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Politics and Power: Examples from Today's Corporate World

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Politics and Power: Examples from Today's Corporate World

An effective organization focuses on strong leadership, power and political issues. These components are critical to creating an organization mindful of values, ethics, culture and innovation. Analyzing the use of power and politics are essential to understanding the behavior of individuals within organizations. There are two sides to power and politics. In one respect power and politics imply the shady side of leadership. However, power and politics can be positive tools that managers use to accomplish tasks. This paper defines power and politics and examines how one can be used to influence the other in a positive way, thus resulting in gain, and in a negative, corruptive way, which ultimately leads to destruction of an organization.


Power has been described as the last dirty word. Money is easier than power for most people to talk about. People who have power deny it; people who want power try not to appear to be seeking it, and those who are good at getting power are secretive about how they got it (Kanter, 1979). The essence of power is control. In organizational behavior power is defined as the ability of controlling the behavior of others. Power is the force one uses to get things done. Power and leadership should not be confused. Leadership achieves goals and power is the means to facilitate their achievement. Power focuses on the tactics for gaining compliance while leadership focuses on style.

Power is not without influence. One has influence when one has power. Power and influence are key components when a person is trying to achieve organizational goals. Power is divided into two categories; position and personal (Schermerhorn, Hunt, and Osborn, 2003). Power-based on a person's position has six bases: coercive, reward, legitimate, process, information and representative (Schermerhorn, et al., 2003). The coercive power base is defined as being dependent on fear. A person will react to this power out of fear of the negative results that might occur. A manager has the power to suspend or terminate an employee this gives the manager coercive power over the employee. The opposite of coercive power is reward power. People comply with the wishes or directives of another because doing so produces positive benefits. In the organization context it can apply to promotions or favorable performance appraisals.

In formal groups and organizations, the most frequent access to one or more of the power basis is one's structural position. This is legitimate power. It represents the power a person receives as a result of his or her position in the formal hierarchy of an organization. Process power is the control over methods of production and analysis. Many organizations need a process specialist to ensure production is accomplished effectively and efficiently. The source for information power is based on the access and control of information or the "right to know." Not everyone is the organization will be privy to the inner workings of the company. Representative power is conferred on an individual when he or she has the formal right to speak as a representative of the organization.

An individual's personal power is based on expert, rational persuasion, and reference bases. (Schermerhorn, et al., 2003). Expert power is influence wielded as a result of expertise, special skill or knowledge. A physician has the expertise and hence the expert powers to convince a person to follow the advice he or she might give. Rational persuasion involves showing the desired outcome and how specific actions will achieve the outcome. Reference power base is identified with a person who has desirable resource or personal traits. Referent power develops out of admiration of another and a desire to like that person.

The analysis of power is to understanding the behavior of individuals within an organization. Power has two sides; one is negative when power is used inappropriately such as in the Enron scandal. The other side of power occurs when it is used to develop, nurture and manage employees in a positive way to effectively manage an organization's success such as Microsoft.


Microsoft Chairman Bill Gates has legitimate power as co-founder and chairman of Microsoft. His expert power is based on software development expertise. Gates also has referent power, because his employees look up to him and admire his incredible accomplishments. Bill Gates leadership style is his willingness to empower his researchers and project managers by arranging them in small groups. New products can make it from conception to production much more quickly (Schermerhorn, et al., 2003). Microsoft's innovation is thought to be unstoppable, although the government did try to stop them in 1998 when it sued the software giant as a monopolist. Microsoft was accused of using coercive power practices when dealing with other companies. In the end Microsoft negotiated a settlement without admitting guilt, the company agreed to stop coercive practices. Microsoft agreed to spend over a billion dollars on computers and software to be sent to deserving U.S. public schools. The Bill and Melinda Gates Foundation created in January 2000 is building upon the unprecedented opportunities of the 21st century to improve equity in global health and learning. The foundation works to expand access to technology through public libraries and focuses on improving global health through a global inoculation program. The foundation has invested more than $1 billion to date in Seattle, Microsoft's headquarters, through its four program areas; global health, education, public libraries and local giving, which emphasize housing and human services for vulnerable families. The Gates foundation has an endowment of approximately $28.8 billion.


The collapse of Enron, the largest bankruptcy in U.S. history, led to thousands of employees losing their life savings in 401(k) plans tied to the energy company's stock. Arthur Andersen, Enron's auditing firm, in on trial on charges of obstruction of justice for shredding Enron documents while on notice of a federal investigation. In Washington, Congress and the Justice Department are investigating what happened at the once high-flying Enron, whose officials have donated millions of dollars to Republicans and Democrats alike. Kenneth Lay, former Enron chairman and CEO has been charged with 11 counts of conspiracy and fraud. The Securities and Exchange Commission has filed parallel civil charges that accuse Lay of



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