eventually gives them formal power. Sometimes, however, individuals with expert power are mavericks—they have little or no desire to assume formal authority over others; they prize their independence. When this is the case, managers with formal power must take pains to increase the autonomy and develop good working relationships with subordinates who have expert power. Otherwise, conﬂict may arise as formal leaders and informal leaders with expert power battle to decide which project should be pursued or how to pursue them. 8
Referent power Employees who gain power and inﬂuence in a group because they are liked, admired, and respected are said to possess referent power. People high on the personality traits of agreeableness, extraversion, or conscientiousness are often liked or admired. A willingness to help others may also lead to employees being liked or admired. Personal reputation or fame is one sign an employee has acquired referent power. Famous film stars and athletes are paid to advertise a company’s products because marketing experts believe their referent power will attract their admirers to buy its products. People with referent power are liked because of who they are, not just because of their expertise or their abilities to inﬂuence people, obtain resources, or achieve their own ends. Charismatic power is an intense form of referent power stemming from a person’s unique personality, physical strengths, or other capabilities that induce others to believe in and follow that person. How transformational leaders—leaders who possess charismatic power—often inspire admiration and loyalty in their followers. These followers buy into the leader’s vision and work with excitement and enthusiasm toward goals set by the leader. When charismatic power exists, legitimate power, reward power, and coercive power lose their significance because followers give the charismatic leader the right to hold the reins of power and make the decisions that define the vision and goals of an organization and how its members should behave. Charismatic power can have a dark side, evident when followers of the charismatic leader blindly follow the leader and fail to take personal responsibility for their actions because they come to believe the leader knows what is best for the organization. When charismatic power is abused by a leader who has a mistaken or evil vision, no checks or balances exist to resist the leader’s directives, no matter how outrageous they may be. Some researchers have argued that charismatic leadership is an advantage only when, checks and balances exist that limit the formal power of a charismatic CEO, such as when powerful members of the board of directors or a strong top management team can intervene and force the CEO to reconsider important decisions and strategies. 1.4.3 Sources of Power Organizational Based 1. Knowledge as power : Information is necessary for top management to take decisions and vital to carry out various operations in the business environment. Thus a person or a group holding information becomes more powerful than their counter part. Flow of information is 9
necessary for continuous production or service operations. Persons who are in position to control
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