Leadership vs. Management: The Difference (Part II)

Figure 1: Formal Organizational Power

I continue to receive a steady stream of visits to my original post on this topic, so here’s a follow up. As I mentioned previously management is to leadership what a house is to home. Developing the relational aspects of leadership will further help to define this difference. Let’s begin by looking at two broad types of power in an organization: formal and informal.

The first is the authority given to each job function by the organization as represented by the organizational chart (Figure 1). A job’s title, position in the hierarchy and stated responsibilities give this authority. Thus, people will listen and accept another simply because those are the rules.

The second is the personal influence each person exerts on every other person (Figure 2). In business, we frequently see this as someone having a particular expertise, experience, personality or quality that encourages members to listen and accept him.

Figure 2: Informal Organizational Power

Therefore, while formal power remains the same no matter who has that job (unless the organization changes the rules), informal power varies depending upon the person who is in that job. Often we perceive this as credibility: How much credibility does a person have in the performance of that job?

Management is more about the use of formal power and leadership informal power. Formal power relies upon organizational structure just as a house is a structure. Informal power relies upon personal influence just as a home’s ambiance influences us. Just as two houses can have the same structure but feel differently as homes, two people can have the same jobs but the influence they exert upon others will have a different feel.

In simple terms, management is about using authority well; leadership is about using personal influence well. The latter makes an organization . . . a team.