Power, Politics, Conflict and Culture

Power, Politics, Conflict and Culture in Organizations

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Power, politics, conflict and culture in businesses can augment output and effectiveness or reduce them considerably. Political process can establish organizational survival and strategic direction. Restructuring, which is frequently encouraged as much by internal power efforts as by external market circumstances, is prompting managers to search out new strategic directions for their companies. In the course, political reflections are changing the career of a lot of workers, both managers and non-managers. At the same time that these proceedings are creating occasions for some, they are costing a lot of others their jobs. Understanding power, politics, conflict and culture is consequently critical to managerial achievement and continued existence in today's business world.

The organization that will be the topic of discussion in my final project paper is Verizon Telecommunications. Verizon (NYSE:VZ) is one of the leading providers of cellular and telecommunications services globally, operating in 150 countries with 92.2 million customers globally. During their latest full fiscal year (FY), the company reporting $110B in revenues, an increase of 4% of their previous full fiscal period. Verizon attained a $12.8B operating profit in their latest fiscal year, which was a decrease of 12.1%. Net Profit during these two time periods also decreased by 5.7% during these fiscal years as well, with the company reporting $2.4B in FY2011. As with many cellular and telecommunications services providers, Verizon has gone through several reorganizations, each being focused on making the company more efficient at driving top-line revenue growth. The strategy has worked to this point and today the company has two globally-based business divisions, Verizon Wireless and Wireline. Verizon generates the majority of their revenues from the consumer segment, the majority of profits from the business and government sectors. In these latter segments it is more difficult to displace a cellular or telecommunication provider once contracts and service agreements are in place. This strategy of lock-in in the business and government sectors have compensated for the exceptionally high churn with consumers and small businesses, a problem that a Customer Relationship Management (CRM) system could solve. Having a more effective CRM system that combines analytics that can measure lifetime customer value, support advanced churn analysis including data gathering, feature selection, modeling and analysis and report generation are essentials for Verizon to retain both its business or enterprise, government and highly volatile consumer accounts. The telecommunications industry's most common benchmarks of performance include Customer Lifetime Value (CLV), involuntary and voluntary churn, gross and net attrition and Recurring Monthly Revenue (RMR) (Jallat, Ancarani, 2008). Telecommunications companies often create dashboards based on the integration of financial, CRM, operations and analytics enterprise-wide applications, so they can track these metrics accurately, often with daily updates. The quality and quantity of this data has a significant effect on the organizational structure, distribution of power, politics, the potential for conflict and the overall direction of the culture of these businesses over the long-term. The politics of information are accentuated when analytics become central to decision making, the allocation of resource, and the rational for continually investing in new programs (Chartrand, 1985). Where advanced and more accurate information flows, power follows. Chief Information Officers (CIOs) who are astute and politically savvy realize this and design organizational structures that allow for greater agility and flexibility, while designing in safeguards against the accumulation of too much data and control in one given department. The politicizing of customer data, more specifically sales analysis and key performance metrics, often has a contrarian effect on the performance of marketing teams, as the goal becomes making the numbers on the dashboards look good, not necessarily actually accomplishing anything of value in the market (Piercy, 1989). This is the dilemma all high-churn business models face and one exacerbated within Verizon who has grown through mergers, acquisitions and been re-shaped through divestures. All of these factors taken together continue to re-shape and redefine Verizon Communication's, making the flow of information and knowledge more difficult, yet paradoxically making business, enterprise, government and consumer accounts more important than ever before.

Problem Statement

Turbulent industries including telecommunications tend to create a more transactionally-driven leadership style that can descend into autocratic decision making when market conditions become to uncertain and challenging in a very short period of time. The telecommunications industry landscape is a brutal one, where mergers, acquisitions, pricing and service bundling programs can quickly render one competitor at a strategic disadvantage over another. This is the reality that Verizon Communications executives live in daily, and are challenged with in terms of attaining the selling, marketing, new product development and services programs.

The problem for Verizon Communications executives face is to how to increase the level of collaboration and communication throughout the company at a time when fear, uncertainty and doubt are forcing the creation of silos, protected enclaves of one executive group vs. another, and the emergence of power cliques. Exclusivity is starting to occur when inclusivity needs to be the focus. This exclusivity is starting to impact the performance of the analytics, CRM, financial management and customer service systems. Instead of having these systems unify the management and leadership of the company, it is becoming increasingly divisive and the data included in them not shared or entered at all from each department. If this continues from a CRM and customer management standpoint, soon the sequence of processes and steps to reduce churn of consumer and small business accounts will break down, and customers will be lost quickly as a result.

