The Koch brothers, Charles and Bill, have been major political actors in the United States for half a century (Hertel-Fernandez, Skocpol, & Sclar, 2018). The brothers have provided funding to promote libertarian policies and Republican candidates, and they have been highly successful in advancing their interests. Charles and Bill Koch have made enormous contributions to society, but I would not recommend them as role models for any young people seeking to make a difference in this world.
The Luthans’ (2015) book “Organizational behavior: An evidence-based approach” outlined Charles and Bill Koch’s sources of power within Koch Industries. The four sources of power identified in the book are legitimate power, coercive power, referent power, and expert power. Legitimate power is the perceived right to influence others based on the power holder’s status or position. Within Koch Industries, Charles and Bill Koch have legitimate powers as they are owners and managers of the company. Coercive power is the ability to reward or punish employees while also forcing employees to comply through force. The Luthans’ (2015) book did not identify this type of power within Koch Industries. Referent power is a type of social influence that derives from an individual admiring another person’s abilities or characteristics and wanting to imitate them. Based on the description in The Luthans’ (2015) book, referent power was likely present within Koch Industries during its early years when it was owned by the family members. Expert power is the ability to influence others by relying on knowledge and experience that cannot be questioned by others.
Charles and Bill Koch have reward power, coercive power, legitimate power, and expertpower. Charles is the CEO of Koch Industries. He has reward power because he gives positive reinforcement to his employees by providing them with good benefits such as healthcare, dental insurance, and a retirement plan. Charles also has coercive power because he controls how much money they make. Charles has legitimate power because his employees respect him and follow his directions due to his leadership abilities. Charles also has expert power because he is an expert in business management which helps him run Koch Industries more efficiently and effectively. Bill is a board member of Koch Industries. He has reward power because he rewards employees by providing them with bonuses based on their work performance. Bill also has coercive power because he controls how much money they make. Bill has legitimate power because his employees respect him and follow his directions due to his leadership abilities. Bill also has expert power because he is an expert businessman who knows how to manage businesses better than most people do.
Billionaires Charles and Bill Koch are fighting bloody battles to control the future of the multinational industrial conglomerate they inherited.
In their battle, they have been accused of using tactics designed to limit employee rights and company transparency. These tactics include buybacks, lock-ups, poison pills, short-term performance management systems, and timing their public offers to correspond with employee restricted stock vesting dates.The Luthans brothers, who have written a book on organizational behavior, say that these tactics are common in business when a family is about to lose its majority ownership. The technique is for the family to gain control of the company by making sure other families or companies cannot get a large enough share of the company stock to wrest control from them.
Charles and Bill Koch are two of the most persistent and ruthless business people in American history. They made their fortune with oil and expanded it into real-estate, cattle, timber, chemicals and finance. They have fought for control of their company against each other, against unions, against competitors and against anyone who questioned their methods.
Charles and Bill Koch began to fight for control of the company after their father’s death in 1967. Their relationship had always been distant; Bill was seven years younger than Charles and lacked Charles’ interest in the family business. Bill also had a very different personality: he was relaxed where Charles was driven, easygoing where Charles was intense. Charles had become CEO after his father died but only controlled a third of the stock. The rest belonged to Bill and other family members. By 2012, when they were locked in one of their many conflicts with each other, Charles controlled more than half the stock but still didn’t have enough votes to fire his brother as CEO. Charles hated being out-voted by his own brother on the board of directors even as he fought for control of the company that was actually making money for them both. So he set out to take control of the board itself rather than just one-third of it.
A key reason why the Koch brothers won was because they tried to understand and make use of the political process that would be required to achieve their ends. They also were not afraid to lose, which is a risk others shied away from. Charles G. Koch had been active in politics since the 1960s, when he began arguing for individual rights in contrast to majority rule (Luthans, 2021). This was an unpopular position at the time, given that minorities were sometimes being treated unjustly. However, his strong belief in individual rights led him to take this unpopular stance even at a personal cost.
