Power and politics in organizations are a reality that no organization can ignore. Though the evolution of the modern corporation and the concomitant rise of the managerial class with a professional way of running the firms is touted to be one of the contributory factors for the decline on power politics in organizations, one cannot just simply say that there are no power centers or people with vested interests even in the most professionally run and managed firms. The reason for this is that power and politics are as old as human nature and recorded history and hence, one cannot simply wish away the primal urge to resist those in power and in turn, try an impose the will by those in power. This is the interplay of forces within organizations wherein the top management and the senior leadership often tries to have it their way whereas those in the middle and those who have been passed over for promotion as CEOs and other C level positions try to resist such power moves.
Power Struggles in Family Owned Businesses
Of particular interest to our discussion is the way in which family owned businesses often have a greater component of power politics in them. The reason for this is that family owned businesses often have rival power centers allied to the different family members. For instance, in organizations such as Fidelity which is a family concern, it is often the case that there are multiple power centers with different factions being propped up by the different family members. Indeed, the reason for choosing this example is the fact that in recent years, the succession struggle is gaining traction and is responsible for most of the intra firm politics in that company.
Talking about succession struggles, there can be no better example than the case of the Reliance conglomerate which witnessed an internecine power struggle between the various family members after the demise of the family patriarch. Indeed, this case has become so famous that many western universities have come up with case studies on why it happened, who gained and who lost and whether it was in the benefit of the shareholders and the employees.
Impact of Power Struggles on the Stakeholders
Talking about the impact of power and politics on shareholders and other stakeholders, it is often the case that the rank and file employees are the major losers in the power games. This is because they find that those at the top are bickering and always fighting and hence, are demoralized to work resulting in attrition and lackadaisical performance. In addition, it is the case that the rank and file employees find that they are caught between rival factions and feel that they are being sacrificed by the factions whose only interest is furthering their own agendas. Indeed, as the saying goes, when elephants fight, it is the grass that suffers, whenever there is a power struggle in the organizations, it is those at the bottom and the middle to some extent who suffer the most. Of course, the smarter ones among them ally themselves to one faction or the other and hence, find that it is safe to take sides rather than being caught in the crossfire. In addition, they also find that it is better to hitch their fortunes to a particular faction so that they play the power game. Needless to say, all this has an impact on the productivity and performance of the organization. This is the reason why many shareholders and particularly the institutional ones among them who step in whenever the power games become too intense and impact the financial and operational performance of the firms.
Power and Politics are Integral to Human Nature
Having said that, it must be noted that not all power struggles lead to negative outcomes as it is often the case that the winning faction might be a result of the losing faction becoming too autocratic or despotic. This is the case in firms such as Hewlett Packard and Apple where the power struggles resulted in the induction and return of the old guard to the benefit of the firms. Moreover, it is always good to have a system of checks and balances within firms so that any excessive centralization of power and control are minimized. It is also good to have specific attempts at dissent because the more divergent the views and the more diverse the opinions, the healthier it is for the firm to decide on the best course of action.
Indeed, it is better for the decision makers to listen to multiple perspectives rather than surrounding themselves with yes men and sycophants who have their own interest in glorifying their masters. Further, decision making which takes into account all the viewpoints is any day better than unilateral styles. In conclusion, while power and politics are as old as humanity, it is also the case that the balancing mechanism whenever there is a tendency to cross the limits means that such power and politics should be assessed from this perspective rather than taking a negative view.