All organizations function on the basis of interdependent activities through various departments. As such they have a formal power structure that is clearly denoted in the organizational chart. Hierarchies in these structures denote formal power or authorization given to individuals as determined by their particular job designation. The higher up you are in the structure, the more formal power you have. It is however a well-known fact that there is usually a parallel organizational chart where the power structure may not necessarily be similar to the formal one. This is the informal power structure, which may at times prove to exercise more influence than the formal one.

Those with formal power exercise it on a daily basis in the process of doing their work. The informal ones however usually only exercise it when it suits their personal interest. But what is this thing called power? Charles Handy defines it as “the control or influence over the behavior of other people with or without their consent.” In simple terms, it means the ability to ‘have a say’ in organizational activities either directly or indirectly, in order to serve individual or group interests. In that context, power is an inherent feature in all organizations that features greatly in the decision making process. There is this perpetual jostling by employees to move up that informal organizational hierarchy to obtain this ‘informal power’.

Due to the nature of their jobs or work relationships, certain individuals are able to exercise a level of power in excess of their formal job designation. For example, a person who has specific knowledge and expertise critical to an organization will have power. Those who advise a formal authority figure have power, and this includes spouses, employees, secretaries, relatives, and even friends. A classic example is the secretary who fulfils the role of gatekeeper to the boss. She will wield considerable influence over the activities of the boss. A memo from someone whom the secretary dislikes can easily find its way to the bottom of the pile. Another good example would be the wife of the managing director, who may exert a tremendous amount of informal power in the organization, without even being part of the formal structure.

Power also arises from interpersonal sources such as the personality, charisma, characteristics and talents of individual members of the organization. They become the informal leaders of the organization. They play a critical role in the effectiveness of the organization, as they may at times wield more power than the formal authorities. It would make sense for managers to recognize these individuals early and to ensure that they are ‘used’ for the benefit of the organization.

There will also be many other people within an organization who will at various times have the ability to wield this informal power by way of granting or withholding ‘favors’. This is termed as negative power as it is usually used to serve own interests, sometimes at the expense of organizational interests. Negative power is not necessarily proportionate to position and may often be exercised by people at lower levels of the organizational structure. The danger with this type of informal power is that it usually leads to abuse, as is common in many organizations. For example, the clerk who processes claims in an organization wields power, as he or she is able to ‘influence’ the speedy approval and payment of claims. This power when abused could lead to corruption and other undesirable activities.

Informal power is inherent in all organizations and plays a critical background role in the smooth functioning or disruption of that organization. Management must come to terms with the fact that formal power may on occasions be subservient to informal power. This is a reality that has to be accepted and importantly, manipulated for the benefit of the organization. This, I however believe, is easier said than done.