Research

What do they value? Access as the source of power

Power is something that every leader, every manager and every business owner seeks, and needs, to further their interests. But, according to W. P. Carey Management and Entrepreneurship Professor Kevin Corley, most leaders simply don't understand the subtle nuances of power, or how power can be leveraged to further their organizational goals.

2011-07-13

Power is a fascinating subject. It's something that every leader, every manager and every business owner seeks, and needs, to further their interests. But, according to W. P. Carey Management and Entrepreneurship Professor Kevin Corley , most leaders simply don't understand the subtle nuances of power, or how power can be leveraged to further their organizational goals.

Understanding the nature of power — where it can be found, and how it can be leveraged for success — is important because no matter whether you are sitting at the negotiating table, in a board room at a desk in one of America's small businesses, you need power to achieve your objectives.

But power doesn't necessarily come from money, Corley says. Nor can it always be found in status. True power, at least in the realm of business, can be traced to resources, or more specifically, access to resources, real or perceived. Power ultimately emerges from "interdependencies," Corley says. In other words, the simplest way to influence others is to convince them that you have the unique ability to serve their underlying interests, and deliver to them precisely the resources they seek.

What do they need?

"The basic idea is that access to resources gives you power — more power than many people realize," he says. "You don't have to actually possess the resource. You don't even need to find it very valuable yourself. But if you have access to a resource and the other side feels that resource is valuable, then you do have power over them. They are open to your influence, because you have something that they want."

It's a simple idea that can be put to use in a variety of business settings and situations, Corley said. Take the example of the pending merger of two companies, one significantly larger than the other. From the outside looking in, it might seem that the larger company, with more money in the bank and a greater share of the marketplace, would hold all the cards in the merger talks. But according to Corley, that's not necessarily true. When it comes to power, size doesn't necessarily matter. Resources, however, do.

"Maybe that smaller company has fewer resources, at least on paper, and so maybe they would be walking into that negotiation feeling that they weren't in a very good position, or that they simply don't have much to offer," Corley explains. "But that's the wrong way to think about things.

They should instead look at what they do have to offer." Simply having "more" resources wouldn't necessarily give the larger firm more power in this case, Corley said, because the quality of resources may ultimately prove more important. Maybe the smaller firm has a wealth of talented staffers the larger firm can't pry away. Maybe it's grabbed a strategically important slice of the market — an area primed for growth, for example.

Or maybe it holds a patent that the larger firm believes it absolutely needs in order to move forward. The larger company wants to buy the smaller company, Corley says, so the executives of the latter would be smart to find out why, and then exploit that knowledge to seize control of the negotiation.

"You have to bring that to the negotiating table, because we know it will increase your leverage," he says. "One of the things we talk about in my negotiations class is really doing your homework and finding out what it is, exactly, that brought the other party into the negotiation. Is it purely financial?"

"Actually, in most cases, it's probably not. So you have to ask yourself, 'What are the other factors? What are they hoping to get out of it?' If you can pull those out and make them front and center, then it will increase your chances of striking a good deal."

Power to change

The same principle — creating power through access to resources — can also be applied to management situations, Corley said. For small business owners and Fortune 500 CEOs alike, getting the most out of their employees is paramount and an ongoing concern. But maximizing the potential of human capital becomes especially crucial during times of change.

Though management may rightly believe that their efforts to implement a new policy, restructure the organization or craft a new corporate culture will be of benefit to the firm, the reality is that employees often feel most comfortable with the status quo. Getting them to accept any kind of change represents a huge managerial challenge.

A cynic might say that the only way to truly motivate employees would be threaten them with termination should they refuse to play along, but Corley says such a view is simply too shortsighted. Smart managers, he says, understand that fear alone is counterproductive.

"If I as a manager am simply commanding you to change, or threatening you with consequences, it's very likely that over the long term, I won't be a very successful manager," Corley explains. "Because the reality is, eventually you as the employee will find ways to undermine my authority, or go behind my back and do things the old way."

A much smarter approach, Corley says, can be found once again in the "power through resources" approach. The trick is figuring out which resources employees seek — and which ones you, as a manager, can actually deliver. Once again, Corley notes that the resource in question isn't always money.

"If you're a manager in this type of situation and you're talking to your direct reports, you really need to find out what motivates them," Corley says. "For some people, it's the idea of autonomy. For others, flexibility of hours is the key. The key is being able to show them that following the new procedures or new policies will actually satisfy their interests. If you can do that, then they'll be much more likely to fall in line with what you want them to do."

Keep it personal

Corley's advice comes with one important caveat, however. He says these kind of management-employee negotiations cannot be handled en masse, for the simple reason that not all employees are the same. As a result, they don't all have the same wants or needs. That's why Corley encourages mangers to engage in these conversations or negotiations on an individual basis.

Such an approach is not only more effective with that individual employee, but also more likely to engender trust and willingness to change across the entire organization. Researchers working in the area of organizational change call this the "cascade of leadership."

It is, Corley says, the optimum result — but it can only be achieved when managers leverage their power-via-resources in a very personal way. "The real scope of influence that a leader has inside of an organization — except if you're extremely charismatic — is probably only within a line or two of you on the hierarchy," he says.

"The old idea of the leader, way up high on the org chart, talking to the organization and telling everyone why change is important and trying to motivate all of the employees — that's just a disaster waiting to happen. If you can't personalize the message, you can't win."

Bottom Line

• The source of power and influence is access to resources.
• You don't have to possess the desired resource, but you must be able to facilitate access to it.
• The resource is not necessarily something of value to you or your firm. Rather it is something the other party values.
• Learn to identify the resource and leverage it in business situations.
• The principles of power apply when motivating employees.
• These kind of management-employee negotiations cannot be handled en masse, because not every individual has the same wants or needs.
• The organization-wide effect can be trust and a willingness to change — what organizational researchers call the cascade of leadership.

Management Faculty