being aware of the process and
When, why and how will you reduce the its potential levers will ensure
political process ? that you are not adversely
impacted by it
Even if you do not play the game,
be aware of the rules of the game
and who are the players
© S Mukherji

11. 11
Should you enhance the political When chances to arrive at decisions
process in organizations, or through rational processes are low
should you try to reduce it ? because of uncertainty & complexity
When, why and how will you increase Build coalitions, co-opt, reach out
the political process? to people through informal
networks
When, why and how will you reduce the
political process ? Increase expertise, legitimacy to
improve your position of power,
gather approval
Bargain, negotiate, make direct
appeals – make needs and goals
explicit
© S Mukherji

12. 12
Should you enhance the political Always! If you have a choice – it
process in organizations, or benefits organizations in the medium
should you try to reduce it ? to long term, make majority of
employees satisfied
When, why and how will you increase
the political process? Increase transparency
When, why and how will you reduce the Bring out conflict in the open,
political process ? encourage dissent and debate
Practice member rotation
Focus on integration devices, shared
mission, superordinate goals, cross
functional tasks
© S Mukherji