Power and influence are significant players in the modern business world. Questions of who has them, who’s using them, who’s abusing them, and where they might be moving are all essential to understanding the dynamics of modern business management. Those who are skillful at managing and wielding power can be tremendously successful both in business and in life

There are more bad bosses than good bosses out there. All of us have likely been managed by a terrible boss who either ineffectively used their power and influence to help us do our jobs or tended to abuse their power and influence, which made everyone’s lives miserable. That largely stems from the fact that most leaders are never educated in the right way to manage a team and use their power for good. That’s not to say that most leaders are necessarily bad people—just that they lack the education to become great leaders. Most leaders and managers in business are thrown into management positions without much guidance, and in many cases, they simply draw on past experiences to lead. Those past experiences can be good or bad, which will heavily influence how leaders wield their own power and influence. Someone’s ability to be a good leader is highly dependent on personal experience, which is why it’s so important to understand the elements of power and influence and how to lead in the right way.

The truth is that there are plenty of resources and tools out there for new leaders to take advantage of to raise their leadership game. It’s more a matter of getting new leaders motivated enough to take advantage of those resources. The best way to become a great leader and wield power and influence with a fair and even hand is to educate yourself. Here’s everything you need to know about how to manage your influence within your company. 

Understand the Different Types of Power and Influence

First, it’s essential to understand that power in and of itself is neither good nor bad. Power is a tool used to move the needle in business, and it is up to a leader to decide how to wield that power. Depending on who you talk to, there are either eight or six different leadership/power types at play in today’s business environment. These include:

  • Coercive Power: The most common and most abused form of power in the business world, this is often characterized by threats and “consequences.” Leaders who leverage this power make their employees feel insecure and force them to do things they may or may not want to do. This kind of power encompasses bullying and gaslighting and leads to fearful, resentful employees.
  • Reward Power: The second-weakest form of power, this type of power has management that uses rewards, or a “carrot” method of motivation. This leadership operates under the idea of “Do this, get this” and relies on the value of the reward to motivate employees. If a reward is given out too readily or too frequently, its value declines. This kind of power tends to breed unsatisfied employees who may feel like the reward isn’t enough for the task at hand. 
  • Legitimate Power: This type of power is imbued by the title a leader holds. It is often tied to a position, not a person. For example, a person with the title of vice president or senior director has specific decision-making power. They are responsible for making decisions, both good and bad, and managing the outcomes of those decisions. When or if someone takes a new job in a new area, legitimate power doesn’t transfer with them. Legitimate power on its own isn’t really valuable, but it is a key ingredient to becoming a successful leader when combined with other types of power. 
  • Referent Power: Respect is central to referent power. It embodies the idea of a cult personality and often stems from a leader’s innate ability to attract and build a following and loyalty. Referent power can arise from repeated success and consistently upholding specific values that the organization or group regards highly. This type of power inspires employees and can motivate them to do more for a company. 
    • Charismatic Power: Some experts break this type of power into its own section, but it’s very closely related to referent power. This type of power allows leaders to influence employees to do things in support of the company’s cause—even when it may seem impossible. This kind of power can create employees who genuinely buy into the core values of a company.
    • Moral Power: Some experts also break moral power out as its own type, but in this case, it makes sense to slot it under referent power since employees respect leaders who do the right thing regardless of who is watching. Moral power tends to influence employees to do the right thing, and in general, employees tend to feel good about the work they do when they have a leader who consistently demonstrates moral behavior. 
  • Informational Power: Now more than ever, information is power. Informational power stems from the idea that the more accurate and concrete information you have (that others do not), the more power you have to mold a situation to meet the company’s needs. This is a highly valuable form of power (in the top three). Depending on how it’s utilized, informational power can create passionate and engaged employees, or it can create employees who are angry, upset, and unhappy.
  • Expert Power: This is the type of power based on experience and know-how. The more learning or understanding you have around a specific skill set, idea, practice, or process, the more power you have. Expert power is the most influential form of power (in general). The amount of power present in this form presumes that reason prevails, which isn’t always the case. Expert power creates trusting and engaged employees. 

The Right Way to Wield Influence as a Leader

With power comes the ability to influence. Each type of power above utilizes specific levers (reward, punishment, threat, information, knowledge, charisma, respect, morals, etc.) to influence behavior. In general, the rule of thumb for wielding great influence as a leader is to always, always, always be a good human.

Sticking to the good old golden rule is a great way to wield influence properly. Staying true to your word and your promises, remaining open and honest with your employees to the extent that you can, and earning real trust from your employees are key to wielding influence in the right way. It’s important to remember that just because you have a great title doesn’t mean your employees will automatically respect (or do) what you say. You have to earn that respect, and it’s only one aspect of building your circle of influence in today’s business world.

It also pays to use your influence judiciously. If you throw your weight around on every little issue, you’re likely to rapidly wear away any amount of power you may have accumulated. Be fair, open, direct, and honest in all your dealings with employees and only throw your title around when absolutely necessary. Remember, just as quickly as that title was granted to you, it can be rapidly taken away.

The best rule of thumb for wielding power in the right way is to be a conscious and conscientious leader. I have written extensively on the characteristics that great leaders need to hone and nurture—and I stand by those. As business changes and evolves, you have to commit to doing the right thing; encourage diversity of voices; challenge the power norms; set, maintain, and manage clear boundaries between work and home; and keep learning, growing, and challenging yourself.

While 2020 has not turned out to be the kind of year we all thought and hoped it could be, it has certainly presented plenty of challenges that allow great leaders to truly shine. Now more than ever, it’s vital that leaders really hone their tools of influence and power to do the right thing for their business and their employees. By understanding the subtleties of power, the types of power, and the impacts power and influence can have on employees, great leaders can learn to wield their influence in a way that improves their business, company morale, employees’ lives, and—by extension—the country and the world. As we navigate the new and ever-evolving business landscape, powerful leaders must do the right things with their influence.


  • Angela Roberts


    U.S. Money Reserve

    Angela Roberts (fka Angela Koch) is the CEO of U.S. Money Reserve, one of the largest private distributors of U.S. government-issued gold, silver and platinum coins. Known as America's Gold Authority, Angela oversees every aspect of operation, while setting culture and pace for the entire organization. With a proven background in business planning, strategy, mergers, acquisitions, and operations, Angela has an in-depth understanding of how to run a successful business and is credited with creating the analytic and KPI structure at U.S. Money Reserve. Believing strongly that the people make the business, Angela has positioned U.S. Money Reserve to be a trusted precious metal leader that always puts their customers and employees first. Learn more in her latest interview with Forbes here, https://bit.ly/2MUQj6a.