"There are two things a prince should fear: internal subversion from his subjects, and external aggression by foreign powers." So observed Machiavelli about Italian principalities in the fifteenth century, but he might as well have been talking about businesses today.
In fact, it is likely that internal conspiracies and vulnerability to outside attack go hand in hand. When a company's energies are taken up with infighting and politics, it provides an opportunity for competitors.
Unless the business is a protected monopoly, it puts itself at risk by the distraction of its focus on conflicts. In effect it becomes a political organisation, as the legitimate power system is replaced by jockeying for position on an informal, often surreptitious basis.
Writing about organisational politics, Sir Anthony Jay likened the phenomenon to the relationships between the king and the barons in medieval history. An ambitious baron is like the manager who finally makes it to head of a business unit, and finds that the only person standing between him and complete freedom is the king, i.e. chief executive. So, he begins to challenge the chief executive. Perhaps his tactic is to withhold information or resources needed by the chief executive, or to overspend on projects that aggrandise himself and make his unit look good at the expense of the company as a whole, or other business units. The latter point emphasises the fact that other "barons" may be doing the same thing. Thus it is not only the king, but other barons who are the obstacles to any given baron's freedom. This sets the stage for an outright baronial war.
The roots of politics are embedded in the structures of most business organisations. Different business units or functions may have different priorities. For example, the finance function which guards cash-flow can be at odds with the sales function when the latter may be willing to offer generous credit terms in order to clinch a major deal. Friction can be further compounded when the salespeople offer a challenging delivery date that the production department cannot possibly meet.
No organisation has unlimited resources. So, inevitably there will be competition for resources, likely to be seen as win-lose situations. This may be manifested in struggles between different divisions or units for budget allocations. But the battles are not always a straightforward competition for financial resources.
Rather, the ability to access greater resources is the outcome of the real prize - the establishment of primacy of one's unit or division over others.
The political processes in companies are typically played out in various manoeuvres - alliances of convenience, empire building and establishing rival camps.
Even if individuals are basically competitors for power, they may unite to form temporary alliances and support one another, perhaps against a superior, or against other alliances. The emergence of a leader gives potency to an alliance, especially if its aim is to weaken or dislodge the existing power structure. Another way in which an ambitious individual may succeed in challenging the prevailing power structure is in empire building. This entails expanding his unit, with the help of subordinates, making it a formidable force within the organisation. For example, in a diversified services company, one of the units could acquire more power at the expense of the others, enabling it to dictate the emphasis and direction of the whole company. Thus, in a bull market, the investment arm of banks assume a lot of importance.
Political activity varies in companies, and it may be defined along three conflict dimensions - (1) moderate or intense, (2) confined or pervasive, (3) brief or enduring. At the two extremes, conflict that is moderate, confined and brief is generally insignificant, while conflict that is intense, pervasive and enduring creates such disorder, that it leads to the demise of the business if it does not subside into a milder form.
Organisations may go through intermittent power struggles in conflicts that are intense, confined and brief. Or, organisations may contain within them shaky alliances, where conflict is moderate, confined, and possibly enduring. An example may be a retailer whose Internet and bricks-and-mortar sales units are competing with each other.
Potentially the most damaging form on a long term basis is one where conflict is moderate, pervasive and enduring. There is a constant undercurrent of rivalry that subverts genuine teamwork and constructive progress. This politicised organisation flourishes in certain conditions. Alliances and rival camps flourish when the leadership is weak and/or after the failed integration of a merger or acquisition. Protected monopolies can also be hotbeds of political activity as different interest groups vie with each other to control the agenda, secure in the knowledge that their jobs and companies are safe. This deep-seated weakness can be cruelly exposed in the event of deregulation and/or privatisation. Failing performance can give rise to political insurrection, as incumbent leadership is perceived to be ineffectual. Contenders start sniping at the leadership and vying among themselves to displace the incumbents even before there is a vacancy. Ironically, at a time when the organisation is most in need of unity it is being torn asunder, further weakening its position. Conversely, the best insurance against internal political intrigue is success. Football coaches and political leaders will testify to that.
Dr Eleanor O'Higgins is a lecturer in strategic management and business ethics at the Smurfit Business School, UCD.
