It is helpful to distinguish authority from power. Managers hold positions of power and authority, but authority is different from power structure; power is broader in scope. The organization gives managers and employees formal authority to do the job, managers are given positions of power. Formal authority (or structure) is based on the specified relationships among employees. It is the sanctioned way of getting the job done.

Informal authority arises from the patterns of relationships and communication that evolve as employees interact and communicate. It is the unsanctioned way of getting the job done. Formal authority is common in mechanistic organizations, whereas informal authority is more accepted in organic organizations. The scope of authority is a hierarchy that narrows as it flows from the top down through the organization.

The levels of authority  are the authority to inform, the authority to recommend, the authority to report, and full authority. The authority to inform. You inform your supervisor of possible alternative actions. The supervisor has the authority to make the decision. The authority to recommend. You list alternative decisions and actions, analyze them, and recommend one action.

The authority to report. You may freely select a course of action and carry it out. However, afterward you must report the action taken to the boss. Full authority. You may freely make decisions and act without the boss’s knowledge. However, even people with full authority may consult their bosses for advice.