How to Practice Interests-Based Leadership

By on / Business Negotiations

Why should the people you’re supposed to lead follow you?

If you believe that your charisma, your exalted office, or your vision is reason enough, you’re in trouble.

While these qualities may affect how others relate to you, the unvarnished truth is that other people will follow you when they judge it’s in their best interest to do so.


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Whether they’re acting as individuals or team members, people almost always give first priority to their own interests. Just as wise negotiators focus not on the other side’s positions but rather on their interests, effective leaders seek to understand the interests of those they lead and to find ways of satisfying those interests in order to achieve organizational goals.

Leaders’ failure to comprehend fully the interests of those they lead can have disastrous results.

  • In 1985, Joe Foran established Dallas-based Matador Petroleum Corporation to find and develop oil and gas deposits in the American southwest. Through a series of shrewd acquisitions, Foran built Matador into one of the larger privately held petroleum firms in Texas.

To raise capital, he gave investors seats on Matador’s board. With a 10% interest in Matador, Chairman and CEO Foran remained its largest single investor.

In spring 2o03, Tom Brown Inc., a publicly traded oil company based in Denver, offered to buy Matador for $388 million. Foran opposed the offer, which he felt did not account for Matador’s growth potential. At the board meeting to discus the bid, Foran was astounded when the other directors voted to approve the sale.

He realized too late that the other directors’ interests were not the same as his own. Foran had the energy and the talent to build the company that would give him security in his retirement, which was still many years away.

But most of the other directors were retired individuals, who had been hurt by the falling stock market and declining investment returns. Their interest was to take the money and run – and that’s exactly what they did.

  • Had Foran understood all this earlier, he might have been able to structure an agreement that would have given the directors the cash they needed while still allowing him to keep control of his company.

Effective leaders realize that they need to know people as individuals to truly understand their interests.

Some individuals care more about long-term career development, for instance, than about compensation.

When you understand where employees’ true interests lie, you can then shape your messages  and your actions to meet those interests in ways that will achieve your leadership goals.


Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School.


Related Article: Find the Right Leadership Voice

Adapted from “Real Leaders Negotiate” by Jeswald Salacuse for the May 2006 issue of the Negotiation newsletter.

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Comments

4 Responses to “How to Practice Interests-Based Leadership”

  • Ajay Veer S.

    This is an eye opener. I committed this mistake last year and lost six employees who were trained by me over the years.

    Reply
  • Dimitris K.

    I would agree that monitoring and understanding the micro environment is a must in order to manage. It is essential for leaders as well, in order to have data for their decision making progress. But stakeholders analysis is more a managerial process and capability than a leaders capability. Negotiators are not leaders. Emotional intelligence should not be confused with partnership negotiations. Caring for followers is not the same as managing stakeholders. The example mentioned is not the adequate one to describe leadership capabilities. Foran failed as a manager not as a leader.
    I believe that the article confused management and leadership which are of course correlated, but not leadership in the pure sense.

    Reply
  • Adrian B.

    Great article..brings back memories

    I know this story only too well from personal experience. Being forced to sell the family business because one member of the family was not engaged in the same plan as I was, and wanted the money. A second time when building a new business, I chose the wrong business partner. We had completely different ideas on how to grow the business and literally this week it has been broken up and sold.

    But it is not just senior managers that need to manage based on the interests of their employees and teams. It is vital to understand those you manage at a personal level, know their needs and dreams and their own purpose.

    My Failure led me to start Community Capital in Business to help Business owners, leaders and managers at all levels, understand how to create an engaging workplace and truly engage people at all levels. By sticking to the rules of “The Engagement Game” conflicting purpose can be revealed before the storm hits, and appropriate action can be taken to avert the surprise and the crisis.

    The only way to truly engage people who work for you is to understand their needs and serve those needs whilst serving the needs of the business (No matter how large or small the business). The challenge for managers at every level is to learn how to connect personally and professionally with their people and not rely on systems to do that job for them

    Engagement is and has to be personal – both ways!

    Reply

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