Shareholders ask an executive to use a big bag of money to start a business and make a profit for them. The executive decides their strategy to deliver the expected return and starts to build the organisation. The executive will recruit department heads, give them a share of the money and set them objectives. Each department then gives budgets to managers to play their part in the overall team effort. The original power (shareholder funds) has now been distributed formally and the business is ready for action. This is just an illustration of the basic concept of organisational power — it never happens this cleanly in real life
As the business matures, organisational power evolves. The executives realise they need to put in place some checks and balances so they recruit a compliance officer. They bestow upon him/her a remit to make sure that everyone is compliant, and provide the role with the means to force compliance. Again this is an illustration of the concept of how power is formally created for the good of the business.
Of course, the executives are not always controlling organisational power — even if they think they are. Ambitious department heads may start “empire building” or protecting their power bases. Cliques and cabals will form, alliances will be forged and power begins to ebb and flow around the organisation. Thus we arrive at the fascinating dynamic of power in action. If you can start to see it, you can start to use it more effectively.
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