4. Sources of Power
There are numerous views of what makes a leader and what gives him or her authority. I apply some of these understandings to the setting of organisations and discuss what business leaders actually do. In organisations the leader-follower relationship is formally set up by the hierarchy. However, where does the power come from? What gives a person or group influence over others? Many researchers have studied five sources of power: legitimate, reward, coercive, expert and referent. I will examine these five sources of power and try to explain those by examples.
4.1. Reward power
Reward power is believed to be the fastest way to persuade people. The reason is simple, it refers to the ability to deliver rewards or benefits to influence others. Such reward doesn't have to be monetary, it can be all kinds of things that bring attraction to people, including promotion, learning opportunity, positive judgement, friendly co-workers, important information and better working conditions. Leaders shall reward employees to get attention from them, thus those who can reward people with what they are expecting get the power of influence. Reward power is totally different from coercive power. Coercive power is something that leaders manage people’s behavior by punishing them for not doing what leaders are expecting. However with reward power, leader could offer incentives to lead people to achieve the final goals.
There are two possible scenarios which explain how reward power works. First of all, reward power is based on utility, which is an understanding that in every transaction there is a potential for exchange. Basically, utility power recognizes that there is always something that some people want and something that others want. Leaders can meet each other's needs by swapping what leaders have for what the followers want. Rewarding prizes could be a specific form of utility power. It is a way to reward followers for doing what leader wants them to do. The reward becomes incentive for compliant action. Examples of utilities also include sales bonuses, paychecks, incentive clauses in contracts, bonus miles on airlines, and bonus points on credit cards. It is important to understand some incentives will work well with one person, but not with another. For example, to some people, money could be an efficient reward to encourage them. To others, however, recognition as the reward could be more important and meaningful. Leader needs to not only find the motivating force or reward for each person he works with, but also understand the desires of the individuals or groups he is dealing with. Then, reward power will be extremely effective in changing human behavior and in enhancing leader’s influence.
Secondly, reward can also be considered to be a way of establishing a relationship. Psychologically speaking, people tend to perform better for those who they favor. On the contrary, people will not do as much for...