Week 10, Friday Lecture Outline

Organizational Politics:
The Seamy Side of Power

Week 10, Friday

Psychology 360
Outline

• I. The nature of organizational politics
• II. Examples from the RJR Nabisco case
• III. Did anybody win?

The Nature of Organizational
Politics

• behavior not approved by the organization
• designed to influence others
• achieve self-interested goals

Breeding ground for politics

• areas where policies are unclear
• upper management

RJR Nabisco Examples

• scapegoating -- Johnson looking for someone to blame for Premier
• alliances-- a) Johnson's obsequious relations with board members; b) recruitment of financial backers

RJR Nabisco Examples

• secrecy -- a) plotting surrounding LBO; b) suppression of Premier test results; c) concealing Johnson's cut
• image building -- Johnson's obsession with perks

Fallout

• Premier failure leaked to press
• details of management's compensation leaked to press
• high-gloss style fueled resentment
• board ultimately balked at Johnson's greed

Did Anybody Win?

• Winners:
  • Johnson walked with $53 million
  • Wall Street firms generated $1 billion in fees
  • Greeniaus retained as Nabisco chief
• Losers:
  • Cohen fired
  • Premier killed
  • RJ Reynolds employees and citizens of Winston-Salem

Contributing factors

• wild greed
• massive egos
• easy availability of capital
• the zeitgeist

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Revised - November 4, 1996