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8/3/2019 Session 11 18
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Session 11 - 18
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Organizing
Organization
Organizer
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A social relationship which is either closed or limits the
admission of outsiders by rules, so far as its order is
enforced by the action of a head.. (Weber, 1947: 145
146) Hierarchy of authority
Division of labor
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Activity is accomplished through conscious, deliberateand purposeful coordination.
Karl Marx
Focus was on outcomes.
System ofconsciously coordinated activities or forces of
two or more persons (Chester Barnard, 1938: 37)
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Organizations are social units (or human groupings)
deliberately constructed and reconstructed to seek specific
goals (Etzioni, 1964)
Organizations have distinctive features other than goal
specificity and continuity (Scott, 1964)
Relatively fixed boundaries
A normative order
Authority ranks
A communication system
Incentive system
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Coordination of
Effort
CommonGoal
Division ofLabor
Hierarchy of
Authority
Conscious coordination
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Environment
Stakeholders
DistributorsSuppliers
Customers Competitors
Government
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Use of an
Organization allows
People Jointly
Increase
Specialization and
Division of Labor
Use Large-scale
Technology
Managing ExternalEnvironment
Economize on
Transaction Cost
Exert Power and
Control
Increases Value that
an Organization can
Create
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Inputs
InformationEnergy
People
Transformations
Social Component
Technological Component
Outputs
Finished GoodsServices
Ideas
Feedback
Environment
Alignment Equifinality
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Measuring Effectiveness
Goal Approach:
When output goals can easily measured
Ex: Business organizations (Profitability, Growth, Market
share, ROI)
Resource Based Approach:
When other indicators of performance is difficult to obtain.Ex: Not-for-profit organizations, Social welfare organizations
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Integrated effectiveness Model
External
Control
Flexible
Internal
Rational Goal Emphasis
Primary goal: productivity,
efficiency, profit
Sub goals: planning, goal
setting
Internal Process Emphasis
Primary goal: Stability,
Equilibrium
Sub goals: Information
Management, Communication
Open Systems Emphasis
Primary goal: Growth & Resource
Acquisition
Sub goals: flexibility, readiness
Human Relations Emphasis
Primary goal: HR Development
Sub goal: cohesion, morals,
training
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Organizational
Design
Effectiveness in
Satisfying Stakeholders
Human Resource
OutcomesSituational Factors
Organizations History
Labor Market and
Workforce Characteristics
Task TechnologyBusiness/ Financial
Pressure
Country culture/ Laws
Union
GM and TMT
Business Goals and
Strategy A Diagnostic Model of Organizational
Effectiveness
Coordination
Competence
CommitmentOrganization of work
Measurement and Reward
Systems
Personnel Flow
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International
The
OrganizationUnion
Competitors
Suppliers
Distributors
Customers
Ecological
Cultural
Political
Legal
Demographic
Economic
Technological
General Environment: Specific environment andOrganizations ability to secure resources
Specific Environment Organizations ability to secure resources
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Environmental complexity: The strength, number, and
interconnectedness of the specific and general forces that an
organization has to manage
Wider variety of products for different groups of customers
Environmental
ComplexityUncertainty about the
environment
Predicting and
Controlling flow ofresources
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Environmental dynamism: The degree to which forces in the
specific and general environments change over time
Stable environment
Unstable (dynamic) environment
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Environmental richness/ Munificence: Amount of
resources available to support an organizations domain
Environments may be munificence because:
The organization is located in a poor country or in a
poor region of a country
There is a high level of competition, and organizations
are fighting over available resources
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Content
Conditions
Analytical Categories
Complexity Dynamism Munificence
Technological
Legal
Political
Economic
Demographic
Ecological
Cultural
International
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Degree of
Uncertainty
Level of
Differentiation
Level of
Integration
As the level of Uncertainty increases, effective organizations
increase their level of differentiation and integration
HighHigh
Low Low
High
Low
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Adapting to Environmental Uncertainty
IntegrationDifferentiation
Number of Positions and
Departments
Environmental
Complexity
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Tasks are broken down into specialized,
separate parts
Tasks are rigidly defined
There is a strict hierarchy of authority
and control, and there are many rules
Knowledge and Control of tasks are
centralized at the top of the organization
Communication is vertical
Dynamism
Employees contribute to the common
tasks of the department
Tasks are adjusted and redefined
Less hierarchy
Knowledge and control of tasks are
