RULES AND POWER IN AN ORGANISATION

In organizational context, the term power refers to the ability of individuals to influence the
conduct or activities of others. People in an organization draw such power from many sources
such as formal authority defined by organizational structure and policies, expert knowledge and
skill, ability to control resources, and interpersonal skills.

Power is related to taking of decisions and for the implementation of those decisions.

Robert Dahl in many of his works has defined power and analyzed its various aspects. In his
Preface to Democratic Theory Dahl calls power a type of relationship in respect of capability and
control. Take a very simple example. There are two men A and B. If A possesses the capability
to control B then it will be assumed that A has the power. So power involves a successful
attempt to do something which he could not do otherwise.

Nature of Power

From the definitions of power noted above we can get certain features and the first such feature
is used in relational sense. When there is only one actor or element the issue of power does not
arise. It is because power implies ability to influence or control others or to get things done by
others. Naturally power relates to the relationship or interaction between two or among more
than two elements or actors. So power is always viewed in the background of relationship.

In the second place, “power is disaggregated (broken) and non-cumulative it is shared and
bartered by numerous groups spread throughout society and representing diverse interests”. In
any diverse society there are numerous groups and they all compete among themselves at various
levels to capture political power or to influence the agencies who exercise their influence.

Hence it is observed that power is not concentrated at any particular centre. Again, all the centre
of power does claim to have equal or almost equal amount of power. In other words, there is an
unequal distribution of power like an unequal distribution of wealth.

Thirdly, Maclver is of opinion that power is a conditional concept. Power, Maclver says, is an
ability to command service from others. But this ability, he continues, depends in some measure
upon certain conditions and if the conditions are not fulfilled properly power cannot function.
Power is not something which is permanently fixed. It is subject to change.

Traditional approaches to power say you only have power if you have a title and status, the right
connections, and something others need such as information. Today, things are not quite so
simple. In information organizations, everyone has a level of power they never had before.

Bargaining power

Definition

Is the relative ability of parties in a situation to exert influence over each other. If both parties are
on an equal footing in a debate, then they will have equal bargaining power, such as in a
perfectly competitive market.

An American economist Neil W. Chamberlains defined bargaining power basing on the model
below.

Bargaining power (of A, let us say) as being the cost to B of disagreeing on A's terms relative to
the costs of agreeing on A's terms. A relatively high cost to B of disagreement with A means that
A's bargaining power is strong and the reverse is through. This statement however, reveals
nothing but strength or weakness of A relative to B, since B might similarly possess a strong or
weak bargaining power. if the cost to B of disagreeing on A's terms is greater than the cost of
agreeing on A's terms, while the cost to A of disagreeing on B's terms is less than the cost of
agreeing on B's terms, then A's bargaining power is greater than that of B.

There are a number of fields where the concept of bargaining power has proven crucial

 Game theory.
 Labor economics.
 Collective bargaining arrangements.
 Diplomatic negotiations.
 Settlement of litigation.
 The price of insurance.
SOURCES OF POWER IN ORGANIZATIONS

There are two main categories of power namely,

1. Formal or Position Power

This is based on your title - manager, supervisor, senior vice-president, etc. With it comes the
ability and responsibility to reward (provide someone with a raise or plum assignment) and
punish (discipline someone or limit access to resources). However, there's another.

2. Informal or Personal Power

This is based not on your position, but on you. You have the ability to develop expert power
(based on highly valued knowledge and skills) and associate power (based upon who you know
and who knows you).

The two broad categories of power can be subdivided into the following:-

Legitimate Power

Legitimate power is also known as positional power. It's derived from the position a person holds
in an organization's hierarchy. Job descriptions, for example, require junior workers to report to
managers and give managers the power to assign duties to their juniors. For positional power to
be exercised effectively, the person wielding it must be deemed to have earned it legitimately.
An example of legitimate power is that held by a company's CEO.

