Leadership in Organizations: Defining Leaders and Their Influence

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Leadership in Organizations: Defining Leaders and Their Influence

Business Essentials · Chapter 5: Management Functions and Strategic PlanningSection 5.6 · lesson 29 of 10512 min · free with a free account

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In this lesson

What leadership is, where its power comes from, and what it can and cannot do.

  • Define leadership and distinguish it from management
  • Contrast compliance with commitment
  • Describe the 5 sources of power and their effects
  • Explain what leadership contributes, and its limits

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Management Functions and Strategic Planning

Leadership in Organizations: Defining Leaders and Their Influence

Some people move others without holding any title at all. Others hold senior titles, and move almost nobody. This section explains that difference. We'll define leadership, and separate it carefully from management. We'll set out the five sources of power a leader can draw on. We'll see why some of that power ends with the job, while some of it travels with the person. And we'll weigh what leadership really contributes, along with the honest limits of its effect. Keep one question in mind throughout. Where does influence actually come from? By the end, you'll be able to say why some influence survives a change of job, and some doesn't.

Leadership Defined

Influence Toward a Shared Goal

Leadership is a process of influence, by which one person or group moves others toward a shared goal. Each part of that definition draws a distinction, so let's take them one at a time. First, leadership is a process, not a trait. It happens between people over time. It isn't a possession that some people have and others lack. Second, leadership is influence, not authority. Authority is the formal right to direct. Influence is the ability to change what others think, feel, or do. And it can exist with or without formal authority. Third, the goal is shared. Leadership aims at something held in common by the people led, not something imposed on them. Put those together, and you get a useful test. Two organizations can each have people in senior positions. Leadership is occurring only where those people actually move others toward a goal that the others accept. How leaders manage this is the work of the theories in chapter six. Here, we stay with the definition.

Leadership And Management

Different Activities, Not Different Titles

So how does leadership differ from management? By activity, not by title. Management, as section five point one defined it, produces order, consistency, and predictability. It plans, budgets, organizes, and controls, so that the organization reliably does what it's supposed to do. Leadership produces something different. Direction, alignment, and movement. It establishes where the organization or group is heading, and gets people to understand and accept that direction. Then it moves them toward it, especially when change is needed. Both activities are necessary. Now notice what follows from defining them by activity rather than by title. A leader may hold no management title at all. A manager may lead well, or lead poorly. And most real roles require a mixture of both.

Figure 5.6.1

Overlapping, Not Opposed

Picture the two sets of activities, not as opposites, but as overlapping. On one side sit the management activities, the ones that produce order. On the other side sit the leadership activities, the ones that produce direction and movement. Real roles sit at different places along that overlap. Some are mostly management. Some are mostly leadership. Most sit somewhere in between. That's why a job label tells you so little. Calling someone a manager doesn't tell you which activity their work demands most. A role is better described by the mix it requires. So the useful question isn't whether someone is a leader or a manager. It's which activity this situation needs most, right now.

A Contrast To Reject

Neither Activity Is Superior

There's a popular version of this contrast that should be rejected outright. It says leadership is inspiring and valuable, while management is dull and lesser. That view is wrong, and the reason is worth spelling out. Imagine an organization with an inspiring direction, but no operational discipline. It fails, because it can't deliver what it promises. Now imagine the reverse. Efficient routines, and no sense of where the organization is going. It fails just as surely. It delivers, faultlessly, what no longer matters. So neither activity is superior to the other. The practical task is knowing which one is needed, and when.

Influence Versus Authority

Compliance and Commitment

The difference between influence and authority shows up in the responses they produce. Compliance is behavior that meets the requirement, because it is required. People do what they're told, to the extent that they're watched or rewarded. Commitment is behavior that goes beyond the requirement, because people accept the goal as their own. They apply effort and judgment, and they act sensibly in situations that no instruction ever anticipated. Here's the key asymmetry. Authority can compel compliance. Only influence produces commitment. That matters most where the work is unpredictable. An organization that needs people to show initiative in unpredictable circumstances depends on commitment. And it can't obtain commitment by instruction alone, because no instruction covers the situation nobody foresaw.

Power

The 5 Sources of Power

To influence anyone, a leader needs power. Power is simply the capacity to influence the behavior of others. Five sources of power are commonly distinguished. Legitimate power derives from a position. The role carries a right to direct, and others accept it because of the role. Reward power comes from control over outcomes that others value. Pay, promotion, assignments, or praise. Coercive power comes from the capacity to impose costs, such as discipline, dismissal, or the withholding of resources. Expert power derives from knowledge or skill that others need, and lack. Referent power comes from others' respect for a person, and their identification with her. People follow because they want to be like her, or to earn her regard. Now sort the five into two groups. The first three are positional sources, because they come from the role. The last two are personal sources, because they come from the individual.

