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How to use formal and informal power on your dairy

Bob Milligan Published on 19 September 2012

“I am the owner! Why do I feel so powerless?”

“Why don’t my employees do what I tell them?”



“I wish I had more influence with my partners.”

“Employees frustrate me.”

As I teach and interact with farm and agribusiness managers, I frequently hear comments like those above. Why do managers so often feel like this?

Owners and managers are often frustrated because they fail to motivate fellow owners and employees to consistently and enthusiastically work toward business success. This frustration is related to influence.

The frustration can be reduced by understanding the limitations of formal power and the great potential of informal power. Influence is defined as affecting the behavior of others – in this case fellow owners, family members, employees and trusted advisers.


Most farm and agribusiness owners overestimate the importance of formal power. Formal power is based on the position held by the leader – owner, manager, supervisor. The perception is that those with formal titles have all or most of the power – nothing could be further from the truth.

Let me illustrate with a personal experience:
Many years ago a farm owner/manager came to me after a two-day leadership workshop and stated: “I am going home to get my farm back!” Before the workshop, he had assumed that since he was the owner, he was the one his employees were following.

He had sensed that something was not right but did not know what it was. After learning about the many sources of power and considering what was happening on his farm, he recognized that a long-time employee was the one that was actually most influencing what was happening on the farm.

Formal power
As the farm owner learned in the workshop, formal power is not the only source of power. Even more important, formal power is seldom the best power to use to influence people. Let’s think about why:

• The ultimate use of formal power is in a dictatorship. Look at our founding fathers or what has been occurring around the globe in recent years. People are rebelling against – even risking their lives to get out from under – formal power. Why? Because they believe it is unfair. Obviously, not all uses of formal power are as unfair as in a dictatorship. The perception of unfairness is, however, an ever-present danger in the use of formal power.

• Would you rather do something you “want to do” or something you “have to do”? The answer, of course, is the former. This creates the second challenge with the use of formal power. People – employees in this case – are “doing what they have to do” when formal power is used.


Informal power
The good news is that leaders and farm owners need not always rely on formal power in working with partners, employees and trusted advisers. They can use “informal power” sources to build trust so that partners, employees and trusted advisers will follow because they want to.

A second advantage of informal power is that it is available to everyone, even if they have no formal power. You do not need a formal title to use informal power.

Informal power sources includes:
• Expert power is based on one’s possession of expertise, skill and knowledge which, through respect, influences others. Everyone knows that you are the dairy and/or crop expert. That expertise brings you and your ideas great respect. You also, however, often have more education, knowledge and experience than others at your farm in many additional areas including leadership, supervision, financial analysis and interpersonal relationships. Use this expertise to generate great ideas. Power comes from great ideas that you are able to communicate to others.

• Reward power is based on one’s ability to reward people. Followers believe that their cooperation leads to gaining positive incentives such as recognition or promotion. Remember that behavior is most determined by consequences. Positive feedback and other non-monetary rewards are powerful forms of power.

• Personal power is based on one’s personal traits. Personal power is your ability to influence through effective interpersonal communications. A person high in personal power is generally liked and admired by others, enabling them to influence others. A person high in personal power is often referred to as having charisma.

• Information power is based on the person’s access to information that is valuable to others. This power base influences others because they need this information or want to be let “in” on things. Early access to financial information and to future plans are examples of information power.

Managers in all fields including dairy farmers often expect employees to willingly and enthusiastically do as told because they are the boss – they have the formal power. Realistically, though, if we want to influence people to follow willingly, formal power should be the last choice. Formal power produces compliance, but not willing followers. All leaders must use formal power at least on some occasions, but its use should be minimized.

Effective farmer owners, like all leaders, minimize the use of formal power and instead maximize the use of informal power, especially reward, personal and expert power. Effective leaders and managers utilize a variety of informal power to build trust and gain commitment, enthusiasm and passion from their employees and only resort to the use of formal power when absolutely necessary. PD

Milligan is also a professor emeritus of the Dyson School of Applied Economics and Management at Cornell University .

Bob Milligan

Senior Consultant
Dairy Strategies, LLC