Expert power

Knowledge is power. Expert power is derived from possessing knowledge or expertise in a

particular area. Such people are highly valued by organizations for their problem solving skills.
People who have expert power perform critical tasks and are therefore deemed indispensable.
The opinions, ideas and decisions of people with expert power are held in high regard by other
employees and hence greatly influence their actions. Possession of expert power is normally a
stepping stone to other sources of power such as legitimate power. For example, a person who
holds expert power can be promoted to senior management, thereby giving him legitimate

Referent Power

Referent power is derived from the interpersonal relationships that a person cultivates with other
people in the organization. People possess reference power when others respect and like them.
Referent power arises from charisma, as the charismatic person influences others via the
admiration, respect and trust others have for her. Referent power is also derived from personal
connections that a person has with key people in the organization's hierarchy, such as the CEO.
It's the perception of the personal relationships that she has that generates her power over others.

Coercive Power

Coercive power is derived from a person's ability to influence others via threats, punishments or
sanctions. A junior staff member may work late to meet a deadline to avoid disciplinary action
from his boss. Coercive power is, therefore, a person's ability to punish, fire or reprimand
another employee. Coercive power helps control the behavior of employees by ensuring that they
adhere to the organization's policies and norms.

Reward Power

Reward power arises from the ability of a person to influence the allocation of incentives in an
organization. These incentives include salary increments, positive appraisals and promotions. In
an organization, people who wield reward power tend to influence the actions of other
employees. Reward power, if used well, greatly motivates employees. But if it's applied through
favoritism, reward power can greatly demoralize employees and diminish their output.

AUTHORITY AND INFLUENCE

Influence
Conventionally, to influence people is to change the opinions or behavior of others.
From a systems view any definitions of Power, Authority, and Influence in human systems
must take into account the web of interrelationships of the human members of that system view,
influencers do not change opinions or behavior. Influencers provide a nudge, a catalyst, or a
force that people use to change themselves. When influencers engage in this way with the
influenced, they are in turn influenced themselves.
Conventionally, Power is the ability of an influencer (a person or group or institution) to change
people, by some means or other.
To believe that influencers do the changing is to ascribe more power to them than they actually
have. Influencers say or do, but the people they influence are the ones who actually do the
changing. Two powers are needed: the power to influence and the power to change. The power
that actually matters is thus an attribute of the system, rather than an attribute of influencers.

INFLUENCE IN ORGANIZATION LEADERSHIP

General tactics for trying to influence others. (Angelo Kinicki and Brian K. Williams)

Forms of influence

Rational Persuasion: - Trying to convince someone by using reason, logic, or facts.

Inspirational Appeals: - Trying to build enthusiasm or confidence by appealing to others’

emotions, ideals, or values.

Consultation: - Getting others to participate in a decision or change.

Ingratiating Tactics: - Acting humble or friendly or making someone feel good or feel
important before making a request

Personal Appeals: - Referring to friendship and loyalty when making a request.

Exchange Tactics: - Reminding someone of past favors or offering to trade.

Coalition Tactics: - Getting others to support your effort to persuade someone.

Pressure Tactics: - Using demands, threats, or intimidation to gain compliance

Legitimating Tactics: - Basing a request on one’s authority or right, organizational rules or
policies, or express or implied support from superiors.

AUTHORITY
Conventionally, Authority is legitimate Power — some say "legitimized" Power.
Authority need not be "legitimate." Rather, authority is something conferred, voluntarily or
under duress, on an influencer or would-be influencer by the person or people the influencer
wants to influence. Because it's conferred on the influencer by the influenced, both parties are
involved. Authority, too, is an attribute of the system.

When we assess the effectiveness of attempts to influence, the legitimacy of authority matters
less than the precise kind of authority that the influenced have conferred on the influencer.

The types of Authority

Legal authority is based on a system of rules that is applied administratively and judicially in
accordance with known principles. The persons who administer those rules are appointed or
elected by legal procedures. In a hierarchy, superiors are subject to rules that limit their powers,
and a degree of authority can be delegated to subordinate managers.

Traditional authority is based on a system in which authority is legitimate because ‘it has
always existed’. People in power usually enjoy ‘power’ because they have inherited it either
through ‘birth’ or by moving into a role that is traditionally seen as ‘powerful’. Subordinate’s
prerogatives are usually similar to those of the ruler above them, just reduced in scale.

