An organization is like a crowded market; everybody is motivated by different goals although the core unifying factor is business. However, many other things, including idle talk, gossiping and political scheming go on in a market. Similarly, strategic governance scholars are interested in the “idle talk” or politics and how it relates to or influences the core business in the organization. In other words, the strategic politics of the organization are as important to every sensible board member as the progress of the organization’s core business.
The purpose of this essay is to compare and contrast pressure and influence political strategies and their application in management of for-profit and non-profit organizations. The paper will demonstrate that both pressure and influence strategies are important for success of both for-profit and non-profit organizations.
Review of literature
In Strategic Governance Review for Multi-Organizational Systems of Education, Training, and Professional Development, Augustine, 2003 assesses the different ways through which stakeholders can be influenced as well as their influence. This research employs a similar approach only that more emphasis is on the influence of managers and not the stakeholders whose interests they represent.
The best influence strategies, according to Filatotchev, et al. (2006) are those that are determined by a board that is properly constituted in terms of numbers and independence. The method used by Filatotchev et al. (2006) is for the most part similar to the one used to discuss influence and pressure strategies in the terms of the political goals that have to be met by an organization. Additionally, the strategic contingency theory as used by Schooten and Jonathan (2008) is very much similar to the approach taken in this paper. The paper will employ a comparative approach in the analysis of two political strategies: influence and pressure strategies.
Influence strategies can best be defined as those utilitarian mechanisms that leaders use in order to steer the organization on the path of harmony and prosperity. Van Schooten and Jonathan (2008) argue that these strategies need not be defined by laid-down policies, rules and regulations. Rather, they are driven by an inherent need for emerging issues to be solved in the most amicable manner possible, for the good of the greatest number of stakeholders. The underlying guide for the success of these strategies is the organization’s vision and mission statement.
In all types of organizations, influence strategies can only be helpful if they are implemented by people with access to all the relevant information that is needed. In the past, managers of organizations have concentrated on defining stakeholders as well as their needs, and this has resulted in good strategic influence planning. However, there is need for the means that stakeholders use to achieve their goals to be analyzed in order for this important segment of an organization to be influenced positively.
Pressure strategies are meant to streamline stakeholder behavior in non-profit organizations as well as for-profit organizations. However, these strategies are often used more in the public education sector than in other sectors (Augustine, 2003). In this case, these strategies are implemented as part of the national education policy (Leslie, 1996). In for-profit organization, the pursuit of profit is the main source of motivation among stakeholders while the need to conform to federal and state business requirements forces board members to use pressure strategies on stakeholders. In non-profit organizations, the need to help other people is the main source of motivation (Chait, 2006).
The influence strategies employed in for-profit organizations should be designed in such a way that they lead to generation of more profits. In the case of non-profit organizations, influence strategies should be aimed at ensuring that the core objectives of the organization are achieved. Additionally, majority of stakeholders must be in support of ongoing projects.
Whenever new opportunities arise or new threats are in sight, communicating this information to all stakeholders is very important. This creates an image of transparency within an organization. However, Castells, 2005:16 opines that without a pressure strategy of politically influencing the perceptions of majority of the stakeholders, such a communication is without any organizational sense.
Influence vs. pressure strategies
In the public education sector, pressure and influence strategies are used in distinct ways but both of them can be used to achieve similar political ends. Influence strategies are mostly used by people who are at the top-most tier in the decision-making hierarchy. In the organizational setting, this fits the description boards. Pressure strategies are useful for organization leaders who are in contact with majority of stakeholders more often. For these leaders, use of overt force is not likely to meet resistance from the stakeholders since a bond already exists that defines an unshakable oneness of purpose.
An assessment of the effectiveness of diversity on the board and in key organizational leadership roles
Board diversity is important in both for-profit and non-profit organizations. In both cases, diverse opinions need to be pooled together in order for people with different interests in the organization can feel properly represented. A public education organization should also be headed by board members who are chosen from different careers in order to provide different opinions on how best to make the organization excel in provision of quality education.
For profit-making organizations, politics, innovations and stakeholder activism are intertwined concepts. The diversity of the board is important if this interrelationship is to be clearly understood and appreciated. For instance, although innovation is important, in political, it is the issue of who brings about the innovation is as important as the innovation itself and the leadership of the organization must use influence strategies to harmonize diverse efforts by stakeholders pursuing divergent political interests.
Some public education organizations are for profit while others function of non-profit organizations. However, board membership in these two different organizational structures need not be different. What differs is the extent of influence exerted by the board. The organizational bottlenecks associated with the public sector might make it difficult for the best people for different positions of political influence to be selected.
Although diversity in membership of the board is important in all organizations, oneness of purpose should be a more important factor to consider. Without a common objective or source of motivation, the process of decision-making can be long. This can make it difficult for the board to lead the way in influencing all stakeholders.
Diversity affects the ways in which political decisions are made in any type of organization. In this case, factors such as globalization, institutional investor, labor standards and human rights have to be considered. Against this backdrop, the board has to contend with the issue of shareholder activism and social awareness. This might require pressure strategies to be used in order for the board to win the support of all stakeholders.
Some pressures that could cause an existing board to become a politically sensible advisory board for the organization and the local community
Crises are perennial pressures that a board of every organization has to be prepared for. The advisory board should be very sensible in a political manner in order to be able to make many compromises for the benefit of the organization as well as the stakeholders. The local community may lack understanding on the dangers that a crisis presents. For example, a public education organization board may have to use pressure strategies in order to get parents to endorse an important education project.
Another pressure is fear from government retaliation. Although a marginalized local community might feel that there is nothing wrong with stakeholder activism, at times, it might not be politically viable to do so. The existing board of the non-profit organization has to exhibit political sensitivity and advise the stakeholders on the best strategies to adopt. This calls for an understanding of when it is justified to go against the core objectives of the organization and when it is not.
Competitiveness is a pressure that affects for-profit organizations (Filatotchev et al, 2006). The board members of the organization have to maintain a balance when interacting commercially with entities with vested interests. All the political decisions have to be made against the backdrop of a competitive advantage.
In the case of non-profit organizations, focus is not on competitiveness but rather, achievement of mission. Accountability is a sensitive issue that requires political sensibility. This issue is a key determining factor when authorities are verifying the authenticity of the organization. For this reason, the existing board needs to be sensitive Some of the commonly used strategies in all organizations include direct withholding; indirect withholding; direct usage and indirect usage. In order to meet political ends, boards of organizations choose to use only one of these strategies. The organizational context is the main point of departure as far as selection of influence strategies is concerned.
How is role of boards changing in response to the activist shareholder theme?
Activist shareholder themes are more common in non-profit organizations that address problems that lead to inequitable distribution of national resources, racial, religious and ethnic discrimination, among many other social injustices. If left unchecked, activist shareholder themes may be counterproductive. The role of the boards therefore has to keep changing in order to maintain a balance of power and regulatory mechanism that is necessary for the survival of the organization.
Shareholder activism agenda determines whether pressure strategies or influence strategies should be used by the board in order to shape the political environment to meet the needs of the organization. The main role of the board is to go with the changing times. In most cases, shareholder activism themes stem from an informed sense of conviction that the organization needs to redefine its objectives in order to meet new challenges. In this case, the role of the board is to maintain a balance of power and ensure that organizational focus is not lost in the redefinition process.
From this discussion, it is clear that both pressure and influence strategies are very important in both for-profit and non-profit organizations. The only difference that exists has to do with the extent to which the strategies are applied in every specific organization. In this case, the political objectives to be fulfilled are the main determinant of the strategy to be adopted.