Power roles (business science)

Organizations consist of a set of individuals with specific roles and tasks who exercise varying degrees of power, and that power, whether formal or informal, can stem from a person’s title, expertise, interpersonal relationships, or simply force of personality.

Formal power is received as a function of position within a company and the authority associated with that position, while informal power results from relationships built and respect earned from colleagues. Corporate structure determines formal power, while personal behaviors and viewpoints control informal power. Informal power involves the ability to lead, direct, or achieve without an official leadership title. Individuals with informal power may be the most experienced or knowledgeable in a certain area or the most respected because of perceived notions about their personality. The person with the most informal power is not necessarily the manager but, rather, the person with the most influence—someone who can lead others to accomplish a task.

Strategic goals and company initiatives rely on formal power, but informal power can be equally useful, especially when leaders recognize and use it to further organizational goals. Employees, for example, may more readily accept criticism or direction from someone at their level whom they respect and trust.

Some sort of authoritative power structure is essential to any type of successful work group. Power gives a group the ability to achieve goals, and authorities use power to control the behavior of others and coordinate their activities.

Organizational scholars have long been interested in the role of power in organizations, and they have demonstrated particular interest in how power roles link to organizational innovation.

Background

Scholars have defined power in various ways. Many define it as the ability to overcome resistance to achieving a desired result. Others consider it a force that results in behavior that would not have happened minus that force. Others define power as the ability to manipulate others and get them to do things they would rather not do, or the ability to get people to do things through charisma or charm. Still others hold that the ability to make someone else do something is the simplest and purest definition of power.

No matter how power is defined, a group cannot function unless power is distributed and someone tells someone else what to do. The person telling another person what to do also must have a reinforcing means that will ensure compliance from the person receiving the directive.

Overview

The heart of power in business is linked to a person’s place on a team—mainly, how far her or his location is from the top of a hierarchy. Defined roles on a team are an often-overlooked but critical part of any organizational structure, and they all relate to how much power is, or can be, exerted. Specifically defining each group member’s role, responsibilities, and success criteria ensures that roles are clear; that team members understand expectations and needs; and that they are motivated by understanding the value of their contribution to a group’s success. Clearly defined roles also ensure everything gets done and increase accountability for task completion. Cooperation also increases and conflict decreases when high-profile tasks are equally distributed.

Various roles and titles with varying levels of power can exist within an organization, but a typical structure may include many of the following power roles:

A chief executive officer (CEO) or president is the driving force behind the company and will set major goals, assemble the resources to support the company, and take the product to the marketplace.

A chief operating officer (COO), vice president of operations, or general manager will ensure smooth and economical company operations and assume responsibility for work done properly and on time.

A vice president of marketing or marketing manager must have both marketing and industry experience and is essential to an organization’s success because he or she has a certain level of power to move consumers to act.

A chief financial officer (CFO) or controller will seek money, look for investors, deal with banks and lenders, manage money, and guard company assets.

A vice president of production or production manager will have specific industry knowledge and experience and exert a degree of power in terms of the quantity and quality of marketplace output.

Other key personnel include an operations manager with overall responsibility for the financial success of the business who handles external relations with lenders, community leaders, and vendors, and often is in charge of either production or marketing; a quality control, safety, or environmental manager; an accountant, bookkeeper, and/or controller responsible for monthly income statements and balance sheets, collection of receivables, payroll, and cash management; and an office manager, who also may serve as human resources director.

In a production shop, a foreperson, supervisor, or lead person is the second-in-command in the shop and will oversee production in the absence of the owner, general manager, or president. A purchasing manager will oversee buying, and a shipping and receiving manager is tasked with packaging, ordering transportation for delivery, receiving incoming material, and warehousing finished goods and stock.

No matter how many roles exist within an organization, however, only certain roles will be considered high-power roles, and researchers have focused on those roles as critical not only in determining group success but also the level of innovation and overall success an organization might achieve.

The notion of power has been extensively researched, but a 1959 study by John R.P. French Jr. and Bertram Raven, “The Bases of Social Power,” is considered a classic. Raven and French identified five types of power in groups, organizations, or among individuals. These types of power are known as reward, coercive, legitimate, referent, and expert power.

