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Introduction
The Koch brothers utilized different power sources and persuasion tactics in their long-running sibling rivalry for the control of Koch Industries. The company started in the 1900s by Fred, who spent most of his time fending off other established oil firms intending to drive him out of business due to his innovative oil refinery tactics. Koch Industries grew to become one of the most successful entities of its kind, running oil pipeline operations, drilling, refining, making chemicals, coal mining, and cattle ranching. Freds sons, William, Charles, Fred, and David, grew up in their business empire, learning about the operations. However, in later years, the brothers ganged up against each other, exploiting persuasion tactics and their respective power sources to control the giant firm. Their long-running squabbles reflect how individuals seek to influence one another and establish themselves as leaders in any organization.
Charles and Bill Kochs Sources of Power
Charles Koch, 53, had different power sources, which he exploited to assert his position and repulse the companys takeover by his brothers. As the chairman of Koch Industries, he had legitimate power and authority to execute his decisions, including firing William. Legitimate power stems from the designation or position held by an individual, which confers them the right to direct actions of the subordinates. By the position in the company, his brothers recognized and complied with his instructions, although reluctantly. For instance, William, discontented with Charles radical action of firing him, had to leave the company as an acknowledgment of the legitimacy of Charles chairmanship. Moreover, Charles legitimate power is demonstrated in his actions of building the companys new headquarters, acquiring the control of other firms, and diversifying the Kochs business interests into new sectors.
Additionally, Charles had a substantial proportion of expert power, which he obtained from his training at MIT and the amassed experience from a consulting firm in which he worked. His training and venture in other companies equipped him with skills and knowledge that supported the molding and growth of Koch Industries into a successful global enterprise. According to Luthans et al.(2015), expert power originates from the knowledge and understanding manifested by an individual in specific areas. As people gain experience in particular areas, they become thought leaders in those fields and accumulate expert power that can be utilized to spur progress. Charles uses his insights to run the company and make various rational organizational decisions, such as poaching talented employees from other oil companies, which also earned him some expert power due to the trust and credibility he established. Bauer and Erdogan (2012) assert that the competence and suitability of expertise demonstrated by individuals within an organization stimulates motivation and better performance. Thus, Charles expert power was influential in steering Koch Industries to the present giant corporation.
Bill also enjoyed legitimate power stemming from the rightfulness of his position in Koch Industries. Since joining the company in 1974, he had been a critical cog in the management and operations and felt slightly lower than David and Charles. Bill had scaled the corporate ladder from a salesman to the companys head of the mining subsidiary, Koch Carbon, and enjoyed reward power in the form of salaries and regular promotions (Tomsho, 1989). His extensive analytical attitude disadvantaged him as the detailed assessment of all the facets of an issue exposed him to indecisiveness instead of rendering useful insights (Schulman, 2014). The shortcomings prompted Charles to always keep him on a short leash, only allowing him some carefully measured amount of freedom. For instance, Bill worked with small budgets and was required to report to non-family executives within the organization (Tomsho, 1989). The strained working relationship between the two was evident as Charles did not treat Bill pleasantly, and the latter craved for more power within the entity (Schulman, 2014). Thus, Bill had legitimate power under his position in Koch Industries.
Influence and Tactics Used in the Battle for Control of Koch Industries
Charles and Bill deployed multiple tactics and influences to displace each other and obtain maximum control of the business empire. The two built coalitions, engaged in consultations, rational persuasion, and exerting pressure in their bid to expel the other and merge the companys authority around themselves. Bill teamed up with Fredrick and nearly ejected Charles from the firm in a proxy fight in 1980. However, Charles built an alliance with shareholders and David, ultimately prevailing over Williams onslaught. To consolidate his power and gain the unwavering support of Kochs executives, Charles exchanged their loyalty with company stocks and finally fired William.
In a rebuttal, William initiated a rational persuasion in a federal court where he adduced facts, logical arguments, and data to demonstrate Charles fraudulent activities. In his suit, William alleged extravagant expenditures in the form of hefty salaries, bonuses, and donations to the Libertarian Party (Tomsha, 1989). In subsequent litigations, William accused his two brothers of racketeering and hiding some of the companys properties, occasioning a short sale of his stake. Charles also utilized this influence tactic by proclaiming that William was mentally unstable and referred to Williams 1970s psychiatrist visit to back his argument. Additionally, in cooperation with David, Charles deployed an exchange tactic in which he bought out Fredrick, William, and other dissenting shareholders. Eventually, Charles gained a 51% stake in the company since the board felt that Bill had overreached himself, causing panic and instability in Koch Industries (Schulman, 2014). Bill was dismissed through voting by the four men, leaving Charles to control the business empire.
Charles Kochs Victory
Charles victory can be attributed to his ability to strategically exploit soft power and build alliances around reciprocity instead of coercion. He built solid relationships with employees through co-option, attraction, and appeal, which ultimately earned their loyalty to him. The members demonstrated unwavering confidence and allegiance to him regardless of Bills actions and mudslinging in public. Charles paid keen attention to his fathers teachings from a young age, learning to assert and standing out from the rest. Additionally, his pursuit of the companys control was underlined by a progressive plan for the company, as evidenced by the stability and growth recorded by Koch Industries during his reign. On the converse, Bill craved power with no sound plan on what to do with it.
Kochs power struggles provide invaluable lessons, especially in the context of administrative control and management. In my view, the readings primary lesson is that people should earn their power and use it prudently to advance non-selfish interests. Obtaining power and abusing attracts rebellion, which erodes its authority and its eventual loss. Moreover, people in positions of authority should strive to earn the confidence, loyalty, and allegiance of people around them as they form the immediate support base against any attempted attacks.
References
Bauer, T. N., & Erdogan, B. (2012). Organizational behavior. Flat World Knowledge.
Luthans, F., Luthans, B. C., & Luthans, K. W. (2015). Power and politics. Organizational behavior: An evidence-based approach. Information Age Publishing.
Schulman, D. (2014). Koch vs. Koch: The brutal battle that tore apart Americas most powerful family. Mother Jones. Web.
Tomsho, R. (1989). Blood feud: Koch family is roiled by sibling squabbling over its oil empire fired his brother, William sues often, helps Feds to probe Koch Industries hailing mother into court. Wall Street Journal.
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