located anywhere in the organization
Communication is horizontal
Mechanistic Organic
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Manufacturing Sales R & D
Mechanistic
structure
Organic
structure
Manufacturing Sales R & D
Tallorganization
Flatorganization
Manufacturing Sales R & D
Centralized
decision
making
Decentralized
decision
making
Manufacturing Sales R & D
StandardizationMutual
adjustment
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External Environment and Uncertainty
Number of Factors in Organization Environment
Adapt to
EnvironmentHigh
Uncertainty
Low
Uncertainty
HighLowLow
High
Rate of
Change in
Factors in
Environment
High-Moderate
Uncertainty
Low-Moderate
Uncertainty
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Simple
Low Uncertainty
Stable
Mechanistic Structure:
Formal, Centralized
Few Departments
No integrating Roles
Current operations orientation:
low-speed response
High-Moderate Uncertainty
Unstable
Organic Structure, teamwork:
participative, decentralized
Few Deptts, much boundary
spanning
Few integrating roles
Planning Orientation; fast response
Complex
Low-Moderate Uncertainty
Mechanistic Structure: Formal,
Centralized
Many Deptts, some boundary
spanning
Few integrating roles
Some planning: moderate-speed
response
High Uncertainty
Organic Structure, teamwork:
participative, decentralized
Many Deptts differentiated,
extensive boundary spanning
Many Integrating roles
Extensive Planning, forecasting;
high-speed response
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Complex
Dynamic
High
Uncertainty
Organic Structure(Low Centralization,
formalization, and low
standardization)
Greater Differentiation
and More Integration
Environment
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Strategies for Managing Resource Dependencies
Two basic types of interdependencies cause uncertainty
Symbiotic interdependencies: Interdependencies that
exist between an organization and its suppliers and
distributors
Competitive interdependencies: Interdependencies that
exist among organizations that compete for scarce inputsand outputs
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Establish Interorganizational Linkages
(Competitive Interdependency)
Cartel CollusionStrategic
Alliance
Merger &
Takeover
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Controlling the Environmental Domain
Change the Domain
Political Activity, Regulation (Influence Govt. Legislation andRegulation)
Trade Associations
Illegitimate Activities
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Complex
Munificence
Dynamic
ResourceDependence
High
Uncertainty
Control of
environmental domain
Establishment of
favorable linkage
Organic Structure
(Low Centralization,
formalization, and lowstandardization)
Greater Differentiation
and More Integration
Environment
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Technical complexity
The extent to which a production process can be programmed
so that it can be controlled and made predictable
High Technical Complexity
(Automation)
Low Technical Complexity(Depends primarily on KSA of
people)
Theory of Joan Woodward
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Three types of production technology:
Small-batch and unit technology
Large-batch and mass production technology Continuous-process technology
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Small-batch and unit technology
Involves making one-of-a-kind, customized products or
small quantities of products
Can be adapted to individual orders Is relatively expensive
Scores ______ on the dimension of technical complexity
_________ structure is the most appropriate structure for
this technology
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Large-batch and mass production technology
Involves producing large volumes of standardized
products
The conversion process is standardized and highlycontrollable
Allows an organization to save money on production and
charge a lower price for its products
Scores _______ on the technical complexity dimension
___________ structure is the most appropriate structure
for this technology
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Structural
characteristics
Small-Batch
Technology
Mass
ProductionTechnology
Continuous
ProcessTechnology
Organizational
Structure
Low Technical Complexity High
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OrganicMechanistic
Model
2
Model
4
Model
3
Model
5
Model
6
Model
1
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It facilitates fast innovative responses
Run by self-driven entrepreneurs (expertise, know each other,
Company survival)
No formal structure and control system
Entrepreneurial Structure
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The structure of an organization helps in
Division of labor Defining the Identity within the organization and
How they relate to each other
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Was the functional structure a good way for
Appex to solve its earlier problems?CEO
Engineering Marketing Finance R & D
Groups people on the basis of
their common skills, expertise, or
resources they use
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Limitations of functional structure
Proliferation of jobs both horizontally and vertically
(Communication Problem)
Emergence of organizational politics
Differentiation and integration
Lot of pressure on CEO (Strategic Problem)
Dilutes accountability for the financial performance of the
organization (Measurement problem)
Can lead to diminished zeal to produce new and innovativeproducts and services
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Do you think the Product and Business teamstructures were useful ways of addressing the
limitations of functional structure?
