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Coercive power, reward power and legitimate power are all formal powers.

A person’s position in a company can give him influence over others below him, thereby affording him formal power. A person reacts to this power out of fear of the negative results that might occur if he/she failed to comply.

Rewards distributed because of a job well done can either be financial or nonfinancial.

Financial rewards come in the form of raises or bonuses and nonfinancial rewards can come in the form of recognition, promotions and preferred work shifts or assignments.

Reward power is based on positive benefits given to workers if they comply with another’s directives.