5 Sources of Power in Organizations

Organizations are made up of individuals that exercise greater or lesser degrees of power. Sometimes,
authority stems from a person's title in the organization, or from specialized knowledge and expertise.
Others may exercise power through interpersonal relationships or the force of their personality. And still
others gain influence through an ability to grant access to important resources.

L EGITIMATE POWER

Legitimate power is also known as positional power. It's derived from the position a person holds in an
organization’s hierarchy. Job descriptions, for example, require junior workers to report to managers
and give managers the power to assign duties to their juniors. For positional power to be exercised
effectively, the person wielding it must be deemed to have earned it legitimately. An example of
legitimate power is that held by a company's CEO.

EXPERT POWER

Knowledge is power. Expert power is derived from possessing knowledge or expertise in a particular
area. Such people are highly valued by organizations for their problem solving skills. People who have
expert power perform critical tasks and are therefore deemed indispensable. The opinions, ideas and
decisions of people with expert power are held in high regard by other employees and hence greatly
influence their actions. Possession of expert power is normally a stepping stone to other sources of
power such as legitimate power. For example, a person who holds expert power can be promoted to
senior management, thereby giving him legitimate power.

REFERENT POWER

Referent power is derived from the interpersonal relationships that a person cultivates with other
people in the organization. People possess reference power when others respect and like them.
Referent power arises from charisma, as the charismatic person influences others via the admiration,
respect and trust others have for her. Referent power is also derived from personal connections that a
person has with key people in the organization's hierarchy, such as the CEO. It's the perception of the
personal relationships that she has that generates her power over others.

COERCIVE POWER

Coercive power is derived from a person's ability to influence others via threats, punishments or
sanctions. A junior staff member may work late to meet a deadline to avoid disciplinary action from his
boss. Coercive power is, therefore, a person's ability to punish, fire or reprimand another employee.
Coercive power helps control the behavior of employees by ensuring that they adhere to the
organization's policies and norms.

REWARD P OWER

Reward power arises from the ability of a person to influence the allocation of incentives in an
organization. These incentives include salary increments, positive appraisals and promotions. In an
organization, people who wield reward power tend to influence the actions of other employees. Reward
power, if used well, greatly motivates employees. But if it's applied through favoritism, reward power
can greatly demoralize employees and diminish their output.

The Advantages of Coercive Power in the Workplace by George N. Root III

Coercive power is the ability to influence someone's decision making by taking something away as
punishment or threatening punishment if the person does not follow instructions. It can be a severe way
to get staff members to follow along with a company plan, but it can be necessary in some cases. There
are advantages to holding coercive power over your employees.

Insubordination: Coercive power becomes necessary in cases of strict employee discipline. If an

employee is habitually late and having a negative impact on overall production, then threatening to dock
the employee's pay for the time he is late is a distinct advantage for the company. The intimidation
factor of coercive power means you should limit using it to only severe cases of insubordination. But it
can be an effective tool in maintaining employee discipline.

Implementing Change: When your staff gets used to the way the company does business, the
introduction of change can be met with resistance. Not every employee will resist change, but the few
that do resist can become a distraction to those that are trying to move forward with new company
plans. Using coercive powers such as threatening employee demotions or termination for staff members
who do not conform to change can be a significant advantage for the company.

Harassment: Harassment can make your employees feel uncomfortable in the workplace, have a
negative effect on productivity and lead to employee turnover. Coercive power backed up by state and
federal laws can come together to help the company combat workplace harassment. The threat of
employment termination and a potential civil lawsuit in retaliation for sexual harassment helps the
company enforce harassment policies and create a productive workplace.

Growth: Managing a growing company can be challenging. As your staff grows, the ability to manage
each individual becomes more difficult. The implied coercive power of company management in the
workplace can motivate employees to stay within company policies and guidelines. It can make the
process of growth easier to manage by making sure that all new and current employees are following
company rules.
Advantages & Disadvantages of Altering Power in an Organization

The typical organizational structure of a small business features an owner who manages the day-to-day
activities of all employees. The chief advantage of this simple power arrangement is clarity. The owner is
aware of everything that is happening, and the employees know from whom to take their cues. But
power shifts are inevitable for a growing business, which must adapt to meet new challenges.

Change: Power shifts accompany growth. Managing every last detail becomes increasingly difficult as an
organization increases in size, so owners must allow power structures to adapt. Otherwise, a business
can’t evolve and improve. Change always entails growing pains, but the long-term benefits of
streamlining your business outweigh the short-term problems.

Resentment: Power shifts within your organization might not be easy for longtime employees, so expect
some friction, especially at first. For example, some employees will resent the advancement of a peer or
the introduction of a new manager. They might not mind taking orders from you, but following the
directions of someone with whom they are not familiar is a different matter. Be sensitive to their
concerns but firm with your intentions. If the power shift is truly necessary, the business will benefit, so
it is in the best interest of even resentful employees to accept the change.

Inertia: Initial confusion is another disadvantage of power shifts. Organizations have cultures that rely
on time-tested methods to get things done. Employees learn to perform their jobs in the context of this
culture, but radical power shifts throw familiar practices into disarray as employees attempt to navigate
the new power structure. Employees must perform their old tasks in a new way, which will take some
getting used to.

Clarity: Restoring clarity is vital to curtailing resentment and to helping employees become comfortable
with the new power structure. Explain why the changes are necessary, as well as what benefits you
expect. Empower newly promoted employees by announcing you intend to back their decisions fully. If
responsibilities have changed, provide clear guidelines to all those affected.

Efficiency: Greater effectiveness is the major advantage of altering the power structure of your business,
according to professor and organizational theorist Richard L. Daft in “Organization Theory and Design.” If
you’ve been the boss for a long time, you might have trouble handing over the reins to a newly
promoted manager. But as boss you’ve had to divide your attention among many tasks, and some areas
of your business likely suffered from your split focus. Delegating responsibility ensures each aspect of
your business receives the direct attention it needs. It also allows you to devote your valuable
experience toward the departments that will benefit most.