Power vs Influence: Why Finance Leaders Who Rely on Their Title Lose the Room

Leadership and Influence in Finance: Beyond Positional Authority

If you lead a treasury or financial risk team, your title opens doors but it does not earn you your team's best work. This post applies the French and Raven framework of social power to finance and treasury contexts, where the gap between positional authority and genuine influence shows up directly in delivery quality and risk culture.

The video above gives a solid grounding in the five forms of power. The sections below expand each one with context specific to finance and treasury teams.

For a broader look at how leadership differs from management in finance contexts, see our earlier piece on leadership versus management for finance professionals.

Why Your Title Only Gets You So Far

You get promoted to a senior role in treasury or financial risk. Your name moves up the org chart. People start copying you into emails they previously left you off. In meetings, the room goes quiet when you speak.

That quiet is not influence. It is compliance. And the difference between the two becomes visible the moment something goes wrong.

A compliant team does what you ask when you are watching. An influential leader builds a team that acts well when you are not in the room, that flags problems early because they trust you will handle the information properly, and that brings their best thinking to the work because they want to, not because they have been told to.

In banking and finance this matters more than in many other industries. Your team probably contains people who know the Basel framework, the LCR mechanics, or the PRA110 reporting requirements at least as well as you do. Telling someone with ten years of IRRBB modelling experience what to do, purely on the basis of rank, does not earn you their best work. It earns you the minimum required to stay out of trouble.

This is the territory we are covering. If you are moving into a leadership role or looking to grow your influence beyond what your job title delivers, the framework below gives you somewhere concrete to start.

The Five Forms of Power

Researchers John French and Bertram Raven identified five sources of social power in 1959. The framework has held up because it maps onto real organisational behaviour with uncomfortable accuracy.

Positional Power

This comes from your role. You are a Head of Treasury, a CFO, a Finance Director. The authority exists because the organisation created the reporting line and put your name at the top of it. Remove the title and the power disappears with it.

Most people entering leadership for the first time rely on this almost exclusively, because it is immediately available and feels concrete. The problem is that it caps out quickly. You can instruct people. You cannot inspire them.

Expert Power in Finance Teams

This is influence that comes from what you know. In treasury and finance teams, expert power is pervasive. The analyst who truly understands the encumbrance model, or who built the liquidity stress testing framework from scratch, holds real power regardless of their grade. People route questions through them. Their sign off matters informally even when it does not appear on a formal approval matrix.

Referent Power

This one is harder to build and harder to lose. It comes from who you are, the consistency of your behaviour, your authenticity, and your track record of following through. People want to work with you, or for you, because of what you represent to them professionally. This is the form of influence that outlasts any reporting line change.

Reward Power

The ability to give people things they value, including pay reviews, visible assignments, recommendations, and recognition. In a finance team context this includes giving someone the opportunity to lead a regulatory project, represent the team at a senior forum, or take point on an ICAAP workstream.

Coercive Power

The ability to sanction, to threaten consequences, to make someone's working life harder. It is real and every manager holds some version of it. The risk is significant.

When Power Backfires

Heavy positional authority combined with even occasional coercive behaviour produces a specific failure mode in finance teams: people stop telling you things.

Think about what that means in practice. A liquidity analyst spots a potential issue in the stress scenario assumptions two weeks before a major ILAAP submission. In a high trust team, they flag it immediately. In a low trust team, where the senior person shoots the messenger or creates blame rather than solving problems, they either stay quiet, or they frame the issue defensively to protect themselves. Both responses are worse for the business than the original problem.

The regulatory environment amplifies the problem. UK regulators have consistently emphasised that strong risk culture depends on people at all levels feeling able to raise concerns. A leadership style that relies on rank and fear actively undermines your firm's risk management, even when it looks efficient on the surface.

Relying too heavily on reward power creates a related problem. If people perform only when there is a visible prize attached, you have not built a team. You have built a transaction. Remove the incentive and the behaviour changes.

Expert Power: The Finance Professional's Natural Advantage

Here is something that genuinely works in your favour as a finance practitioner moving into leadership.

You have spent years building deep technical knowledge. You know how the LCR run off rates work in practice, not just in the regulatory text. You understand why a particular FTP methodology creates the incentives it does. You can read a PRA110 return and see what the numbers are actually saying about the balance sheet.

That knowledge is a source of power and influence before you ever manage a single person. The key is using it well rather than using it to dominate.

Using expert power well means explaining your reasoning so people learn from it, not just issuing conclusions. It means being genuinely curious when a junior analyst spots something in a model that you did not. It means saying clearly when a question is outside your expertise rather than bluffing through it. Bluffing once in front of a technical team costs you more credibility than saying "I do not know, let me look at that properly" ever would.

The most effective technical leaders in finance hold their expert power lightly. They are clearly credible but they are not performing credibility. There is a difference, and experienced practitioners can see it immediately.

Referent Power: Building Credibility That Lasts

Referent power is the form that most leadership writing romanticises. The reality is more straightforward than the mythology.

It builds through repeated small actions that are consistent with what you say you value.

You tell your team that accuracy matters more than speed on regulatory submissions. Then a deadline compresses and someone asks if they can cut corners on the reconciliation. What you do in that moment either reinforces or undermines everything you said before. Referent power is built in exactly those moments, not in strategy presentations or leadership offsites.

A few things that build it specifically in finance and treasury contexts:

• Follow through on commitments to your team. If you said you would review someone's model methodology and give them feedback, do it. If you cannot, say so and reset expectations before the deadline, not after.
• Be consistent under pressure. Behavioural consistency when a project is running badly is what people remember. Anyone can be a good leader when the numbers are clean and the deadlines are comfortable.
• Give credit accurately. When the NSFR analysis your analyst built gets praised by the CFO, make sure the CFO knows who built it.
• Acknowledge mistakes without theatre. If you called something wrong, say so clearly and move to what you are going to do about it. Extended self criticism is as unhelpful as denial.

None of this is complicated. The difficulty is consistency over time, especially when organisational pressure runs in the opposite direction.

A Practical Audit of Yourself

The question is not whether you have power. You do, in some combination of the five forms. The question is which forms you are leaning on and whether the mix is producing the team behaviour you actually want.

Work through these questions honestly.

Positional Power

When you make a decision and someone pushes back, do you engage with their reasoning or close the conversation with your seniority? How often do you explain the why behind a direction rather than just issuing it?

Expert Power

Is your technical credibility current? When did you last go deep into the detail of a regulatory or modelling question rather than delegating all of it? Are you using your knowledge to develop others or to maintain a monopoly on the answers?

Referent Power

Ask yourself what your team would say about you if you were not in the room. Not what they would say to your face. What is your track record on the small commitments, the ones that nobody is formally tracking?

Reward Power

Are the assignments, recognition, and opportunities you distribute going to the people who deliver the best work, or to the people who are most visible to you? The two are not always the same.

Coercive Power

Have you used it in the last six months? In what circumstances? Was it the right tool, or was it frustration expressed through authority?

The point of the audit is not to produce a perfect score. It is to identify the one or two shifts that would move you from producing compliance to building genuine commitment. Pick one. Work on it for ninety days. Then run the audit again.

Your title got you into the room. What you build from here is what keeps people there.