3. Relevance of the 5 Bases to Organizational Performance (D.D)

Organizational performance is broken down into three categories of performance. Financial, product market, and shareholder returns performance. Performance is measured as the actual versus the intended performance of an organization. The goal of any organization is to meet or exceed the intended performance. One way to accomplish acceptable organizational performance is for organizations to successfully implement the right amount of power. This is how the 5 bases are relevant to organizational performance.

Coercive power is used to reach short term goals within an organization. Since the power is brought on through fear or punishment, long term use of this will cause employees' performance to fall or cause them to leave the organization as they believe they will never receive anything good. An example of using coercive power to increase performance would be an organization threatening an employee that they will lose their job if they don't complete a certain task.

Reward power is a commonly used type of power. It typically offers a win-win situation for the organization and the employee. The employees are motivated by the rewards they can receive by increasing their performance within the organization. Examples include things such as raises, benefits, bonuses, or other non-monetary rewards such as higher recognition, better schedules, different tasks, etc.

Legitimate power is a must in attaining successful organizational performance. This power is represented through position within an organization. This is necessary because it aligns the organization with its goals. There is a set hierarchy or structure within organization and the main goals of the organizations are spread down the from top management through the lower level employees. An example is a manager assigning a task to one of his employees. The employee complies and does the task based on the fact the manager is above him on the work structure, and he knows it will benefit the organization.

Expert power allows organizations to meet many specific goals. They seek out employees who have a great deal of knowledge in things related to the organization's goals. Expert power can be obtained relatively easily as people are always learning and knowledge is "contagious." An example would be an organization that wants to improve its intranet. They can use the expert power of an IT person who has a high level of expertise in the field.

Referent power in organizations is a common attribute of managers. Organizations typically find upper level managers who have the ability or traits to influence others. These managers are set on the goals of the organization and want to perform the best they can. They use their referent power to lead employees in performing the way they need to in order to meet company goals.