Charismatic authority is based on the charisma of a leader who shows that he or she possesses
the right to lead by virtue of their personal attributes. Followers respect his/her right to lead
because of these personal qualities (charisma), not because of any tradition or legal rules.
Differences between authority and influence (Bacharach and Lawler, 1980)

Authority Influence
Authority is the static, structural aspect of Influence is the dynamic, tactical element.
power in organizations

Authority is the formal aspect of power Influence is the informal aspect

Authority refers to the formally sanctioned Influence is not sanctioned by the organization
right to make final decisions and is, therefore, not a matter of organizational
rights
Authority implies involuntary submission by Influence implies voluntary submission and
subordinates does not necessarily entail a superior -
subordinate relationship
Influence implies voluntary submission and Influence is multi-directional and can flow
does not necessarily entail a superior - upward, downward, or horizontally.
subordinate relationship

The source of authority is solely structural The source of influence may be personal
characteristic, expertise, or opportunity.
Authority is circumscribed, that is, the Influence is uncircumscribed, that is, its
domain, scope, and legitimacy of the power domain, scope, and legitimacy are typically
are specifically and clearly delimited ambiguous

DECENTRALIZATION

Decentralization can be defined as the extent to which authority and power is passed down to
the lower levels in the organization by top level managers. In a decentralized organization, a lot
of the decision-making is delegated to the lower levels of the organizational structure.

DECENTRALIZATION VS CENTRALIZATION
Centralization involves top management retaining the authority and power hence making all the
important decisions in the organization. This power includes activities such as planning. These
decisions are then enforced on the lower tiers of the organization. Thus a centralized
organization systematically works to concentrate authority at the upper levels.

While;

Decentralization involves a lot of the decision-making being entrusted to the lower levels of the
organizational structure. Thus authority and power is passed on from the top management to the
bottom level. Thus in a decentralized organization, management consciously attempts to spread
authority and power to the lower organization levels.

It is obvious that the top management will not have all the required information and firsthand
experience to deal with the issues that crop up on the field. Such issues are better solved by those
directly dealing with the issue rather than waiting for decisions from top management.

ILLUSTRATION OF CENTRALIZED VS DECENTRALIZED.

Source: (Montana, P. and Charnov, B. Management: A Streamlined Course for Students and Business
People. (Hauppauge, New York: Barron’s Business Review Series, 1993), pp. 155-169.)

A variety of factors can influence the extent to which a firm is centralized or decentralized.
Organizations whether big or small should know when to decentralize or centralize authority. At
any one point, let it be in a crisis they should be in position to choose one that is effective
keeping in mind that it will help them to effectively achieve the organizations goals and
objectives.
The following is a list of possible determinants:

 The external environment in which the firm operates. The more complex and
unpredictable this environment, the more likely it is that top management will let low-level
managers make important decisions. After all, low-level managers are closer to the problems
because they are more likely to have direct contact with customers and workers. Therefore,
they are in a better position to determine problems and concerns. Case in point is MTN
(south Africa/headquarters & MTN Uganda) they portray a decentralized form of authority
because MTN Uganda has the power to create their own products that they feel will suite
their customers’ needs without having to seek authority from their head offices on how to go
about it.
 The nature of the decision itself. The greater the risk, the greater the tendency to centralize
decision making. For example decisions on long term investments, long term industrial costs
and any other strategic issues in an organization are sensitive decisions that have to be made
by top management. It is also imperative to note that depending on the urgency of the
decision to be made, authority can be decentralized. i.e. In cases where a crisis will arise
such as an accident victim, there is no need for a doctor to wait for their supervisor as an
urgent decision has to be made on whether to operate or the victim dies.
 The abilities of low-level managers. If these managers do not have strong decision-making
skills, knowledge and competence, top managers will be reluctant to decentralize. Strong
low-level decision-making skills encourage decentralization because mangers will have a
high degree confidence in their subordinates to take effective decisions with the
organizations interests in mind.
 The organization's tradition of management. An organization that has traditionally
practiced centralization or decentralization is likely to maintain that posture in the future.
 The size and complexity of the organization. Big organizations that have branches in
different locations for example banks may choose to decentralize keeping in mind that they
all have different market segments and are in close contact with their customers in their
particular locations hence they would know better on how to carry out tasks and make
decisions pertaining to their branches. Small business enterprises with few employees may
choose to centralize for purposes of efficiency and to also cut costs.
 The nature of tasks to be undertaken. If they require massive coordination and precise
integration then centralization is advised to reduce on costs and inefficiency.
 Managers’ preference .a manager would decentralize if he/she wishes to involve his or her
subordinates in carrying out tasks and making organizational decisions. In cases where a
manager fears for his job i.e. feels threatened that if he decentralizes, his subordinates might
surpass his performance or better yet get the experience and skills he possess (making it
easy to replace him some day)he/she will choose to centralize authority.

