Power is often defined as the ability of one person to make other people or groups do something that they would not have otherwise done. In other words, power is the ability of a person to influence and control the way other people or groups can choose to act in a particular situation. In business, power ultimately derives from the possession of property rights to use resources. Once a person or company has bought the right to use people’s labor, that is, has hired employees, they have the legal authority to direct and control these employees’ activities. This source of power is known as legitimate power. Tammy Savage has legitimate power because she was appointed to her position by managers above her in Microsoft’s hierarchy. She could simply instruct her subordinates to do as she tells them—but would this make her an effective leader?
When leaders possess legitimate power they gain access to two more kinds of power that are important sources of influence and control: reward power and coercive power. Reward power stems from a leader’s ability to recognize and acknowledge employees who perform their jobs in a way that meets or exceeds the requirements of their job and company. Job requirements include things like achieving a certain level of performance or being courteous and cooperative to one’s co-workers. Company requirements include things like following the company’s rules regarding gift giving and receiving protocols and abiding by the company’s health and safety procedures.
Leader like Tammy Savage selectively reward employees to influence their job performance. Employees who exceed the work performance standards set for them can be rewarded with pay raises and bonuses, more interesting job assignments, advanced training, promotions, and other forms of recognition. In her role as leader, Savage has had to decide how to distribute, or reward, Microsoft stock to her subordinates based on how well each of them performs.
Coercive power, on the other hand, is the leader’s ability to sanction or punish employees. When using coercive power, a leader like Savage withdraws rewards or selectively sanctions employees to encourage them to meet their work requirements. If they consistently fail to do so over time, this results in the termination of their employment. In short, leaders develop and use a system of rewards and sanctions, that is, an incentive system, to shape, influence, and control the way employees behave in the workplace.
A fourth source of a leader’s power is expert power—something that Tammy Savage is widely acknowledged to possess. Expert power stems from a person’s recognized expertise or superior skill in a particular functional area of business such as marketing or research and development. A marketing manager who has demonstrated an ability to forecast changing customer needs, like Tammy Savage has, or a research scientist with a track record of innovating successful new products, has expert power.
As leaders, these people are listened to and respected by employees because of their functional abilities and