This balkanization or siloing of Verizon Telecommunications has also been exacerbated by their continual merger and acquisition strategy, which has thrown together very diverse corporate cultures, different systems, customer acquisition and service practices, and approaches to reducing churn. It is no surprise that the majority of mergers fail as a direct result of incongruence and lack of consistency in leadership mindset and shared values, including the willingness to cooperate and collaborate or not (Peaks, Gordon, O'Keefe, 2009). This is a symptom of the broader strategic problem of how information systems are being used as a means to "wall in" separate business units and lock out other business units and service lines that need the data to also compete. Instead of striving to be inclusive and take into account the broader and far more urgent need to coordinate across all divisions of Verizon Telecommunications, the leaders of the company are creating more exclusivity of processes and most important, customer information. Power and the ability to control politics follow the flow of information and knowledge (Chartrand, 1985). This is especially true in Verizon Telecommunications where the accumulated result of mergers, acquisitions, downsizings and re-organizations have left the company in need of a unifying strategic vision and overarching series of objectives. Conflict within Verizon Telecommunications will escalate and eventually each major operating unit will isolate itself and create its own siloed operational structure unless steps are taken to unify the company again. The myriad of problems Verizon Telecommunications has in ensuring its CRM systems stay unified and focused on minimizing churn while increasing revenue can be tracked back to this fundamental disconnect in leadership direction and values of exclusivity vs. inclusivity.

Literature Review

It is common for organizations to experience a significant amount of dysfunctional decision-making when the industries they are involved in are going through turbulent, uncertain and often unprofitable times. This is exactly what Verizon Telecommunications continues to experience. The tendencies of operating units at this point in any industry cycle is to retreat, become closed, and seek to hoard any relevant information they have that is perceived as potentially valuable for selling or serving customers. When this occurs, an organization being to atrophy and fall apart. Instead of allowing this to happen and the organization self-destruct, the senior management and leadership team need to concentrate on creating a shared learning environment and shows how critical it is for each department and vision to contribute their expertise for the common strategic goal of survival in a very turbulent industry. Creating the opportunity for organizational learning is therefore critical for the re-unification and solidification of the entire corporate structure, as empirical studies have shown (Ferdinand, 2004). This is the precursor to creating a culture and climate of trust, which in turn would motivate a more inclusive mindset over the natural tendency of exclusivity when organization's face high level of uncertainty and risk. Creating and maintaining organizational learning at a structural level and also one that can unify siloed departments needs cannot be nurtured into place in Verizon Telecommunications however. The combined effects of power over specific departments and divisions, coupled with the potential value of analytics, CRM, pricing and customer service data have created a very divisive culture. Democracy and collaboration cannot necessarily be used for creating the organizational learning framework and values for the initiative to succeed. Senior management must become the champion of organizational learning with the explicit goal of unifying the entire organizational structure through better communication and collaboration (Ferdinand, 2004). Only then will the more effective use of knowledge occur and its value is de-politicized, making it more potent in generating profits (Chartrand, 1985).

It is a paradox that the more challenging, disruptive and uncertain a given industry is the more organizations fractionalize their structures, creating splinter groups and politically volatile structures that only accelerate a company's demise. The paradox is that in the toughest and uncertain of times in the telecommunications industry, Verizon Telecommunications needs to think more about how they too can be a disruptive force in the market. Instead, the management team is focused on a highly balkanized, very politically-driven agenda of holding onto power by creating smaller silos or departments that can easily manage the data that is perceived as the most valuable asset there is in the organization. The paradox comes full circle when a company is sold in pieces and the sold unit or department must integrate themselves into their new parent organization with a level of accuracy, alacrity or speed and focus that would have saved their previous company. This scenario plays out often in highly commoditized, price-driven industries like telecommunications. Verizon Telecommunications could ironically save themselves that pain if they only chose to look at their combined intelligence and knowledge as the most critical asset they have, and unify to pool their expertise to keep the customers they have and earn new ones. The study of smaller, more interdependent groups within organizations show that they are more capable of overcoming market and industry turbulence than isolated often siloed organizational structures (Pfeffer, 1992). Just as managers who are often stymied by the larger-scale organizational structures that have engrained processes and systems in place to preserve power, the breaking down of larger organizations into smaller operating units' yields greater trust, and therefore faster acceleration to complex goals and objectives (Pfeffer, 1992). This is critically important for Verizon Telecommunications to consider as it will redefine the balance of power in the organization and also lead to greater transparency throughout the company as well. All of these factors need to be taken into account in the development of a more streamlined, highly integrated organizational structure.

Another facet of the leadership and organizational challenges that Verizon Telecommunications faces is the divisive nature of different cultural and political themes throughout the organization. Organizational learning has shown to be effective in bridging the gaps between cultural and political ideologies in an organization, and have also shown to be highly effective in unifying diverse power-driven cultures in companies as well (Ferdinand, 2004). What Verizon's leadership must do is create a more effective shared knowledge and learning strategy to ensure the political ramifications of Verizon's tendency to balkanize into exclusive departments doesn't force the overall culture to break apart,. Only by using organizational learning as a catalyst for continued communication and collaboration will Verizon Telecommunications be able to overcome the dysfunctional nature of the organizational structure. The politics and cultural foundation of the company can potentially lead to even more of a balkanized organizational structure; it is up to senior management to lead the company through this aspect of their divisive culture and re-unify the organization (Berezin, 1997).