TYPES OF DECENTRALIZATION
Political decentralization
 Political decentralization refers to the degree to which central governments allow non-
central government entities to implement certain political functions. It represents a shift
in power and responsibilities as these functions used to be the central governments’
responsibility.
Fiscal decentralization
 Fiscal decentralization refers to fiscal policy, which is the whole of expenditures and
revenues of public authorities that central governments transfer to non-central
government entities. Financial responsibility is a core component of decentralization.
Fiscal decentralization is also a form of responsibility in decision-making and policy
design and therefore could also be seen as a sub-form of political decentralization. Fiscal
decentralization covers two interrelated issues (Davey, 2003). The first is the division of
spending responsibilities and revenue sources between national, regional and local levels
of government. The second is the amount of discretion of regional and local governments
to determine their expenditures and revenues.

Administrative decentralization
 Administrative decentralization refers to the extent of autonomy of non-central
government entities relative to central control. Administrative decentralization seeks to
redistribute authority, responsibility and financial resources for providing public services
among different levels of government. It is the transfer of responsibility for the planning,
financing and management of certain public functions.
STRENGTHS OF DECENTRALIZATION
 Relieves the top management from dealing with mundane issues, so that they can
concentrate on the daunting tasks that are faced by an organization. It enables top
decision makers to concentrate on the “big picture” while day-to-day operations are
tended by division managers
 Since many of the decisions have to be made by lower level managers, this not only
gives them a chance to display their decision-making skills, but also gives them the
experience they would have missed in a centralized organization.
 The increased responsibilities of the lower level managers, increases their enthusiasm
for work and acts as a motivator.
 Decentralization has more scope for diversification.
 Makes an organization flexible to minor changes.
 Decision-making at lower levels for certain problems is better, as the lower level
managers have a more in-depth knowledge of the situation, and can hence handle it
better.
 Faster decision-making without resort to higher level consultation
 Excellent training experience for promotion to higher level management
 Decisions better adapted to local conditions
 It leads to a more efficient and accountable administration.
 It leads to better regional development.

DISADVANTAGES OF DECENTRALIZATION

1. Lower level managers may make decisions without fully understanding the "big picture."
While top level managers typically have less detailed information about local operations
than the lower level managers, they usually have more information about the company as
a whole and should have a better understanding of the company's strategy.
2. In a truly decentralized organization, there may be a lack of coordination among
autonomous managers. This problem can be reduced by clearly defining the company's
strategy and communicating it effectively throughout the organization.
3. Lower-level managers may have objectives that are different from the objectives of the
entire organization. For example, some managers may be more interested in increasing
the sizes of their departments than in increasing the profits of the company. To some
degree, this problem can be overcome by designing performance evaluation systems that
motivate managers to make decisions that are in the best interests of the organization.
4. In a strongly decentralized organization, it may be more difficult to effectively spread
innovative ideas. Someone in one part of the organization may have a traffic idea that
would benefit other parts of the organizations, but without strong central direction the
idea may not be shared with, and adopted by other parts of the organization.

CONCLUSION
Power, influence and authority are the most important aspect in organization leadership.
If you have all of these aspects, everybody will follow your leadership.