Strategic focus to the development and performance of various
products and services
Reduced integrative role of Shikhar
Greater emphasis on product development
Ambiguity and conflict over who had what decisions right
Resource allocation
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Product
Team
VP
Purchasing
CEO
VP
Engineering
Manager
Product A
Manager
Product D
Manager
Product C
Manager
Product B
VP
Marketing
VP
Finance
VP
R & D
Matrix Structure
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Network Structure
A cluster of different organizations whose actions are
coordinated by contracts and agreements rather than through a
formal hierarchy of authority
Very complex as companies form agreements with many
suppliers, manufacturers, and distributors
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Divisional structure: To solve some of the control problems
Create smaller, more manageable subunits
Product structure Geographic structure
Market structure
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Division
C
Division
B
Division
A
VP
R&D
VP
Marketing
VP
Finance
CEO
VP
MM
Corporate Headquarter Staff
Division
D
Support Functions
Corporate
Managers
Divisional
Managers
Functional
Managers
Multi Divisional Structure
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SalesEngineering Marketing Finance R & D
CEO
PT
Manager
PT
Manager
PT
Manager
Product
Division
Product
Division
Product
Division
Product
Development
Teams
Functions
Functionalspecialists
Product Team Structure
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1984-May, 1988
Division of Labor Projects, Interest and Skill
CoordinationMechanism
Senior LeadershipFace2face
Conflict Resolution Persuasion
Distribution of
Decision Rights
Informal
Control Commitment
Identity and Careers Entrepreneur
Strengths
Responsive
Innovative
Fast
Weakness Short term focus
No Accountability
No career Path
Service suffered
May 1988-Feb, 1989
Expertise
Not Clear
Consensus
Not Clear
Not specified
Experts
Fast
Egalitarian
Difficult to Understand
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Feb, 1989 Mar, 1989
Division of Labor Functional Expertise
Coordination
Mechanism
Conflict Resolution
Distribution of
Decision Rights
Partitioned. But Ghosh
was involved in everything
Control Compliance Actions
Identity and Careers Functional Experts
Strengths
Focused People in Specific
tasks
Efficient Pooling
Weakness
May 1989-Aug, 1990
(Product Team)
Product & Functional
Expertise
Product
Team manager
Team Persuasion
Product Manager
P & L
General Management
Balanced functional and
product focus
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Aug, 1990 Jan, 1991
(Divisional)
Division of Labor Products
Coordination
Mechanism
Authority of Div. Head
Conflict resolution Senior Management
Distribution of
Decision Rights
Division Head
Control Profit and Loss Results
Identity and Careers General Management
Strengths Profit Focused
Strategic Responsive
Weakness Walls between Divisions
Innovation Lowers
Duplication of Resources
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Functional
Division of
Labor
By Inputs
Coordination Hierarchy,
Supervision,
plans
Decision Rights Highly
Centralized
Boundaries Core/Periphery
Importance of
Informal
Structure
Low
Network
By Knowledge
CFT
Highly
decentralized
Porous and
Changing
High
Matrix
By Both
Dual Reporting
Relationships
Shared
Multiple
interfaces
Considerable
Divisional
By Outputs
Division
manager and
Corporate staff
Separation of
Strategy and
execution
Internal/
External
Markets
Modest
Comparison among Different Structures
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Functional Divisional Matrix Network
Resource Efficiency Excellent Poor Moderate Good
Time Efficiency Poor Good Moderate Excellent
Responsiveness
Adaptability
Relative Advantage and Disadvantage of Different
Structures
Accountability Good Excellent Poor Moderate
Environment for
which Best suited
Stable Heterogeneous
Environment
Complex
Environment
Volatile
Environment
Strategy for which
best suited
Focused/Low
Strategies
Diversified
Strategy
Responsiveness
strategy
Innovation
Strategy
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Opinion about Beta culture
Weird, penguin, primitive, materialistic, etc. Opinion about Alpha culture
Close, Insulting, No purpose, etc..