Charles Koch understood that he needed to learn about politics so he could influence the political process in a direction that best aligned with his beliefs and values. He invested considerable time and money into understanding what makes politicians tick and how politics works on a national level. His efforts helped him realize that people who used government to help others actually had little interest in changing people’s lives for the better; rather, they wanted to control people’s actions with government force and intimidation. This realization further solidified his decision to work towards limiting what government could do rather than using it as a tool of change.
Charles Koch is a man who believes in the free market and how it can help improve people’s lives. He has seen that it can do this in his own life by giving him the means to do what he wanted. But he has also seen how it can be abused, taken advantage of, and manipulated. He has seen how much better off people would be if they could rely on the free market to provide for their needs and wants without someone manipulating them or taking advantage of them. In fact, he has probably seen this more than most people. He had to live through an era when his company was under control of someone who made decisions that were not in the best interest of anyone except himself and his family.
Charles Koch saw first-hand how being in control of a business can lead to becoming less like a person who cares about others’ well-being and more like someone who cares only about his own. The key thing here is that he never forgot where he came from or what got him where he is today. That is why I believe that Charles Koch was so successful at exposing the wrongs done by those who would manipulate others for their own personal gain instead of allowing them to live freely and independently as they please.
I think that the most important lesson is that power struggles should not be underestimated as nothing more than a form of political maneuvering. I believe that one should take these battles very seriously as when there are power struggles at hand it shows that there are underlying problems between individuals in an organization that need to be resolved before the organization can truly function successfully.
Chapter 10 of Organizational behavior discusses different forms of power including legitimate power; reward power; coercive power; expert or referential power; information or exchange power; and personal influence. In this case study we can see how Charles Koch uses each type of power to reach his objectives in his company Koch industries without having to resort to violence or force which is what makes this particular case unique as it demonstrates how a powerful leader can effectively resolve conflicts using other methods such as manipulation and negotiation rather than brute force.
Ultimately, Charles Koch’s success was strongly connected to the unique nature of his philanthropy, which emerged from the fact that the foundation was set up as a private foundation. This distinctively private model influenced not just how the foundation was organized and empowered, but also why it was selected. A sample of 323 foundations, representing nearly 8 percent of all private foundations, had annual giving as their primary activity. He had better alliances and made sure he utilized them. He involved unions in his cause as well as other companies that agreed with him and tried to work with management. He believed in the importance of politics on what he and his brother wanted to accomplish. Charles Koch talked about the importance of politics. As a result, he went out of his way to learn about politics and what it took to be successful in it. He spent time with politicians and participate in political activities. Charles Koch knew that making an effort was more important than being smart. Therefore, Charles Koch’s political efforts would lead him to great successes in politics, whereas his brother would never succeed in politics because he did not do enough to learn about how it worked.
Over the course of our reading I have learned several important lessons regarding organizational power. One is that power must be acquired, fought for, and protected. The second lesson tells us to never anger those whom you have equal or greater authority than. These are both relatively common sense and are pretty easy to obtain if one is smart about it. But the third lesson tells me to always try to be prepared for whatever comes my way, even if that means learning from others mistakes (Allen, Porter, & Angle, 2016). That being said, we’ve learned some important lessons on organizational power that can really help us later in our lives when dealing with these types of power struggles . Another lesson is that organizational power struggles are something that happen all the time. Considering I have been through a few of them myself, I have to apply my knowledge in this article to better prepare myself for what’s being thrown at me, so I can be prepared to take care of myself in the midst of all this; this article has helped me do just that.
Luthans, F. (2021). Organizational Behavior _ An Evidence-Based Approach.
Hertel-Fernandez, A., Skocpol, T., & Sclar, J. (2018). When political mega-donors join forces: how the Koch network and the democracy alliance influence organized US politics on the right and left. Studies in American Political Development, 32(2), 127-165.
Allen, R. W., Porter, L. W., & Angle, H. L. (2016). Organizational influence processes. Routledge.