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CHAPTER 12: LEADERSHIP POWER AND INFLUENCE 367
high-tech talent was so severe that many employees could shop around, gather
several offers, and then demand more money and benefi ts from their employers.
With a struggling economy and massive downsizing, however, such as occurred in
the early 2000s, the situation reversed. Once again, managers gained more clout

over workers because people would have a hard time finding comparable jobs
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and salaries elsewhere. When jobs are hard to come by and unemployment is
high, organizational leaders have greater power over employees because most
people are dependent on the organization for their livelihood.
This type of dependency primarily affects a leader’s position power, which is
based on formal authority and the ability to bestow rewards and punishments.
When supervisors are dependent on employees, such as in a tight labor market,
leaders must gain and exercise personal power to a greater extent, because people
will often stay in a job where they admire and respect the leader, even if other
opportunities are plentiful. When jobs are scarce, it is easier for leaders to get by
relying on position power, but they won’t get the full benefi t of employees’ enthu-
siasm and commitment.

Control over Resources
Dependency within organizations is related to a person’s control over resources.

Resources include such things as jobs, rewards, financial support, expertise, knowl-
edge, materials, information, and time. As illustrated in Exhibit 12.4, people are
more dependent—therefore leaders and organizations have more control and
power—when resources are high on three characteristics—importance, scarcity,
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and nonsubstitutability. People in the organization must perceive the resource to
be important—that is, if nobody wants what you’ve got, it’s not going to create
dependency. Resources can be important for a variety of reasons. For example, they
may be essential elements of a key product, they may directly generate sales, or
they may be critical to reducing or avoiding uncertainty for the organization’s top
decision makers. Chief information officers have gained a tremendous amount of

power in many organizations because of the critical role of information technology
for both business and non-profit organizations. Similarly, ethics and compliance

officers are highly powerful today because they help reduce uncertainty for top
leaders concerning ethical lapses and fi nancial malfeasance.
Exhibit 12.4 Characteristics That Affect Dependency and Power in Organizations

Leader has Leader has
control over: control over:
Resources seen as Resources seen as
unimportant Importance very important

Widely available Scarce
Scarcity
resources Resources

Resources with Resources with
Nonsubstitutability
acceptable substitutes no substitutes

Low dependency High dependency
on leader = on leader =
lower power higher power