Basis of Power
Brian R. Gates
BCOM 230
November 14, 2011
Katalin Ogle

Power—in a business environment—is defined as the potential for one individual to exercise influence over another individual. That potential may never be realized, but for an individual to possess power one can infer that other individuals are dependent upon the person who holds the power. Power can be derived from two basic sources: personal and formal. There are five bases of power that exist, and the base of the power ultimately affects how people react to that power.
Formal Power Formal power stems from an individual’s place in the hierarchy of an organization, and includes three bases of power: coercive power, reward power, and legitimate power. Coercive power results from the potential negative impact upon the dependent individual from the person holding power. Reward power is the exact opposite—with the power derived from the ability of the individual holding power to positively impact the dependent person. These two bases of power very often occur simultaneously. If a manager tells a subordinate to perform a certain action, there are potential outcomes derived from each of these power bases. If the subordinate successfully performs the action, the manager could give the subordinate a bonus, a raise, or a better position within the organization (reward power). If the subordinate does not successfully execute the directive, the manager can demote the subordinate or withhold bonuses (coercive power). Legitimate power—the third type of formal power—“represents the formal authority to control and use organizational resources” (Robbins & Judge, 2009, p. 452). Legitimate power generally encompasses the two other forms of power as well, but legitimate power goes one step further. An individual derives legitimate power from the acknowledgement and acceptance of other