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Make it legitimate for people in culture A to stereotype and
make fun of the people in culture B
Tend to discount everything in culture B so no one tries tounderstand any of it
No one in culture A says anything good about the people in
culture B for fear of appearing disloyal
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It is often difficult to get people value Others who are
different from them in looks, dress, or behavior
Some of us are marginalized because we are fromdifferent
Gender
Race
Too tall, too short
Different age
Different social background etc.
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Some traits that characterize culture
High territoriality vs. Low Territoriality
Respect for elders
Respect for authority
Individualism vs. Collectivism
Monochronic vs. Polychronic
Work to live vs. Live to work
Relationship vs. Deal-focused Formal vs. Informal
Past, present, future emphasis
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ExternalFocusI
nternalFocu
s
Flexibility and Discretion
(Interest in Making Changes)
Stability and Control
(Interest in Keeping things the same)
Clan
Culture
Adhocracy
Culture
MarketStructure
HierarchyCulture
Competing Values Framework
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Contingency Approach to Organizational Design
Design ofStructure
Environment
Fit
Effectiveness
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State of collaboration among organizational units
Differences among several units of the organization
Greater the differentiation the more difficult it becomes
for employees to communicate across unit boundaries
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Form of
Interdependence
Main type of
coordination
Communication Strategy to reduce
uncertainty
Pooled Standardization Low
Increase number
of Customers
served
Sequential
Planning
&
Scheduling
Medium
Slack Resources/
Vertical
Integration
Reciprocal
Mutual
Adjustment High
Specialism of task
activities
Number and Pattern of units that have to collaborate
Aspects of Integration
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Frequency with which collaboration is necessary
Importance of achieving the objective
Certainty and predictability of the information involved
Aspects of Integration
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Organizational Design Challenges
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To determine the levels of vertical and horizontal
differentiation to reach organizational goals
CEO
Vertical
Differentiation
Horizontal
Differentiation
Improve Coordination
among subunits
To facilitate
specialization
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How to Link and Coordinate organizational
activities
Higher the differentiation
the more complex the
integration mechanisms
Integration
Differentiation
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Who will make Decisions
Makes Planning and Coordination
Difficult
Lose control of decision making
Risk Averse
Decision making process
Slow
Centralization
Decentralization
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To decide Mechanisms to control specific
employee tasks and roles
Standardization
Mutual Adjustment
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Resource Constraints
Existing Players
Population Ecology Model
The factors that affect the rate at which new organizations are born
(and die)
Population Density
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Organizational Isomorphism
(Similarity among organizations in a population)
Coercive isomorphism
Mimetic isomorphism
Normative isomorphism
Pressures exerted by other
organizations and by society in general
Indirectly adopt the norms and values
of other organizations
Organizations intentionally imitate one
another to increase their legitimacy
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Evolution and Revolution
Prolonged periods of growth where no major upheaval
occurs in organization practices
Periods of substantial turmoil in organizational life
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Key Forces in Organizational Development
Age of the Organization
Size of the Organization
Stages of Evolution
Stages of Revolution
Growth rate of the Industry
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Management practices that work well in one phase may
bring on a crisis in another
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Organizational Practices in Five Phases of
GrowthCategory Phase 1
Measurement
focus
Make and Sell
OrganizationalStructure
Informal
Top-
Management
Style
Individualistic
and
Entrepreneurial
Control System Market Results
Management
Reward
Emphasis
Ownership
Phase 2
Efficiency of
