Whenever there is a particular system containing humans, like e.g. organizations, there must be some authority acting as a stabilizing factor making e.g. employees follow the directions of the leaders. Authority will help to prevent anarchy, and help to define a clear hierarchy of decision-making. A clear hierarchy will potentially lead to an effective organization, consisting of strong and legitimate authority relations between leaders and followers.
This authority is only granted leaders if followers find his or her authority legitimate. This illustrates the fictitious believe that leaders automatically posses authority. Instead, leaders are given authority by their followers to e.g. inspire, control and command. (Barnard, 1938). If authority is to be seen legitimate, the relation between authority and followers must be balanced, so that the authority relation is accepted by the followers. This was also seen by Max Weber as a prerequisite for maintaining authority and effective authority relations.
Max Weber distinguishes three types of authority: Traditional authority, Rational-legal authority and Charismatic authority.
This type of authority rests on an established belief that leaders have a traditional and legitimate right to exercise authority, where different traditional circumstances enable and legitimize those in command to exercise authority.
This traditional authority gives rise to patrimonial systems like e.g. patriarchal and feudalistic systems and societies. These systems are however dependent upon the followers' acceptance of this authority, and that the followers see this type of authority as legitimate.
This type of authority rests on the belief in the "legality" of formal rules and hierarchies, and in the right of those elevated in the hierarchy to posses authority and issue commands.
This type of authority is often seen as legitimate in bureaucratic systems, which enables impersonal, specific and formal structures of modern companies. People will hence find this type of authority legitimate, if the authority is distributed to leaders based on e.g. rationality and capability.
This type of authority rests on the belief in an exceptional sanctity, heroism or exemplary character of an individual, and on the normative patterns or orders revealed and issued by him or her.
Charismatic leaders are often seen as legitimate in times of crisis or change when extraordinary leadership is called for, and when this extraordinary leadership is recognized in the specific authorial figure by followers.
According to Max Weber, only the traditional and rational-legal types of authority relationships are stable enough to provide the fundament for permanent administrative structures such as e.g. business organizations. Structures formed on charismatic authority, will therefore most like need to evolve into more stable forms of authority.