Organisational Sources of Power

Those with control over resources, e.g. budgets, equipment, and personnel, hold significant power over those in need of that resource. Power increases the more essential, the less abundant and the more irreplaceable the resource is; and the fewer people in control of that resource. The ability of the power holders to allocate and use the resources will determine the extent of their power.

People with this type of control are generally senior personnel who allocate resources (often budgets); groups or departments who supply other departments (e.g. IT); and suppliers outside the organization (e.g. of raw materials).

2. Control of Decision-Making Processes

Those who have control over the decision-making process have control over the criteria on which decisions are made and the processes that decide what the issues to be resolved are. Senior management generally set guidelines for how decisions are made further down the organization. In this way, they can effectively push through certain decisions, or halt certain issues before they fully come to light.

3. Control of Information and Knowledge

Those with access to information and knowledge have considerable power. They can determine when and how to release information, they can hold back pieces of information, and even shape knowledge to favor their own interests.

4. Location in the Communication Network

Organizations have formal and informal communications structures, through which information flows. At certain points, where communications are passed on from one person or group to another, there are gatekeepers.[3] Gatekeepers are people who can control the flow of information, open and close communication channels, and collect and reform information. They have the greatest number and variety of interpersonal and organizational contacts, and tend to be central players in terms of power and influence.

5. Managing Relationships

Those responsible for managing relationships with external stakeholders, e.g. suppliers, partners, unions, etc. will determine how effectively these parties interact with the organization. The more critical the relationship to the organization the more power is gained.

6. Stakeholders

Stakeholders can be any person or group with an interest in the success of the organization. This can include employee associations, the public, special interest groups, internal and external customers, shareholders and the government. Stakeholders can hold great power over how the organization operates, through for example, direct involvement in decision-making or resource allocation. They can also have indirect influence, through for example, environmental groups mobilizing the media to act in their interests.

7. Groups

Individuals without a formal position of power can converge to form a group with influence. This can happen in two ways:[4]

1. Where groups, made up of individuals with similar interests coordinate actions to shift the balance of power, for example, in the case of employee strikes. The power of these groups comes from their ability to act in a unified, consistent fashion.
2. Where organizational sub units hold power in certain areas, e.g. claims on resources, ties to powerful others, being close to critical issues or being adept at solving critical problems. Today’s organization is highly dependent on technology and consequently on those individuals able to operate or fix information and communication (ICT) systems. This dependence relationship gives ICT employees power.

8. Network-Based

A well-known and significant source of influence is developing relationships with those in possession of direct power or influence. This is, in effect, power due to who you know rather than what you know. Formal or informal networking can exist across departments and levels of hierarchy, and is a reciprocal arrangement, so that a favor is expected in return for a favor granted.

9. Formal Authority

Within any organizational structure, certain people will hold power by having a formal position of authority. Others further down the organization are expected to obey orders of those with formal authority who are likely to have control over certain resources.

Manipulating Power Sources

Power structures within organizations can be changed in a way that supports strategy implementation. If managers identify and group together powerful supporters of the strategy, they can build a strong power base.[5] This may consist of networks of supporters dispersed throughout the organization who will act to champion the change. Supporters can be granted additional power by allocating them control of certain resources or decision-making authority, for example.

It is possible for managers to lessen the influence of powerful opposers. If opposers can be identified early on, managers can work at building relationships and selling the benefits associated with the strategy in order to gain their buy-in. In more extreme cases, it may be necessary to make structural changes, merge units, outsource or reallocate responsibilities in order to lessen the power allocated to certain individuals or groups, and break dependence relationships. Implementing change is often an opportunity to assess whether the right people are in the right roles, and to take advantage of other ways in which dependence relationships can be altered. For example, by introducing technology that can be operated by anyone to remove the dependence on specialist operators.

Managers must ensure that those in positions of power support the strategy and have detailed instruction as to how to use their source of power. For example, those with access to information should be instructed as to what information to release, when to release it and to whom.

An analysis of stakeholders should also be carried out at the beginning of strategy formulation in order to identify the extent of both the interests and influence of those connected to the strategy before implementation takes place. Relationships with stakeholders can then be managed accordingly.

Conclusion

Developing structures of power and using power sources strategically requires careful consideration of the factors outlined in this article, e.g. who holds formal authority, how resources are deployed, and relationships with stakeholders. An understanding of how power is formed and an analysis of power sources can help managers formulate an effective plan to enable smooth implementation of strategy. Within these considerations, it is also important to look at individual sources of power, addressed elsewhere.