Table 5.6.1

What Each Source Produces

Each source produces a characteristic response, and each carries its own cost. Legitimate and reward power generally produce compliance. Legitimate power is limited to what the role covers, and it weakens if the role itself is doubted. Reward power needs resources. And people may end up doing only what gets rewarded. Coercive power produces compliance with resentment. It erodes trust, it hides information, and it carries a high cost of monitoring. Expert and referent power tend to produce commitment, because people respect the knowledge, or the person. Their costs are different. Expert power depends on the knowledge staying current, and on its holder being seen as credible. Referent power is slow to build, and fragile if trust is broken. Now look down the last column. The three positional sources end with the role. The two personal sources survive it.

Why The Source Matters

Power That Ends With the Role

That last column has a practical consequence. Positional power is lost when the role is lost. Personal power travels with the person. Think of a manager who moves into a role without formal authority. She keeps her expertise and her reputation. She doesn't keep her position. From then on, her influence depends on the sources she has actually developed. So a leader who relies only on positional power has influence that lasts, but only as long as the position. Now return to coercion, and the information it hides. Revealing a problem invites a penalty, so people conceal problems and mistakes. Picture a department where the manager frequently threatens disciplinary action. An error in a batch of orders can go unreported for weeks, and surface only when a customer complains. Expert and referent power produce commitment instead, so they're more likely to bring a problem to light.

Dependence

Where Influence Actually Sits

Underneath all five sources sits one principle. Power rests on dependence. A person has power over another to the extent that the other depends on him. That means depending on him for something he controls, and that can't easily be obtained elsewhere. This explains where influence actually sits, regardless of the organization chart. Take the maintenance technician who alone understands an old machine, or the assistant who controls access to a busy executive. Either one may have more influence than their title suggests, because others depend on them. That leads to informal leadership, which is influence exercised without formal authority. Think of a respected colleague whose opinion shapes what a team does. Organizations depend on informal leadership, and a manager who overlooks it can be surprised. Direction given through the chart is quietly ignored, while direction from the informal leader is followed.

Contribution And Limits

What Leadership Adds, Honestly Measured

So what does leadership actually contribute? Four things. First, direction under ambiguity. A sense of where to go when the path isn't obvious. Second, alignment, so that the efforts of many people point the same way. Third, motivation, by giving people reasons to commit effort. Chapter nine develops this. Fourth, sense-making. An interpretation of events that helps people understand confusing circumstances. Now the limits, stated honestly. Studies that try to attribute performance differences to the leader generally find that the effect is real. They also find it's consistently smaller than popular accounts suggest. Much of the variation is explained by other things. The market, the structure, and the resources. Take a leader in a favorable market, with strong resources. That leader will usually look more successful than an equally able leader in a difficult one. So the credit or blame assigned to individuals is often larger than the evidence supports. None of this means leadership doesn't matter. It does. It means being cautious about explaining outcomes by pointing at a single person.

Case Vignette (Composite)

Influence That Belonged to the Role

Here's a composite case, built for instruction, that pulls these ideas together. Lina has been a department manager for six years. She secures cooperation by making clear that she controls schedules, assignments, and the annual ratings. Her team meets its deadlines. Then she's moved to lead a cross-departmental improvement project. No one reports to her, and the working group's members belong to other departments. She issues instructions as she always has, and the group ignores them. Members attend meetings and offer little. Their own managers control their ratings, and Lina controls nothing they value. Her influence rested almost entirely on legitimate, reward, and coercive power. It stayed with the department she left. So she has to build the personal sources. She consults members about their own priorities, and shares her analysis so its value is clear to them. She makes progress visible, in ways that help each of them. The trade-off is the speed of giving orders, against the slower work of earning support. She has no formal way to compel anyone. Her reasoning is that her earlier results depended on positional power. In this role, only expert and referent power will produce commitment.

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FAQ

Questions students ask us

About Leadership in Organizations: Defining Leaders and Their Influence

What is the difference between leadership and management?
Management produces order, consistency, and predictability through planning, budgeting, organizing, and controlling, while leadership produces direction, alignment, and movement, especially when change is needed. The difference lies in activity, not title: someone with no management title can lead, and a manager may lead well or poorly. Neither is superior. An inspiring organization without discipline can't deliver, and a disciplined one without direction delivers what no longer matters.
What are the five sources of power in organizations?
The five sources of power, from John French and Bertram Raven, are legitimate, reward, coercive, expert, and referent power. Legitimate power comes from a position, reward power from controlling valued outcomes, and coercive power from the capacity to impose costs. Expert power comes from needed knowledge or skill, and referent power from others' respect and identification. The first three are positional and end with the role; the last two are personal and travel with the person.
What is the difference between compliance and commitment at work?
Compliance is behavior that meets a requirement because it is required, while commitment goes beyond the requirement because people accept the goal as their own. Authority can compel compliance, but only influence produces commitment. Legitimate and reward power generally yield compliance, coercive power yields compliance with resentment, and expert and referent power tend to produce commitment. Commitment matters most in unpredictable work, where no instruction anticipates every situation.
What is informal leadership?
Informal leadership is influence exercised without formal authority, such as a respected colleague whose opinion shapes what a team does. It reflects the principle that power rests on dependence: people gain power when others depend on them for something they control that is hard to obtain elsewhere. A technician who alone understands an old machine may have more influence than the title suggests. Managers who overlook informal leaders can find their direction quietly ignored.

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