Reward power is based on the ability to reward, and the classic example is a manager having the ability to award a raise. Used appropriately, reward power is a strong employee motivator, but, if favoritism is a factor, reward power can demoralize employees and reduce output. Conversely, coercive power uses the threat of punishment to achieve compliance—for example, if a manager threatens to dock pay for lateness. Coercive power is a person’s ability to punish, fire, or reprimand another team member. That power would be reduced, however, if an employee threatened with punishment quits.

Legitimate, or positional, power is power inherent in a position or office in which others are obligated to accept the holder’s influence. Structure is key, and examples of legitimate power holders are teachers, police officers, or employers, all of whom are granted power because of an established code within a system. In the effective exercise of positional power, the person wielding it must be deemed to have earned it, for example through extensive study, long experience, or a track record of success.

Referent power is based on the identification of one person with another. The person with referent power has influence inherent in the respect and admiration others have for him or her. Referent power holders are typically seen as credible or as role models. Referent power also is derived from the personal connections a person has with key people within an organizational hierarchy, such as the CEO. The perception of another’s personal relationships is what generates her or his power over others.

Finally, expert power flows from someone’s knowledge, skill, or experience. Whether lawyer, pilot, or auto mechanic, this person’s power is intricately tied to his or her perceived credibility and reputation. Those with expertise are highly valued within organizations, especially for problem-solving skills, and are often deemed indispensable.

Bertram and Raven also identified a set of powers in addition to the classic five. One is informational power, possessed by those who know how to retrieve information in the modern electronic world. Others are earned power that results from performance that wins the approval and respect of others, political power often derived from self-promotion, and social power achieved by those with the ability to influence others.

A person’s power within a group and her or his responsibility for what happens in that group often are directly linked. That is the classic superior/subordinate hierarchy, and it relies on subordinates willing to obey superiors or follow orders. Subordinates often will follow orders even if they believe them to be wrong. In Stanley Milgram’s widely cited 1973 “Agency Theory” study, he analyzed power by creating small groups in a laboratory at Yale University and trying to explain why obedience to authority, particularly a malevolent one, has such a strong hold on behavior.

Milgram’s well-known experiment focused on the conflict between obedience to authority and personal conscience. Using his own associates as “learners” and a group of test subjects as “teachers,” he set out to examine how far people would go in obeying an instruction if it involved harming another person. The teachers controlled an electric shock generator, and the learners were strapped to a chair with electrodes. The teacher was told to administer an electric shock every time a learner made a mistake, and, when teachers refused to administer shocks, the experimenter gave a series of prods or orders until the teacher complied. Sixty-five percent of teachers were willing to continue administering shocks up to the highest level of 450 volts, while all teachers were willing to administer shocks up to 300 volts.

One of the many questions that arose from this study related to motivation—why the test subjects were willing to act as they did. One explanation could be that they were simply operating under the norms of human nature. Another explanation could hold that the unique circumstances of the situation motivated them to obey.

Milgram identified two psychological states that a person can be in at any given time: autonomous and agentic. In the autonomous state, behaviors are self-directed, and individuals make decisions based on personal beliefs and experiences. In the agentic state, individuals see themselves as agents of a higher authority and defer to that authority. A person in the agentic state, Milgram said, follows orders without considering the consequences or appropriateness of a request and typically will shift responsibility for their behavior to those who directed it. Human beings learn to function in these two states from an early age, Milgram said, noting that parents teach children to obey, and obedience often carries with a person throughout life.

When a group member, however, exhibits undesirable or evil behavior, blame tends to get placed on the person’s character rather than on the powerful group processes at work that forced the behavior. Social psychologists call this the fundamental attribution error and note the tendency to underestimate external group pressures and overestimate internal motives and personality.

Because power dynamics can affect employee morale and productivity, employers must understand how power dynamics work and how to balance them. Power dynamics influence company culture because leaders, through their own behaviors, often set a company’s culture.

Power dynamics also can affect workplace communication because employees are typically most comfortable speaking with those who have the same amount of organizational power they do. Employees would do well to understand the power dynamics within a group because they are more likely to address conflicts before power struggles decrease productivity.

Power dynamics also can influence who feels comfortable contributing in a group and who does not. Awareness of power dynamics can ensure everyone has fair opportunity to contribute. Power dynamics can affect every organizational interaction, so understanding and observation are essential to improving company culture, communication, and collaboration.

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