organizational power and its usage

8/8/2019 Organizational Power And Its Usage

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Organizational Power

ORGANIZATION: HABIB BANK LIMITED

SUBMITTED BY:

Ans Salman

Roll# EMBA-1208-09

Syed Ahmed Waqas

Roll# EMBA-1201-09

SUBMITTED TO:

Mr. Asad Raza



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INTRODUCTION OF ORGANIZATION

Mission Statement

To be recognized as the leading financial institution of Pakistan and a dynamic

international bank in the emerging markets, providing our customers with a premium set

of innovative products and services, and granting superior value to our stakeholders ±

shareholders, customers and employees

OVERVIEW

HBL was the first commercial bank to be established in Pakistan in 1947. Over the years,

HBL has grown its branch network and become the largest private sector bank with over

1,450 branches across the country and a customer base exceeding five million

relationships.

The Government of Pakistan privatized HBL in 2004 through which AKFED acquired

51% of the Bank's shareholding and management control. HBL is majority owned (51%)

by the Aga Khan Fund for Economic Development, 42.5% of the shareholding is retained

by the Government of Pakistan (GOP), whilst 7.5% is owned by the general public i.e.

over 170,000 shareholders following the public listing that took place in July 2007.

With a presence in 25 countries, subsidiaries inHong Kong and the UK, affiliates in

Nepal, Nigeria, Kenya and Kyrgyzstan and rep offices in Iran and China, HBL is also the

largest domestic multinational. The Bank is expanding its presence in principal

international markets including the UK, UAE, South and Central Asia, Africa and the Far

East.

Key areas of operations encompass product offerings and services in Retail and

Consumer Banking. HBL has the largest Corporate Banking portfolio in the country with

an active Investment Banking arm. SME and Agriculture lending programs and banking

services are offered in urban and rural centers.



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INTRODUCTION OF TOPIC

ORGANIZATIONAL POWER

Organizational power is defined as the ability of the organization structure to

utilize all the mandatory resources in favor of organization development such as

man , machine and other resources. Power is not uniformly distributed to all levels

in the organization howsoever it is confined to certain departments group of

people depending on the level of responsibility and seniority.the motive of assigning power to these levels is to streamline the underlying

activities by designing work structures, circulars, policies and their successful

implementation for the success of the organization.

TYPES OF ORGANIZATIONAL POWER

a) Legitimate Power

Legitimate power is an agreement among organizational members that people in

certain roles can request certain behaviors of others. This perceived right partly

comes from formal job descriptions as well as from informal rules of conduct.Executives have considerable legitimate power, but all employees also have this

power based on company rules and government laws. For example, an

organization might give employees the right to request customer files if this

information is required for their job.

Legitimate power depends on more than job descriptions. It also depends on

mutual agreement from those expected to abide by this authority. Your boss's

power to make you work overtime partly depends on your agreement to this

power. Classic stories of shipboard mutinies, such as The Caine Mutiny and

Mutiny on the Bounty, illustrate this point. Today, employees question their boss'sright to make them stay late, perform unsafe tasks, and other activities. Thus,

legitimate power is the person's authority to make discretionary decisions as long

as followers accept this discretion.

People in high power distance cultures (i.e., those who accept an unequal

distribution of power) are more likely to comply with legitimate power than are



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people in low power distance cultures. Thus, an employee in Mexico (a high

power distance culture) is more likely than someone in the US (a low power

distance culture) to accept an order, particularly when the person's right to give

that order is uncertain. Legitimate power is also stronger in some organizations

than in others. A 3M scientist might continue to work on a project after being told

by superiors to stop working on it. This is because the 3M culture supports anentrepreneurial spirit, which includes ignoring formal authority from time to time.

More generally, employees are becoming less tolerant of legitimate power. They

increasingly expect to be involved in decisions rather than be told what to do.

"People won't tolerate the command-and-control mode," says Bank of Montreal

CEO Tony Comper. Thus, the command style of leadership that often guided

employee behavior in the past must be replaced by other forms, particularly expert

and referent power, which are described below.

b) Re

ward P

ower

Reward power is derived from the person's ability to control the allocation of

rewards valued by others and to remove negative sanctions (i.e., negative

reinforcement). Regional Chief have formal authority that gives them power over

the distribution of organizational rewards such as pay, promotions, time off,

vacation schedules, and work assignments. Employees also have reward power

over their bosses through the use of 360-degree feedback systems. Employee

feedback affects the supervisor's promotions and other rewards, so bosses tend to

behave differently towards employees after 360-degree feedback is introduced.

c) Coercive Power

Coercive power is the ability to apply punishment. Regional Chief have coercive

power through their authority to reprimand, demote, and fire employees. Labor

unions might use coercive power tactics, such as withholding services, to

influence management in collective agreement negotiations. Team members

sometimes apply sanctions, ranging from sarcasm to ostracism, to ensure that co-

workers conform to team norms.

Many firms rely on the coercive power of team members to control co-worker

behavior. For example, 44 percent of production employees at the CAMI

automobile plant in Ingersoll, Ontario, believe that team members use coercive

power to improve co-worker performance. The coercive power of team members

is also apparent at Eaton Corp.'s forge plant in South Bend, Indiana. "They say

there are no bosses here," says an Eaton Corp. employee, but if you screw up, you

find one pretty fast.



