Read this case: “Nab's Rogue Trader” (page 312).
The sources of contingency of power model applies to the situation described in case study 10.2 in McShane & Von Glinow (2010) book through legitimate and coercive sources of power and visibility and discretion contingencies of power. Whether power is used in an ethical (good) or unethical (bad) way power is still power. Power is defined by McShane & Von Glinow as “capacity of a person, team, or organization to influence others” (2010, pg. 290). This ability to influence people is shown by Luke Duffy in the case study through mainly coercive power but also legitimate power. Duffy’s power was derived from legitimate power because of the position he held within National Australia Bank’s (NAB’s) foreign currency option desk. Duffy’s boss, Gary Dillon, enforced this legitimate power by keeping him this position. Legitimate power that Duffy receives is due to his agreement within the organization and originates from his formal job description and informal rules of conduct. In the case study, Dennis Gentilin who is Duffy’s subordinate, states that Duffy is one of the “untouchables” and is used to getting his way. Legitimate power does have limitations and Duffy gets around this issue by also using coercive power to control or influence the staff to do what he wants and stay loyal. Duffy’s other source of power that he used to stay in his position was coercive power. By using his ability to apply punishment Duffy utilizes his coercive power. He does this several ways, one by inducing fear that he will use the punishment of transferring off his team and the other by mocking (bullying) them into submission. A good example from the case study is when it is explained how Duffy uses this mocking against a coworker in the London by making fun of him, which in turn kept the employee compliant. The employee did not want to be made fun of so the easiest way to make Duffy stop making fun of him (a form of punishment) was to let Duffy do what he was doing and stop interfering with his actions. Duffy also had contingencies of power that he used in his favor such as visibility and substitutability, though mainly his ability to use discretion was his main contingency of power within NAB’s. Duffy’s ability to make decisions without being questioned gave him this important contingency of power. Duffy was doing things against policy because he had been given too much discretion in his decision making responsibilities which resulted in numerous illegal actions on his part. The executives that gave him this amount of discretion to abuse ended up losing their jobs because of Duffy’s illegal actions. 1B. Influence Tactics
Duffy does use his influence tactics effectively though in a negative capacity. One tactic that Duffy uses effectively is assertiveness. Duffy had a team that was under him and his social network consisted of this group, though not all of them enjoyed his company or agreed with what he was doing they still stayed in line, for the most part, with him due to his influence tactic of assertiveness. He was able to keep his social network by limiting contact of other social networks by being the main bridge between others and essentially creating a structural hole in the social network of the organization. According to McShane and Von Glinow (2010) a structural hole is the gap that is formed between two different groups or clusters in a social network. Duffy’s influence tactic was assertiveness, which he used very effectively throughout the organization, in a negative way. He applied vocal authority and through legitimate and coercive powers to influence others inside and outside his team to conform to his ways or turn a blind eye to his activities. In the case study, Gentilin, attempted to have Vanessa McCallum look into Duffy’s transactions but did not want to because she was afraid of his threats and assertiveness tactics of having her being...