It is inevitable in organizations going through disruptive levels of change for conflicts to emerge. These conflicts are exacerbated by the depth and intensity of power struggles, in addition to the innate nature of cultural conflict that occurs between business units. Adding in the turbulent nature of the telecommunications industry and its continual merger and acquisition cycle, and a culture of conflict and power struggles begin to dominate an organization. When this occurs it is imperative that the management team of an organization look at how to alleviate conflict before it begins, in addition to practicing appropriate conflict style orientations that can lead to positive outcomes (Stephen, Kyle, Manda, Oommen, DeMaris, 2011). As difficult as it is for an organization going through the massive amount of change that Verizon Telecommunications is experiencing in highly competitive markets, defining and managing conflict-style preferences is critical for the continued unification of the business (Stephen, Kyle, Manda, Oommen, DeMaris, 2011). Awareness and insights into conflict styles can also be instrumental in creating more effective learning systems as well (Ferdinand, 2004). For Verizon to resolve the dysfunctional nature of its structure, as it moves in the direction of more exclusive, closed business units, it is imperative that their leaders of the company gain insight into conflict style preferences and manage the re-unification of the company with respect to these. The conflict styles will often be used for defining the power structure and organizational political hierarchy as well, which further will isolate one part of the organization from another. The management team and leaders at Verizon need to create a culture of open communication with recognition of the value of conflict styles and their potential to contribute to the company's long-term structural stability and growth (Stephen, Kyle, Manda, Oommen, DeMaris, 2011). Only by doing this will Verizon's management team and key leaders be able to also unify the diverse analytics, CRM and service systems, creating a more unified view of the most critical metrics their business relies on including reduction of customer churn rate and increasing customer lifetime value (CLV) (Jallat, Ancarani, 2008).

Dysfunctional organizations are not created by committee; they evolve when balkanized, splintered groups choose to pursue their own strategy without coordinating it with other parts of the organization. Often these groups will rely on the power of information and the vast amount of customer data they hold in legacy CRM, customer service and pricing systems to influence other departments and divisions to get what they need to attain their own objectives (Chartrand, 1985). In the absence of credible and trusted leadership, this often occurs, leaving an organization more attuned to specific political agendas and less a strong, galvanizing goal of serving customers and growing profitably (Berezin, 1997).

When faced with the challenge of teams or entire departments or divisions going in separate directions, leaders will often replace the traditional group with newly conceived groups, thinking this revised organizational structure will prove more effective. This however inevitably leads to more of the same power struggles and organizational challenges as the political capital at stake in even the most well-designed new group is the most critical concern of everyone involved. What must be done in this instance is to completely replace the leaders and senior management team so the basic foundation and composition not just the team, but its philosophical mindset and approach to cultural assimilation and affiliation, are changed and made more collaborative in their approach to conflict management (Abdelkader, 2009). Changing a team's leader will change its mindset, and making changes at the individual level will open up entirely new avenues of collaboration and communication as well. Another benefit of taking this approach to re-designing a department at the group level is that it forces a much higher level of shared risk taking and shared accountability as well. The single most powerful aspect of changing individuals within a given department at Verizon Telecommunications will be the increased accountability and visibility they will have to ensure greater coordination, communication and collaboration throughout the company (Abdelkader, 2009). Senior management needs to be cognizant of which member of a previous team they place into a given position, as the more politically powerful a given team is based on their control of information assets, the more critical it is the new lead of the department have a very clear set of expectations given to them about accountability, collaboration and transparency (Abdelkader, 2009).

Of the many catalysts or sources of conflict that Verizon continues to face, the most challenging to overcome on a daily basis are the vast differences in work ethics and personal agendas between team members within the same department and across groups or departments. The more uncertainty a given department or group perceives, the greater the conflict on the dimensions of relative work commitment and trust (Berezin, 1997). Each person's work ethic is scrutinized in organizational cultures going through significant, turbulent and disruptive change. Adding in the aspect of personal agenda, or the implied belief that someone's motivations are now what they appear to be, and the cultural cues are set for a volatile political conflict (Peaks, Gordon, O'Keefe, 2009). Work ethics are also seen as an indication of relative commitment and belief in the vision not just of the overall company, which for Verizon Telecommunications would be the continual acquisition of consumer, small business, enterprise and government customers, but the reduction of customer churn as well. In highly political environments, a person's work ethic is an indicator of their allegiance to a given political faction or group as well (Peaks, Gordon, O'Keefe, 2009). And personal agendas of individuals and groups are also interpreted, even assumed, based on their alignment to specific power bases within the organization. The politicizing of information in Verizon for example would show that marketing has a very clear agenda to control all aspects customer sales and funnel analysis, ensuring that there is complete control over the selling and gross margin process by them (Piercy, 1989). In cultures facing an uncertainty and in highly turbulent industries, is level of political control through the use of personal agendas is commonplace. For Verizon, the challenge is very clear. It must break down the barriers that fuel suspicions over agendas and also seek ot unify the work ethics of entire teams towards more visible, valuable goals (Peaks, Gordon, O'Keefe, 2009).

