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What is the meaning of power in business?

Power is the ability to influence the behavior of others to get what you want. It gets things done the way you want them done. For that reason, power is one of the most important factors for success in management and leadership.

Power is primarily perceived to be a ranking system where individuals agree on who is in charge. However, power can vary from one department to another.

Power is usually visible within organizations and is typically distributed in a way that benefits the individual with power. Power is often used to get what you want, such as a larger budget. Influence is relative and can only be determined by the person ranking themselves. People tend to agree on who the top and bottom managers are.

Power is used for many different purposes in business. It can be used to get what you want, to make decisions, or to control resources. Power is often thought of as a negative thing, but it doesn't have to be. Power can be used for good, such as to make decisions that are in the best interest of the company.

There are three main types of power in business: formal, personal, and social.

  • Formal power is given to you by your position in the company. For example, the CEO has formal power over all of the employees.
  • Personal power comes from your own personal qualities, such as your charisma or your ability to persuade others.
  • Social power comes from your relationships with others, such as your network of contacts.

The most effective leaders use a combination of all three types of power.

When used correctly, power can be a positive force in business. It can help you make decisions that are in the best interest of the company, and it can motivate employees to do their best work.

However, power can also be abused. If you use your power to make decisions that are not in the best interest of the company, or if you use your power to take advantage of employees, it can have negative consequences.

Power in business is important because it can help you achieve your goals. However, it is also important to use power responsibly.

The advantages of using power are:

  • Power can help you make decisions that are in the best interest of the company.
  • Power can motivate employees to do their best work.
  • Power can help you achieve your goals.

The disadvantages of using power are:

  • Power can be abused.
  • If power is abused, it can have negative consequences.

The disadvantages of using power are:

  • Power can be abused.
  • If power is abused, it can have negative consequences.

The risks of using power are:

  • You may make decisions that are not in the best interest of the company.
  • You may abuse your power.
  • If you abuse your power, it can have negative consequences.

What are the different types of power in business?

1. Legitimate power

Legitimate power is the power that comes from having a position of authority in an organization. Leaders who have legitimate power are driven by example and understand that it can be taken away at any time. To successfully drive cultural change, leaders must first have authority over their team and understand the needs of the company. Demonstrate the importance of your decision by communicating why it is important, relevant, and valuable to employees. Back up your words with resources and support teams to help them succeed.

Legitimate power comes from having a position of authority in an organization. Leaders can exercise legitimate power by setting a good example and being driven to change the culture of the company. For example, if a company is launching a new initiative, the leader could communicate the reasons behind it to employees and ensure they understand how they can contribute. The leader could also provide support so employees can be successful in carrying out the initiative.

2. Influence

Influence is the capacity to have an effect on the character, behavior, or development of someone or something. In business, influence is often used to change someone's behavior or decision-making in the desired direction. This can be done through persuasion, coercion, or manipulation.

3. Referent power

Referent power is the ability to inspire others to follow your lead. This type of power can be gained through successful business projects or digital transformations. To gain referent power, leaders must have strong interpersonal skills and be admired by their employees. Referent power is a powerful tool that can be used by leaders to inspire others and motivate them to take action.

4. Coercive power

Coercive power is the ability of a manager to influence others through fear and threats. Coercive power can be used to control or suppress employees. When coercion is used between colleagues, it's called "coercive bullying."

5. Reward power

Reward power is the ability to give rewards in order to motivate subordinates and increase their performance. When using reward power, it is important to make requests that are both feasible and reasonable and to only make requests that are ethical and proper. Additionally, when giving rewards, it is important to be specific and offer credible rewards that employees want. Reward power can help achieve results, but it doesn't always ensure the support or commitment of employees.

6. Reward power

Reward power is the ability to give rewards, such as bonuses, raises, or promotions, to employees in order to motivate them and improve their performance. Reward power can be used in business to increase employee satisfaction and motivation, as well as improve employee productivity.

7. Referent power

Referent power is the ability of an individual to influence others to act in a way that benefits them. This type of power can be used in business to achieve goals such as gaining favor with clients or employees or gaining an advantage in a competition. Leaders need to develop strong interpersonal skills in order to wield referent power effectively.

8. Connection power

Connection power is the ability to connect to influential people and leaders. It is the key to gaining connection power is to network and make lasting friendships. Connection power can help businesses stay up-to-date with technology, grow their customer base, and more.

9. Political power

Political power refers to the ability of an individual or group to influence the decisions and actions of others. This can be done through a variety of means, such as coercion, persuasion, or manipulation. In many cases, political power is gained through the control of a state-owned organization.

