Power is irrelevant for efficiency in a complete contract world. This paper studies how powerless groups, engaging in noncontractible coercive actions, affect the distribution and size of organizational surplus. I show that, by transferring bargaining power, powerful groups can mitigate coercive actions and enhance their welfare. I investigate this dynamic in union-management disputes, examining how an increase in labor unions' bargaining power affects firms' profits. This offers early causal evidence of power's efficiency effects in incomplete contract settings. Using administrative records from a Chilean labor code reform, I run an event study based on a quasi-random treatment assignment. It reveals that while profits were unaffected, remunerations of nonmanagerial workers increased, the number of hours worked did not fall, and unionization rates declined. Heterogeneous effects based on prepolicy bargaining power indicate that firms' profits are concave, while remunerations and unionization rates are convex, in unions' bargaining power. A Nash-bargaining model explains these findings, characterizing Pareto-efficient bargaining power distributions; demonstrating that management's welfare decreases with its bargaining power when the disputed surplus is sufficiently small; and showing that management generally prefers not to minimize the union's coercive actions. A model calibration indicates a union’s surplus share increase from 0.39 (prereform) to 0.48 (postreform)—equivalent to a USD 5.9 million increase—without harming profits.