1 Concept of power at HBL:

Concept of power at HBL:

Power: A capacity that a person ‘A’ has to influence the behavior of person ‘B’ so that
‘B’ acts in accordance with A’s wishes.
At each organization there is obviously some designations are powerful according to
their authority and on the basis of formal and personal power.

Formal Power: It bases on the individual’s power in an organization it comes from

coerce, reward or from formal authority.

Coercive Power: The coercive power dependent on fear. One reacts to this power
out of fear of the negative results that might occur if one failed to comply. At HBL
managers of branches have coercive power over their branch subordinates as they can
dismiss, suspend or demote. Similarly Area managers have coercive power over branch
managers, Regional Presidents have power over Area Managers, and CEO has power
over Regional Presidents and finally chairperson has coercive power over President of
HBL.

Reward Power: Compliance achieved based on the ability to distribute rewards

that other view as valuable. The rewards can be either financial such as controlling pay
rates, raises and bonuses or non financial including recognition, promotion, interesting
work assignments, and preferred work shifts. At HBL the reward power circulates as in
the hierarchy of coercive power. Managers report the progress of branch subordinates
to the Area managers who further report to Regional manager who decides the
promotion or reward of Branch and Area Managers. The performance of regional
Presidents is inspected by President of HBL who promotes or demotes the regional
managers. Chairperson has authority to designate President of HBL with the help of
Board of directors and advisors.

Legitimate Power: The power of the person receives as a result of his or her
position in the formal hierarchy of an organization. It is broader than the power of

M. Ismail (L1F07BBAM0001) UNIVERSITY OF CENTRAL PUNJAB

2 Concept of power at HBL:

reward and coercive. At HBL the higher legitimate power is of President. At lower level
branch managers, Area managers and regional presidents have legitimate power.

Personal Power: it is the power that comes from an individual’s personal

characteristics. There are two kinds of personal power; Expert and referent power.
At HBL only expert power is being practiced. Boards of directors and advisors have
expert power at HBL. The power hierarchy is as following,

Ch air per s
on
Board of Direct or s &
Advi sor s

Pre siden
t
Vice-
Pre sident

Regional President

Regional vise- President

Area Manager

Bra nch
Ma na ger

Bra nch
Su bordi nat es

M. Ismail (L1F07BBAM0001) UNIVERSITY OF CENTRAL PUNJAB