Operation
Centralizedand functional
Directive
Standards &
Cost Centers
Salary and
Merit
increases
Phase 3
Expansion of
Market
Decentralizedand
Geographical
Delegative
Reports and
Profit Center
Individual
Bonus
Phase 4 Phase 5
Consolidation of
Organization
Problem
solving and
innovation
Line staff andProduct group
Matrix ofTeams
Watchdog Participative
Plans and
investment
centers
Mutual Goal
setting
Profit Sharing
and stock
options
Team Bonus
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Organizational Decline
When the organization fails to
Anticipate
Recognize
Avoid, neutralize, or adapt to
external or internal threats
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Weitzel and Jonssons Model of Organizational
Decline
Decline
BeginsDissolutionTime
P
E
RF
O
R
M
A
N
C
E
Blinded InactionFaulty
ActionCrisis Dissolution
Good
Information Acceptable Performance
Prompt
Action
Corrective
ActionEffective
Reorganization
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The Commonwealth Mini-society
Top Group
Middle Group
Bottom Group
Promote Learning
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Appreciation for structural injustice and its effect on
individuals
Individual efforts and goodwill can be distorted and
wasted in the absence of a social system that permits theirexpression
Our understanding of power and authority
Complex interplay between structure and the individuals Regardless of individual beliefs and make-up, being on the top
is very different from being on the bottom
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In-group and out-group dynamics
How difficult it is to create effective communication and
decisions even with best of intentions.
Experience of dilemmas and conflicts of power
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Life generally seems good for high-power persons
Usually hard to move towards cooperation, conciliation,
and compromise.
Protect their superior power
High-power members tend to be more angered by lowpower members insult than when the position is reversed
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Tug-of-war
Organizational
Contributors
Individuals
Groups
Group/
Organizational
Interest
ConflictManagement
Power
Influence Tactics
Political
Tactics
Climate of Destructive
Competition and Suspicion
Climate of Openness,
Cooperation, and Trust
Self-interest
Source: Kreitner, R., & Kinicki, A. (1995). Organizational Behavior. Chicago: Irwin
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Sources of Power
Source: Mcginn, K. L., & Lingo, E. L. (2007). Power & Influence. Harvard
Business School Publication
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Unique personal attributes and
skills
Your relationship with others
Formal roles in your organization
Personal
PowerRelational
Power
Position
Power
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Ability to endure and succeed
in competitive situations
Ability to obtain others social support
Ability to encourage others cooperation by building trust and
understanding
Personal
Power
Charisma
Communication
Skills
Track
Record
Energy &
Stamina
Focus
Tolerance
for Conflict
Sensitivity Submerging ego Flexibility
Expertise &
Self-confidence
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Position
Power
Formal Hierarchical
Position
Controlling Strategic
Resources
Control over entry
Legitimate Power
Control over values and
terms of Legitimacy
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Relational
Power
Direct Ties
Mutual Intimacy
Tie Strength
Frequency of Interaction
Duration
Multiplexity
Reciprocity
Tie Content
Information
Money Emotions
Social Support
Exchanged Based Trust Based
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Relational
Power
Networking
Density
Centrality
Coalition
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Coercive
Reward
Legitimate Informational
Referent
Expert
Bases
ofPower
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Influence Tactics
Consultation
Rational Persuasion
Inspirational Appeal
Personal Appeal Ingratiation
Coalitions
Pressure
Legitimacy Exchange
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Indirect Influence
Beat Around the bush
Let people figure things out for themselves, come to their own
conclusions, and take initiative on their own
Talk Less, Listen More
Need to be understood, affirmed and appreciated
Make them like you
Craumer, M. (2006). When direct approach backfires, try indirect influence,Harvard
Management Update .
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Use stories and metaphors
Do a favor even a small one
Make them laugh
Humor can create common bond that melt resistance andencourages cooperation
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Thank You