10. Charismatic power

Charismatic power is the ability to influence and persuade others. This type of power can be used in business to influence and persuade others. When used properly, it can be a very effective tool for leaders.


Sources of Power in Management

There are five primary sources of power in business: positional, personal, financial, knowledge-based, and customer-based.

  • Positional power comes from having a senior position within an organization. This type of power grants the individual influence over others within the company.
  • Personal power is derived from the ability to influence others. This could be through charm, persuasion, or manipulation.
  • Financial power comes from having access to money, assets, and capital. This allows businesses to exert control over others through financial means.
  • Knowledge-based power is derived from having expertise or specialized knowledge that others do not have access to. This type of power can be used to influence decision-making within a company.
  • Customer-based power comes from having a large customer base or being an essential customer for a supplier. This gives businesses leverage when negotiating with suppliers or trying to influence company policy



How can managers use power effectively within their organizations?

Step 1: Understand the different types of power

Managers must understand the different types of power and their source. This sets the basis for using power to positive effect.

Step 2: Understand how the different types of power can be used

Managers can use different types of power effectively within their organizations by understanding their goals and team members, knowing which power type to use, and being flexible and open to feedback. By using these strategies, managers can create a positive environment where team members are motivated to achieve results.

Using Legitimate Power

Legitimate power is a type of power that comes from having a position of authority in an organization. To exercise legitimate power, leaders must drive cultural change by example. To maximize the benefits of legitimate power, managers must understand the risks and be able to handle them when necessary. Demonstrating the importance of a particular initiative to employees is one way that managers can use legitimate power to their advantage. By communicating the why behind an initiative, employees are more likely to understand its importance and how it aligns with company goals. Additionally, offering resources and support to employees helps them feel empowered to succeed with initiatives.

Using Reward Power

Managers can use reward power to motivate employees by offering rewards in exchange for desired behavior. Rewards can be financial or non-financial, and they can help employees feel motivated to perform better and increase productivity.

Using Coercive Power

Managers can use coercive power to get their employees to do what they want by making threats and using fear. This can be difficult to do without causing resentment and retaliation, but it may be the only way to get compliance. Leaders must be clear about rules and expectations and punish subordinates evenly and consistently. Punishment should only be administered in private to avoid damaging the relationship between manager and subordinate. Care must be taken to ensure that punishment matches the infraction.

Using Expert Power

Managers can use expert power to get the most out of their team by possessing knowledge or expertise in a particular area, which gives them the ability to solve problems quickly. Expert power is a stepping stone to other forms of power, such as legitimate authority, and can be used to influence and motivate team members.

Using Referent Power

Managers who have referent power can get what they want from employees by being well-liked and trusted. They must be careful not to abuse their power, as this will lead to resentment. Leaders must develop interpersonal skills in order to gain and maintain referent power. Managers with referent power have successfully changed their organizational culture and employees will take bigger and smarter risks as a result.

Step 3: Use power in a way that is appropriate for the situation

  1. Leaders need to be able to draw on different forms of power in order to get the results they want.
  2. When disciplining employees, leaders should use coercion only as a last resort.
  3. Leaders can use legitimate, referent, and expert power in order to motivate their employees.

Step 4: Use power in a way that benefits the organization

Managers can use power effectively within their organizations by using coercion, reward, and legitimate power wisely. This benefits the organization by leading to cultural change and motivating employees.

Step 5: Use power in a way that benefits the employees

Managers can use power effectively by using a variety of methods to motivate and improve employee performance. Rewards, such as bonuses or raises, can be used to incentivize employees to work harder. In some cases, coercion may be necessary to get employees to comply with company rules or regulations. Legitimate power can also be used to encourage employee commitment, while referent and expert power can be used to reward employees for their contributions or expertise.

Step 6: Use power in a way that benefits the customers

Managers can use power in a way that benefits the customers and the organization by using it to motivate employees, improve communication, and resolve disputes. Managers can also use power to set company policies and standards and to make decisions that affect the organization as a whole.

What is the difference between compulsion and influence in business?

In business, compulsion refers to the use of force or the threat of force to get people to do what you want them to do. Influence, on the other hand, refers to the ability of an individual or group to get someone else to change their attitude, opinion, or behavior in a way that serves their own interests.

When compulsion is used well, it can motivate employees and help them achieve their goals. However, if compulsion is used in an unfair or unprofessional manner, it can cause employees to feel demoralized and diminish their output.

Abraham Lincoln said, "Nearly all men can stand adversity, but if you want to test a man's character, give him power."

Compulsion power strategy effects are short-lived and eventually result in people disliking the power abused in the long run. Influence, however, is much more sustainable. This happens without the provocation of the person's natural will and can keep everything intact and positive if exercised in the right manner.




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