No matter what one's leadership style, a key component of effective leadership is found in the power the leader has to affect other people's behavior and get them to act in certain ways. There are several types of power: legitimate, reward, coercive, expert, and referent power. Effective leaders take steps to ensure that they have sufficient levels of each type and that they use the power they have in beneficial ways.
LEGITIMATE POWER. Legitimate power is the authority a manager has by virtue of his or her position in an organization's hierarchy. Personal leadership style often influences how a manager exercises legitimate power. Take the case of Carol Loray, who is a first-line manager in a greeting card company and leads a group of 15 artists and designers. Loray has the legitimate power to hire new employees, assign projects to the artists and designers, monitor their work, and appraise their performance. She uses this power effectively. She always makes sure that her project assignments match the interests of her subordinates as much as possible so they will enjoy their work. She monitors their work to make sure they are on track but does not engage in close supervision, which can hamper creativity. She makes sure her performance appraisals are developmental, providing concrete advice for areas where improvements could be made. Recently, Loray negotiated with her manager to increase her legitimate power, so now she can initiate and develop proposals for new card lines.
REWARD POWER. Reward power is the ability of a manager to give or withhold tangible rewards (pay raises, bonuses, choice job assignments) and intangible rewards (verbal praise, a pat on the back, respect). As you learned in Chapter 12, members of an organization are motivated to perform at a high level by a variety of rewards. Being able to give or withhold rewards based on performance is a major source of power that allows managers to have a highly motivated workforce. Managers of salespeople in retail organizations like Neiman Marcus and Dillard's Department Stores, in car dealerships like Chrysler's and Ford's, and in travel agencies like Liberty Travel and the Travel Company often use their reward power to motivate their subordinates. Subordinates in organizations such as these often receive a commission on whatever they sell and rewards for the quality of their customer service, which motivate them to do the best they can. Effective managers use their reward power in such a way that subordinate feel that their rewards signal that they are doing a good job and their efforts are appreciated. Ineffective managers use rewards in a more controlling manner (wielding the "stick" instead of offering the "carrot"), which signals to subordinates that the manager has the upper hand. Managers also can take step to increase their reward power. Carol Loray had the legitimate power to appraise her subordinates' performance, but she lacked the reward power to distribute raises and end-of-year bonuses until she discussed with her own manager why this would be a valuable motivational tool for her to use. Loray now receives a pool of money each year for salary increases and bonuses has the reward power to distribute them as she sees fit.
COERCIVE POWER. Coercive power is the ability of a manager punish others. Punishment can range from verbal reprimands, to reduction pay or working hours, to actual dismissal. In the last chapter, we discussed how punishment can have negative side effects such as resentment and retaliation and should be used only when necessary (for example, to curtail a dangerous behavior). Managers who rely heavily on coercive power tend to be ineffective as leaders and sometimes even get fired themselves. William J. Fife is one example; he was fired from his position as CEO of Giddings and Lewis Inc., a manufacturer of factory equipment, because of his overreliance on coercive power. In meetings, Fife often verbally criticized, attacked, and embarrassed top managers. Realizing how destructive Fife's use of punishment was for them and the company, these managers complained to the board of directors, who, after a careful consideration of the issues, asked Fife to resign.
Excessive use of coercive power seldom produces high performance and is questionable ethically. Sometimes it amounts to a form of mental abuse, robbing workers of their dignity and causing excessive levels of stress. Overuse of coercive power can even result in dangerous working conditions. Better results can be obtained with reward power, as indicated in this.
EXPERT POWER. Expert power is based in the special knowledge skills, and expertise that a leader possesses. The nature of expert power varies, depending on the leader's level in the hierarchy. First-line and middle managers often have technical expertise relevant to the tasks that their subordinates perform. Their expert power gives them considerable influence over subordinates. Carol Loray has expert power: She is an artist herself and has drawn and designed some of her company's top-selling greeting cards.
Some top managers derive expert power from their technical expertise (Andrew Grove, CEO of Intel, has a PhD in chemical engineering and is very knowledgeable about the ins and outs of producing semiconductors and microprocessors (what Intel does). Similarly, Bill Gates, chairman of Microsoft, has expertise in software design; and Roy Vagelos, former CEO of Merck, a major pharmaceutical company, was an outstanding research scientist in his own right. Many top-level managers, however, lack technical expertise and derive their expert power from their abilities as decision makers planners, and strategists. Jack Welch, described in the "Case in Contrast," is one of these. He puts it this way: "The basic thing that we at the top of the company know is that we don't know the business. What we have, I hope, is the ability to allocate resources, people, and dollars.”
Effective leaders take steps to ensure that they do have an adequate amount of expert power to perform their leadership roles. They may obtain additional training or education in their fields, make sure they keep up-to-date with the latest developments and changes in technology, stay abreast of changes in their fields through involvement in professional associations, and read widely to be aware of momentous changes in the organization's task and general environments. Expert power tends to be best used in a guiding or coaching manner rather than in an arrogant, high-handed manner.
REFERENT POWER. Referent power is more informal than the other kinds of power. Referent power is a function of the personal characteristics of the leader; it is the power that comes from subordinates' and coworkers' respect, admiration, and loyalty. Leaders who are likeable and whom subordinates wish; to use as a role model are especially likely to possess referent power. Rochelle Lazarus, a top manager at the advertising agency Ogiivy & Mather, won IBM's; worldwide advertising account in part because of her referent power.
In addition to being a valuable asset for top managers like Lazarus, referent power can help first-line and middle managers be effective leaders as well. Sally Carruthers, for example, is the first-line manager of a group of secretaries in the finance department of a large state university. Carruthers's secretaries are known to be among the best in the university. Much of their willingness to go above and beyond the call of duty has been attributed to Carruthers's warm and caring nature, which makes each of them feel important and valued. Managers can take steps to increase their referent power, such as taking time to get to know their subordinates and showing interest in and concern for them.