Power, politics and

stakeholder management
Organizations as political arenas

Organizations are conceptualized as a collection of constituencies, each pursuing their own

objectives:
• Individuals and groups attempt to influence each other in the pursuit of self-interest.
• When there is a conflict of interest, it is the power and influence of those involved that
determines the outcome rather than logical and rational argument.
• In order to ensure the successful introduction of change, it is essential that change
managers secure the assistance of powerful stakeholders and build a critical mass of
support for the change.
• Stakeholders are any individuals or groups who can affect or are affected by a change.
Theoretical positions

Normative: all stakeholders should be taken into account. Moral commitments

should provide the basis of managing stakeholder relationships rather than the
desire to use stakeholders to promote managerial interests.

Instrumental: managers will only attend to the interests of stakeholders to the

extent that they can affect their interests.
Instrumental theory of
stakeholder management
• Resource dependence theory: organizations are dependent
on the resources in their environment for survival and
growth.
• Prospect theory: outcomes that are evaluated as losses are
weighted more heavily than similar amounts of outcome
that are evaluated as gains. Individuals will be risk seeking
in the loss domain and risk averse in the gain domain.
• Organizational life cycle models: the pressures that
threaten the success of a change project will vary with the
stages of the project life cycle. Consequently, the resources
required will also vary with life cycle stages.
Resource dependence theory and Prospect
theory

• In the absence of threats, a ‘gain frame’ will be adopted, and the

organization will follow a risk-averse strategy and actively address all
stakeholder issues.
• In the presence of threats, a ‘loss frame’ will be adopted, and the
organization will pursue a risky strategy that involves addressing the
concerns of only those stakeholders who are relevant to the immediate
loss threat, while defending or denying any responsibility for the
concerns of other stakeholders.
Communicating change
Directionality:
• The management of change is often experienced as a top-
down process, with those responsible for managing the
change informing others lower down the organization about
the need for change, what is going to happen, and what is
required of them.
• Effective change communication calls for a stream of
upward communication that provides change managers with
the information they require in order to clarify the need for
change, and develop and implement a change programme.
Role:
The nature of what is communicated can be affected
by the roles that organizational members occupy.

The nature of an inter-role relationship is important; a

person might communicate certain things to a
colleague they would not communicate to an external
consultant, an auditor, a member of another
department, their boss, a subordinate or a customer.
Content:
• It is important to give careful consideration to the potential
relevance of information that at first sight may appear to be
of little consequence. MacDonald (1995) distinguishes
between internal and external information and draws
attention to the importance of attending to information from
outside the organization and integrating this with the
information that is routinely available to organizational
members in order to facilitate organizational learning.
• It is also important to pay attention to issues of fairness and
justice when deciding what to communicate.
Channel:
• Information and meaning can be communicated in many
different ways. It is important to select a channel that is fit
for purpose.
Motivating others to change
 • people’s past experience of change can affect their level of
commitment to the organization and their willingness to
support further change
• the psychological contract is an unwritten set of
expectations between all organization members and those
Commitment who represent the organization and incorporates concepts
such as fairness, reciprocity and a sense of mutual
to change obligation. If employees feel that the organization has failed
to keep its side of the ‘bargain’, they may respond by
redefining their side of the psychological contract and
invest less effort in work, be less inclined to innovate and
less inclined to respond positively to changes.
 • low trust
• low tolerance for change
• different assessments about costs and benefits
Factors • parochial self-interest.
 • their ability to deliver a satisfactory level of performance in
the changed situation
• whether a satisfactory, or even exceptional, level of
performance will lead to the achievement of valued
outcomes in the changed situation
Expectations • whether the net benefits accruing to them will be equitable
when compared to the net benefits accruing to comparable
others in the changed situation.
Supporting
others through
change
Experience change

• Organizational change not only

involves a change in situational
factors, such as technology,
structures and systems, but also a
series of personal transitions for
all those affected.
• New structures and systems may
not work as planned until
organizational members let go of
the way things used to be and
adjust to the new situation.
Incremental and
discontinuous changes

• Individuals, just like organizations, can

be confronted with incremental or
discontinuous changes.
• Incremental changes do not present any
serious challenge to the assumptions we
make about how we relate to the world
around us, but discontinuous changes do.
• Discontinuous changes are those that are
perceived to be relatively lasting in their
effects, take place over a relatively short
period of time, and affect large areas of
an individual’s assumptive world.
 • Awareness/shock: when awareness is sudden, the individual can be
overwhelmed – anxiety can undermine the ability to think
constructively and plan, leading to a state of immobilization.
• Denial: individuals cling to the past in order to reduce anxiety –
attention is focused on the known and the familiar.
• Depression: following acknowledgement that things cannot continue
as they are, individuals experience a feeling of loss of control. This
can lead to depression, anger, sadness, withdrawal and confusion.
Psychological • Letting go: the need to change is accepted.

reaction • Testing: experimental involvement in new situations begins to occur.

Frustration is experienced when experiments fail. As some
experiments appear to work, the individual begins to consolidate
successes.
• Consolidation: this stage progresses in parallel with testing and leads
to new ways of behaving and being.
• Reflection, learning and internalization: the transition is completed
when the changed behaviour is accepted as normal.
Factors

• the importance of the transition

• whether it is perceived as a gain or
a loss
• the existence of other
simultaneous transitions
• personal resilience.
Implications
• Recognize that there will often be a time lag between the
announcement of a change and an emotional reaction to it.
It is easy to mistake the apparent calm of the initial
awareness and denial phases for acceptance of the change.
• Realize that different individuals or groups will progress
through the cycle at different rates and in different ways,
because the change might affect them differently.
• Be aware that they may be at a different stage to other
organizational members. They tend to know about the
change before others, so it is not unusual for them to have
reached an acceptance of change long before them.