On many levels, power is extremely important in terms of providing direction and assisting in the management process. When examining it from the top down elements, power and authority can help to give structure to an organization, assist employees in performing better, and allow short and long term goals to be articulated and reached. The charting of an organization's success can be largely dependent on top down directives. On another level, power coming from the bottom up can also be important. Such a conception of power can help to give voice to workers and those whose voice might be marginalized. Individuals who can collectivize from the bottom up can advocate for rights and articulate a responsive vision that organizations must appropriate in the process of striving for success and sustainability.
Power is important in an organization because it helps to accomplish one's objectives. The more power an individual or group of individuals within any particular organization wields, the more influence it will have and the more it will achieve. That is the point of pursuing power: control one's environment and dictate outcomes.
Power within an organization can be accumulated in a number of ways. The owner of a business, obviously, has more influence in that company's operations than the employees. A famous comic strip, The Wizard of Id, once ran a cartoon that included an exchange between peasants responding to the notoriously narcissistic king's exclamation to "remember the golden rule." When one peasant asks, "What's that," another responds, "Whoever has the gold, makes the rules." That is how life works. Money is power, and whoever has the money wields far more influence than those who do not. Warren Buffet and Bill Gates enjoy a degree of influence in America out of proportion to their percentage of the nation's population simply because their business successes helped them to amass enormous wealth. That wealth, in turn, provides them the ability to influence public affairs. Financial contributions to favored causes helps such individuals to affect outcomes. The ability to affect outcomes is power.
Within organizations, absent power, one's ability to influence operations or policies is severely limited. Moral authority will only get someone so far. The more power an individual secures, the more likely he or she will achieve his or her objectives.
In organizational context, the term power refers to the ability of individuals to influence the conduct or activities of others. People in an organization draw such power from many sources such as formal authority defined by organizational structure and policies, expert knowledge and skill, ability to control resources, and interpersonal skills.
Power is essential for smooth functioning of any organization. An organization usually consists of many people and the activities of these people need be channelled and coordinated in particular ways to achieve the organizational objectives. To do this most important is the power exercised by managers over their subordinates to direct and control their activities. However, members of organization also exercise power in some form or other over their peers and superiors also.
Power is important for organizations in another ways also. Power may be exercised by individual and groups of individual to achieve their personal objectives, in ways that may interfere with achievement of organizational objectives. Therefore it is important to understand the nature of such such power and regulate it. It is best if ways can be found to channelise such power to assist in achievement of organizational goal. When that is not possible, at least it must be kept in check to minimize negative impact on achievement of organizational objectives.