Leadership is a process of influence that can occur potentially anywhere in an organisation. It is not a set of behaviour limited to any role. Organisational leadership is defined as an interpersonal process involving attempts to influence other people in attaining some goal. Effective leadership is that which assists a group or an organisation to meet its goals and objectives and person successfully.

Power is defined in this course as the capacity or ability to influence. Power comes from positions, based on an organisational structure or personal power, based on individual characteristics (cf., Habermas' reputation of skills and respect of moral consistency). Formal authority ("legitimate power") is a type of position power granted to a person by an organisation. Reward power is the type of position based on a person's authority to give out rewards and coercive power the position based on the authority to administer punishments. Personal power includes expert power and referent power.

There are four key issues for managers to consider with power; how much should be used in a given situation, what sort of power should be used, how can it be put to use, and should it be shared? When putting power to use various influence tactics can be employed, specific behaviours which affect the behaviour and attitudes of others.

Leadership arises from a locus of the leader, their followers and a situation. Leaders have specific traits, skills and behaviours. Traits do not determine leadership effectiveness but can increase its probabilty. They include drive, motivation to led, honesty and integrity, self-confidence and emotional maturity. Leaders display a high level of emotional intelligence, the ability to be aware of others' feelings and being in control of one's own emotions. Social intelligence is the ability to read other people and their intention and adjust one's own behaviour in response.

Leader behaviour consists of task behavior and people behaviour. Task behaviour specify and identify the roles and tasks of leaders and their subordinates, such as planning, scheduling, setting standards and devising procedures. People behaviours include being friendly and supportive, showing trust and confidence, being concerned about others and supplying recognition.

Almost every leader is a followers of someone else, which shows the possibility of leadership changes. Leaders act, followers respond and leaders react to those responses. Followers often check their perceptions against the traits they think leaders should possess and the behaviours they should display. In organisational seetings leaders and followers engage in reciprocal relationships. The leader-member-exchange (LMX) theory suggests that the relationship-based approach focuses on the importance of a strong, mutually respectful and satisfying relationship between leaders and followers.