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d) Expert Power

For the most part, legitimate, reward, and coercive power originate from the

position. In contrast, expert power originates from within the person. It is an

individual's or work unit's capacity to influence others by possessing knowledge or

skills that they want. For instance, civilians working at Canada's Department of National Defence have acquired a lot of power because they know how to operate

the bureaucracy. Military personnel are rotated around various Canadian Forces

bases, so they depend on the civilians for their expertise as the corporate memory.

Employees are gaining expert power as our society moves from an industrial to a

knowledge-based economy. The reason is that employee knowledge becomes the

means of production, not some machine that the owner controls. And without this

control over production, owners are more dependent on employees to achieve their

corporate objectives. This is quite apparent in Canada's high-technology sector,

where the skill shortage is so acute that companies have been forced to limitgrowth. Job applicants can demand generous salaries and preferential working

conditions because of their expert power.

e) Referent Power

People have referent power when others identify with them, like them, or

otherwise respect them. Like expert power, referent power comes from

within the person. It is largely a function of the person's interpersonal skills

and usually develops slowly. Referent power is usually associated with

charismatic leadership. Charisma is often defined as a form of interpersonal

attraction whereby followers develop a respect for and trust in the

charismatic individual.



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POWER STRUCTURE AND ITS USAGE IN HABIB BANK

LIMITED (OBSERVATIONS)

Management Hierarchy

PRESIDENT

BOARD OF DIRECTOR

MEMBER EXECUTIVE BOARD

REGIONAL CHIEF

ZONAL CHIEF

BRANCH REGIONAL CHIEF

Going further, we¶ll discuss structure of organizational power and its usage at Regional

Chief level of the Bank.

Use of Reward Power

The theory of reward power relies on the belief that employees are more likely to

perform their job at a high level if they know rewards are contingent on their

performance. Regional Chiefs in HBL have the power to control the allocation of



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these rewards, which can include pay raises, bonuses, days off, awards or

recognition.

Use of Legitimate Power

Legitimate power is the most simple and basic source of power in HBL amongstRegional Chiefs. This source of power stems mainly from the formal position or role of

the Regional Chief in the company. The power and influence of the Regional Chief is

seen as fair and legitimate by the employee because the power is derived from the

Regional Chief¶s position, experience or status.

Use of Coercive Power

Coercive power is a source of power that relies on an employee's high dependency on his

job, current pay and benefits. Regional Chiefs in HBL try to intimidate employees with

reprimand or punishments such as losing their job or being demoted; this source of power leaves employees no choice but to perform well or risk losing their job.

Use of Referent Power

Referent power is based on the relationship of the Regional Chief and sub ordinates. With

this source of power, employees will work hard and respond well to a Regional Chief

use of power because of a positive working relationship, strong emotional bonds or a

physical attraction. The source of referent power is more of an employee choice rather

than a managerial style or ploy.

Use of Expert Power

Expert power is the source of power that almost majority of Regional Chiefs should strive

to achieve. With expert power, an employee trusts and believes in everything a Regional

Chief tells or asks of them because they see the Regional Chief¶s having great expertise

in the specific area of business.



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RECOMMENDATIONS:

Shore Up the Integrity

When it comes to leading change, integrity is the most important characteristic. The only

way to increase the integrity is to not do things that destroy it. Regional Chiefs should

keep their promises, and match their actions to their words. Refrain from saying things

that reduce the trustworthiness, like talking about others in their absence. Tell people the

truth, even if the answer is, "I don't know."

Increase The Visibility

The more people see you and your cause for change, the more power you will have just

by gaining attention. Having said that, Regional Chief should tap into a broader network,

he will gain supporters, even detractors, but when they see their leader as the champion

of the cause it will solidify the personal brand as a change advocate. Attention is power.

Control of k nowledge and inf ormation

Knowledge is power, as they say, and how you gather and distribute it is a source of power, whether it is technical or social information.

Experts often work in this way, protecting their elevated status by hiding the sources of

their knowledge and exacting high prices (whether financial or social) for their learnedopinions.

Control of counter-organizations

Not to every organization is there an equal and opposite counter-organization, but in the

battlefield of businesses, whole ecologies spring up, include local opposition to factory

expansion, trade unions seeking ever-increasing pay and benefits and so on. If you can

infiltrate or otherwise hold some sway over the groups who might oppose you, you may

at least be able to damp the danger they power and possibly neutralize them completely.

Exercise the Power You Already Have

Regional Chiefs in HBL probably have latent power that they are not using. Not using

power one has is as useful as not having it at all. The following are examples of power

that everyone Regional Chief has, but not everyone uses.



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y Time. Regional Chiefs exercise power by what they spend their time on. It's the

only finite asset that you have.

y Knowl edge. Remember the old adage, "Knowledge is power." Share your knowledge and skills with others.

y Att itude. A recent study showed that happiness is contagious. Regional Chiefs

have the ability to influence others by choosing their own attitude.

y Respon sibil ity. Regional Chiefs carry power in the tasks they personally

manage. So they must take on more responsibility, and earn more power.

organizational power and its usage

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