Which source of organizational power refers to the people youre connected with professionally and personally?

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Driving cultural change and organizational transformation is now a priority for businesses that were heavily impacted by the coronavirus pandemic. They’ve realized that for their company to survive – let alone thrive – they need to be agile in their operations and prepared for any future disruption. Adding this necessary agility is a process that starts from the top, but many leaders are finding that they aren’t sure where to start.

There’s no tried-and-true approach for how to respond to a pandemic, especially when its impact differs so greatly from company to company, industry to industry. As a result, many business leaders are going back to the basics in hopes of understanding their sphere of influence and how they can best utilize it to drive positive change in their company’s culture.

The hope is that by understanding power dynamics and how these dynamics affect others will uncover insights about what type of leadership a company currently has, and if that type of leadership is truly what the company needs.

The five bases of power, identified by John French and Bertram Raven in the early 1960s, The showed how different types of power affected one’s leadership ability and success in a leadership role. And when managing complex projects in industries like construction, understanding power in leadership is more important than ever.

The five types of power are divided in two categories:

Formal Power

1. Coercive

Coercive power is conveyed through fear of losing one’s job, being demoted, receiving a poor performance review, having prime projects taken away, etc. This power is obtained through threatening others. For example, the VP of Sales who threatens sales folks to meet their goals or get replaced.

This type of power can be used to set high expectations for employee performance. Leaders can use coercive power to establish innovation as part of their employee’s responsibilities – if people aren’t able to come up with new and inventive ways of doing things, then they might get replaced with someone who can provide that value.

2. Reward

Reward power is conveyed through rewarding individuals for compliance with one’s wishes. This may be done through giving bonuses, raises, a promotion, extra time off from work, etc. For example, the supervisor who provides employees comp time when they meet an objective she sets for a project.

This is all about positive reinforcement and can work to really incentivize people while on the job. The draw of a reward – whether big or small – can foster creativity, healthy competition, and excitement across your team. Even if it isn’t realistic to offer rewards all the time, the energy reward power can generate will encourage cultural change that sticks even after the fact.

3. Legitimate

Legitimate power comes from having a position of power in an organization, such as being the boss or a key member of a leadership team. This power comes when employees in the organization recognize the authority of the individual. For example, the CEO who determines the overall direction of the company and the resource needs of the company.

Driving cultural change with legitimate power means leading by example. If you want your employees to prioritize things like innovation, automation, or building out digital capabilities, demonstrate the importance by communicating the why — why it aligns to with business goals, why it is the right move for the company, and why employees have the power to make a difference – and back your words up with the resources and support teams need to succeed.

Personal Power

4. Expert

Expert power comes from one’s experiences, skills or knowledge. As we gain experience in particular areas, and become thought leaders in those areas, we begin to gather expert power that can be utilized to get others to help us meet our goals. For example, the Project Manager who is an expert at solving particularly challenging problems to ensure a project stays on track.

With expertise comes respect. People are more likely to trust your insights and follow your lead if they know that you have a wealth of knowledge in a relevant field. For leaders who model expert power, they can drive organization-wide cultural change by encouraging others to become experts, too. This could look like practicing knowledge-sharing throughout the company, so people can access a single-source of truth to inspire and inform their innovation efforts. This could also look like using your expertise to provide training opportunities for new and useful skills.

5. Referent

Referent power comes from being trusted and respected. We can gain referent power when others trust what we do and respect us for how we handle situations. For example, the Human Resource Associate who is known for ensuring employees are treated fairly and coming to the rescue of those who are not.

You can hope that your efforts to be a leader to your company — whether through a successful business quarter or a successful digital transformation — will result in referent power. If you have referent power, it means you have already made progress towards changing your organizational culture. And with each successful project, this reference will only grow, encouraging your employees to take bigger, smarter risks and keep moving forward.

Leading Teams Through Transformation

We live in the age of agility, meaning that businesses either must adapt or fall behind. You can change your processes, upgrade your tech, and increase your market visibility as much as your like, but if these changes aren’t backed up by the people at your company, your efforts will inevitably fall short.

It’s up to leaders to make sure that their organizations can keep up with these changes by driving cultural transformation alongside all other transformation efforts. This is best done by strong leadership who aren’t afraid of using their power for the good of the company and who care about empowering employees across the business to grow and innovate.

Being cognizant of how leadership’s power effects their employees is a great first step but needs to be followed with a commitment to change. And for this change to make the biggest impact, it needs to involve each and every employee in your company.

Power equals influence. It's personal, too, residing within those who wield it. Sometimes a position of authority within an organization lends power to a person, but borrowed power isn't necessarily as effective as power derived from leadership.

Every organization has leaders who hold no positional authority yet somehow wield influence while managers who should be able to command respect flounder.

Small-business owners wanting to enhance their influence and that of their managers should consider the five sources of power in organizations. The first three come with position while the other two are available to anyone.

Legitimate power comes from a position of authority and increases the higher a manager rises within the organizational hierarchy. Once awarded legitimate power, its wielder has influence because he can set and enforce standards and use and distribute organizational resources.

Managers can build upon a legitimate power base through other sources of power, which transform managers into leaders. Leaders inspire behaviors in others without resorting to their legitimate authority alone.

Coercive power is bestowed on a person through position and is based in fear. Subordinates follow a manager's directives to avoid being suspended or fired. Employees also know that rewards such as raises, plum projects or promotions can be held back if standards of work or behavior are not met.

Coercive power loses some of its effectiveness if administered unfairly. Even so, it is seldom one of the types of power in leadership that managers aspire to most.

Reward power comes from a manager's ability to give rewards – not only raises and promotions, but also favorable reviews, shifts, positive attention and mentoring.

If coercive power is the stick, reward power is the carrot. And, when the rewards are genuine and well-deserved, you may even wish to think of the carrots as organic; they're that good.

When a person possesses expertise or abilities that others value, that person gains influence. And he can become keenly aware of the importance of power in leadership. Anyone can gain expert power by acquiring skills, knowledge or experience.

Sometimes the power of an expert is perceived as so great that the expert is elevated in the minds of others, as often happens with doctors and attorneys. In a workplace, veterans often have influence though they do not hold any legitimate power.

Referent power also goes by the term "charismatic power." Some experts maintain that everyone possesses some referent power. This point may be debatable, but it's fair to say that the qualities that attract, entertain or rivet some people may leave other people cold.

As a source of power, referent power is unpredictable in this way. It's subjective. But when everybody in an organization is equally enraptured, referent power can be a force to be reckoned with, even if the person lacks technical or intellectual ability.