THE QUESTION
When do leaders really have power and influence with subordinates? More specifically, apply this question to CPA firms, and qualify it as the type of power and influence that improves organizational effectiveness.
A study by Dr. Anthony J. Matias (1997) analyzed the importance of the power base variables in an effort to determine which matter most for leader and organizational effectiveness in CPA firms.
According to one popular theory, the source of a leader's power and influence can be categorized as one of the following:
• Coercive power: Influence that comes from the subordinate's perception that the leader has the power to mediate punishment of some kind, whether through organizational or other, less official channels
• Expert power: The subordinate's perception of the leader's special knowledge and skills.
• Legitimate power: Legitimate power comes through the recognition of authority based on the leader's formal position or status, such as the manager's right to manage those under him or her.
• Referent power: the power source based upon the follower's feeling or desiring to identify with the leader; evidenced by factors such as respect, likeability, identification and admiration of the power holder.
• Reward power: Derives from the subordinate's perception that the power-holder can and will reward for behavioral compliance.
Leader effectiveness was evaluated using subordinate satisfaction (with supervision and with work) and organizational effectiveness (indicated by level of commitment of subordinates).
THE RESULTS The study's results found that referent power was the only power base that was significantly related to all three of the outcome variables, the two satisfaction measures as well as commitment (as evaluated by the Beta coefficient). It also confirmed previous research, which found referent power, along with expert power, represent an important combination in the leader's and the firm's effectiveness.
The results of the study point to the importance of management and supervisory styles to leader and organizational effectiveness at CPA firms. In knowledge-based enterprises, such as CPA firms, there is the tendency to value expertise, knowledge and information above all else. One cannot deny the importance of these elements to the overall success of the firm in achieving client satisfaction levels and, thereby, firm performance.
PRACTICAL APPLICATION
If Referent and Expert power are consistently demonstrated to be key elements of firm success, then they warrant greater attention and emphasis. This would suggest that knowledge-based enterprises would do well to be more attentive to these elements in planning for the development of its future leaders.
Building Referent Power
While the ability to inspire respect and admiration has traditionally been considered an important leadership quality, other sources of referent power might seem counter-intuitive to the common understanding of leadership. This study suggests that factors such as likeability and identification with the power-holder can also be a strong source of influence. Leaders can look to identify with their subordinates by getting to know them on a personal level, being genuine and transparent about common struggles, or simply communicating that the power-holder understands what challenge the subordinate is facing in his or her job or personal life.
Building Expert Power
Expert power comes in one of two ways: (1) Experience, and (2) Education/training.
Leaders who have experience to draw on should look for ways to best utilize that influence with others. An organization could support its leaders in this way by publicly praising or acknowledging their relevant experience.
In knowledge-based enterprises, such as CPA firms, the power of training should not be underestimated. Managers who are deficient in both experience and training (expert power) lack the ability to effectively influence (i.e. lead) subordinates, and therefore are likely to experience diminishing organizational effectiveness.
It is important to note that these power sources depend not only on the power-holder's actual qualities, but on other's perceptions of those qualities as well. Superiors should not take their influence over subordinates and other organizational members for granted, but should make an effort to market themselves to these important stakeholders just as they might to a potential client or investor.
In summary, this study suggests that organizations should look for ways to incorporate learning-by-experience opportunities with management skills training (gain Expert power) in order to raise effective organizational leaders. Furthermore, the ability of a leader to successfully market his or herself (gain referent power) to organization stakeholders could be considered an important factor in one's management/leadership training.
Article by: Sarah Bernier and Anthony Matias
Sarah Bernier, Director of Marketing for Matias Interactive Learning.
Visit our website: http://matiasinteractive.com/index.html Visit our blog: http://matiasinteractive.com/updates/updates.html
MIL Managing Director, Dr. Anthony J. Matias, is an expert on a number of financial and management topics. In addition to 25 years of providing expert consultation regarding financial, management, accounting, information systems, and tax issues, Anthony J. Matias has developed and led courses for Fortune 500 companies, top-tier universities, and the US government.
At MIL, we help companies maximize profitability through the development of an industry-leading managers and project managers. We allow your organization to offer cost-effective management training without sacrificing quality. Matias Interactive Learning offers a customizable online training solution that utilizes the best of information technology with a proprietary approach to course design that integrates industry best practices in adult learning and professional management training.
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