Analysis

The absence of a galvanizing vision and mission for companies involved in turbulent change often leads to highly Balkanized, fragmented and politically charged organizational climates and cultures. This is exactly what's happening at Verizon Telecommunications. The literature review and class sessions highlight the need for organizations going through disruptive change to be focused on how to create an inclusive organization by concentrating on the fundamentals of authenticity, transparency and shared learning and task ownership leading to trust. Part of this inclusionary process needs to be the creation and continual support for a corporate-wide learning platform as well (Ferdinand, 2004). As the literature review showed, the beginning of creating a more effective organizational culture is the definition and development shared knowledge and shared learning, followed by a corporate vision and goals that galvanize the entire company around delivering customer-driven value. Today, the nature of political power and the disintegration of the Verizon culture due to lack of unified leadership is leading to highly balkanized, siloed organizational structure. This is, for many companies, the beginning of their disintegration and eventually being sold off in divisions or departments.

Another characteristic of the Verizon culture in general and the telecommunications industry overall is the masse needs for customer analytics to measure churn, customer lifetime value (CLV) and the effectiveness of pricing and bundling promotions (Jallat, Ancarani, 2008). Too often companies under the strain of competing in highly uncertain industries marked by mergers and acquisitions will allow the balkanization of information to occur. This has the immediate and long-term effect of making knowledge and the information systems used to generate it a politically valuable asset that is often fought over with a great deal of intensity (Chartrand, 1985). For Verizon, the dysfunctional nature of their organizational structure that is moving the entire comp-any in the direction of siloed, separate operation must stop. There are a myriad of potential solutions to this problem as have been discussed in class in addition to in this analysis. Verizon's leadership needs to move beyond transactional and at times authoritarian leadership styles to one more focused on how to create shared ownership of information, greater communication and collaboration. This is the first step to get beyond the limitations of power struggles, political infighting and the inherent nature of conflict that occurs when there is a lack of transformational leadership in a business. Verizon's senior management need to concentrate on transformational leadership by making communication and collaboration core components of its strategy, unifying all aspects of these efforts together with greater transparency and clarity. They also need to define and stand behind a unified series of corporate strategies and goals so the entire company will be galvanized in a common direction. In short, the senior management team needs to work diligently to bring greater levels of trust and accountability into the organizational structure and culture.

Solutions

There are three potential solutions to the challenge Verizon is facing. First, the company could complete a massive reorganization and redefine its structure based on each dominant customer segment. The advantages of this would be the streamlining of information systems to specific customer requirements, more efficient use of internal knowledge, and greater traceability of spending to results. The disadvantages include a lack of coordination with other departments, continued fueling of he balkanization already occurring in the company, and the potential for one division to dominate all the others by taking a disproportionately higher amount of resources.

The second option is to replace the Verizon senor management and force an entirely new matrixed organizational structure into place. This structure would require high levels of accountability throughout the organization, would also have direct financial reporting of customer sales, and would have the flexibility of getting resources when needed for different projects. The disadvantages of this approach include a lack of focus on results, the tendency of matrix organizations to continually create more political infighting, and the lack of accountability for shared resource use.

The third solution is to completely refine the organizational structure from the customers' perspective. This includes redefining the consumer, small business, enterprise and government divisions so they align to customer needs, not just segments. This approach will force the entire company to be accountable for delivering an exceptional customer experience as well. Instead of just concentrating on customer segments, this organizational structure would concentrate on the specific goals and needs of customers. The small business would then be able to get many of the same benefits as enterprises if and when their needs progressed that far. And enterprises would be able to better manage the Bring Your Own Device (BYOD) trend now occurring as well. The advantage of this approach is that it would bring a central vision and mission to Verizon of delighting the customer. And this goal could be easily tracked using metrics and key performance indicators of customer satisfaction by segment as well. Third, the de-politicizing of the information systems throughout the company would be a step closer to being achieved when they are all aligned to specific customer workflows and needs. The downsize of this or disadvantages include the complete redesign of the company, the significant resistance to change that will be encountered from those department and division managers who have accumulated significant political power, and in many groups, the re-assignment of workers.