Politics and organizational performance

Politics and organizational performance (January 24, 2002)

The View From Taft, BusinessWorld

These are tough times for companies. Technologies are changing at blinding speeds. Markets are more fiercely competitive than ever. The global slowdown has resulted in depressed demand across many industries. Managers are trying to cope by cutting costs, making their processes more efficient, and innovating on product and service designs to meet ever-increasing customer expectations. But as managers deal with the headaches imposed by the marketplace, there is an internal threat that could slowly eat away at the results of many a promising strategy and drain the energy from even the most committed employees. It can defeat a company faster than any competitor. This debilitating force is organizational politics.

Stanford University’s Kathleen Eisenhardt has analyzed politics among top management teams and I draw from her instructive findings. She defines politics as the often covert actions done by managers to enhance their power to influence a decision. It includes forming coalitions behind the scenes, private lobbying, withholding information and controlling agenda. In colorful local parlance, the unobtrusive nature of organizational politics would be referred to as “pailalim” or “gapangan”. This makes it very different from straightforward influence methods using open and forthright discussion, with full information-sharing, in settings open to all decision-makers. This type of negative organizational politics is what I refer to in this article.

The interesting thing about organizational politics is that while everyone knows it exists, there is very little constructive discussion of it. It’s treated much like gravity or the air we breathe – a given about which nothing much can be done, except to talk about it in hushed tones in boardrooms, cafeterias and corridors.

Even graduate programs in management hardly deal with the topic. Most management frameworks assume it away. Peter Drucker, the management guru, avoids the topic altogether in his book “The Profession of Management”. There is an apparent belief that since politics is so pervasive and problematic, managers would better spend their time not dealing with it – or more specifically, just going along with it and hoping to survive in the process.

I couldn’t disagree more. Politics left alone weakens an organization. It results in inefficiency by restricting the flow of information and, therefore, harms the speed and quality of decisions. It reduces trust among people with different points of view which destroys the chances of synergy and innovation in the organization. It demoralizes and diminishes the quality of work life for members of the organization who may eventually decide to leave. With all the harm politics can cause, managers had better deal with it. It is their professional duty to do so.

But to deal with this phenomenon, we need to understand how it arises. Eisenhardt found that politics among managers results from conflicts in a setting of centralized power. It’s important to point out that conflict – differences in convictions about a particular issue – is not the problem per se. Rather, it is conflict combined with the concentration of decision-making power among a select few top managers or, at the extreme, on the chief executive officer alone. Because power is in limited supply, managers resort to building backroom coalitions (“kampihan” in the vernacular) to somehow gain influence on the decision process. And because this is done covertly, it leads to the downward spiral in trust that characterizes a politicized organization.

What can be done? Since conflict is one of the causes, should it be avoided? After all, most people find conflict unpleasant and would prefer to avoid a confrontation on an issue whenever possible. They may be concerned about not offending anyone. They may think it would take time and energy away from more productive things. But we shouldn’t confuse an absence of conflict with agreement. It is more likely apathy and disengagement. And a company that simply moves along under an illusion of agreement will not get very far. No, conflict should not be avoided. It should in fact be encouraged – but focused on issues and not on personalities. I believe that Filipino managers, in particular, will need to work on being able to argue about issues without resulting in personal friction. This is easier if managers are encouraged to interact with each other more frequently in less formal occasions.

And what of centralized power? Should top management abdicate and simply distribute decision-making authority to lower levels? Not necessarily. What is needed is fuller involvement of decision-makers up, down and across the organization in regular meetings where issues are openly discussed and argued about, and guided by objective information. In such a scenario, the authority for a final decision still resides with the highest manager, but such a decision will be of a much higher quality because it had benefited from a full and intelligent discussion.

Organizational politics is a reality but so is human disease. We certainly wouldn’t argue that disease should be allowed to continue simply because it is the reality. Management is concerned with achieving worthwhile goals for a firm’s stakeholders and this is more easily achieved if the organizational disease that is politics is eliminated.