Final answer:
Lord Wolfson, the CEO of Next, exercised reward power by distributing his annual bonus to his employees, incentivizing and recognizing their hard work and dedication. This power directly impacts employee motivation and fosters a positive work environment.
Step-by-step explanation:
The scenario presented describes a situation where Lord Wolfson, the CEO of a clothing company named Next, distributes his entire annual bonus of US$3.6 million among his employees. This act is a prime example of reward power. Reward power is one of the five bases of social power identified by social psychologists John French and Bertram Raven in their classic study "The Bases of Social Power."
Reward power is the ability to give or withhold rewards to influence behavior. In the context of the workplace, rewards can be financial, such as bonuses or salary increases; they can also include promotions, additional time off, or recognition among peers. When employees know they can receive tangible rewards for their performance or commitment, they are motivated to work harder and be more committed to the organization.
In the provided scenario, the CEO's action is a classic demonstration of reward power, as he uses his own bonus as a financial reward to acknowledge the hard work and dedication of his employees. Reward power is effective because it directly incentivizes employees and can foster a positive and productive work environment.