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Topical Perspectives in Business and Management

Top Ten Strategies for Holding on to Leadership

Equifax’s recent firing of its CEO and the forced departures earlier this year of the heads of Ford, Uber, and Yahoo are reminders that leadership is, as one British MP has said, “a leasehold, not a freehold.”  Whether you are a corporate CEO, a university president, or a foundation head, your lease on leadership can expire at any time, often when you least expect it. To withstand challenges to your leadership, keep in mind three fundamental principles. First, you are an organization’s leader because influential individuals or groups support your hold on that position. Second, those key players support you not because of your charisma or vision but because they judge it is in their interests. Third, their perceptions of those interests can change at any time. When that happens, they may withdraw their support, confronting you with an existential question: What can I do to hang onto leadership?

My new book, Real Leaders Negotiate! - Gaining, Using, and Keeping the Power to Lead Through Negotiation, answers that question by identifying ten strategies that embattled leaders use to fend off challenges. While leaders in some countries murder, imprison, or banish challengers, Real Leaders Negotiate! considers gentler methods of leadership defense, specifically those that rely on negotiation.

Here is a brief summary of the top ten negotiation strategies for holding on to leadership. Click on each to find out more.

1. Reaffirm and Strengthen Your Alliances

As long as your supporting alliances remain solid, you will continue to lead. So, when faced with a challenge to your leadership, you should first verify that those alliances remain intact. Indeed, as a leader, you should constantly engage in alliance maintenance, communicating frequently with supporters and moving quickly to deal with any sign of possible defection among directors, officers, and key employees on whom you depend for support.

2. Make New Alliances

When you lose the support of important allies, you need to negotiate new alliances that will keep you in power. This strategy is precisely the one used by heads of coalition governments when, because of changing political dynamics in a country, a political party that is a member of the coalition government threatens to quit the coalition. A prime minister facing the loss of leadership will usually try to find other political parties with which to build a coalition and therefore remain in power. So if you, as president of a foundation, want to devote funds to a new, but controversial areas of activity, such as help for undocumented workers in rural areas, but discover that some of your strongest supporters are dead set against the idea, you might, instead of dropping the idea, negotiate a new supporting coalition with other members of your governing board or appoint new members who share your views.

3. Pay Off Challengers, Preferably with Other People’s Money

Sometimes leaders can effectively remove challengers by buying them off, by giving them a benefit that will cause them to end their opposition. To use this strategy successfully, you have to understand what the people challenging your leadership really want and then devise an offer they can’t refuse. For example, in the mid-eighties Ross Perot became a director and the largest shareholder of General Motors as a result of the sale to GM of his company, Electronic Data Systems (EDS), and he then began to challenge the policies and leadership of Roger Smith, GM’s chairman and CEO. As relations between the two men became increasingly hostile and the subject of growing commentary in the financial media, Smith decided to adopt a two-step strategy to end Perot’s opposition: 1) to buy back the GM shares owned by Perot and 2) to remove him from the board.  After lengthy negotiations GM, invoking contingency clauses in the original sales agreement with EDS, repurchased Perot’s shares for nearly twice what it had paid for them just eighteen months before. Shortly, afterwards Perot resigned from the GM board, thus ending his challenge to Smith’s leadership.

4. Exclude Challengers

Challengers’ ability to threaten leaders depends very much on their place within the organization. By excluding a challenger from that position, a leader deprives the person of the power to make a credible challenge. German Chancellor Angela Merkel, a woman who has risen to power in a predominately male culture, has been a consummate practitioner of the strategy of exclusion throughout her career, for example by forcing Helmut Kohl from his position as leader of the party and Chancellor. A former US Ambassador described Merkel’s leadership style,

“If you cross her, you end up dead. There’s nothing cushy about her. There’s a whole list of alpha males who thought they would get her out of the way, and they’re all now in other walks of life.”

In situations where you don’t have the authority to fire opponents you may still have sufficient power to transfer them away from influential organizational positions, such as memberships on key committees, and thereby reduce if not eliminate the challenge to your leadership.

5. Agree to Yield Power... Later

Yet another way to deal with a competitor is to agree to give up leadership later and to support or at least not oppose your competitor’s subsequent rise to power. In return, your opponent agrees not to oppose your leadership for a fixed period of time. An example of such a negotiated deal was the so called “Granita Pact” between Tony Blair and Gordon Brown, allegedly made in London’s Granita Restaurant in May of 1994, when both men were rising stars in the British Labor Party. Supposedly, they agreed that Brown would not present himself in the next election for Labor Party leader to give Blair a stronger chance of winning, that if Blair subsequently became Prime Minister he would appoint Brown Chancellor of the Exchequer with wide powers over domestic policy, and finally that Blair would serve only two terms as Prime Minister and then resign to allow Brown to succeed him. In fact, Blair led the Labor Party to a resounding victory in 1997 and Brown became Chancellor of the Exchequer as a result. Labor won again in 2001and 2005 under Blair’s leadership. But instead of immediately resigning at that point as agreed, Blair, to the great annoyance of Brown, continued to serve as Prime Minister until 2007, at which time he resigned and allowed Brown to become Prime Minister.

6. Step Aside, but not Down

In certain situations, particularly strong leaders may negotiate an exit that allows them to give up the title and day-to-day responsibilities of leadership but hold onto a role and status that still gives them strong influence over organizational policies and decisions. Thus, a chairman and CE0 of a corporation might give up the title and powers of a CEO but hold on to the role of chairman of the company’s board of directors, the institution’s governing body. Similarly, Lee Kuan Yew, prime minister of Singapore from 1959 to 1990 and a dominant force in the modernization of that country, resigned but remained in the cabinet as “Senior Minister” (1990-2004) then “Minister Mentor” (2004-2011) where he continued to exert considerable influence. A similar case of a leader stepping aside but not down, was that of John Silber, the controversial president of Boston University from 1971 until 1996 who resigned to become Chancellor, holding that position until 2002 and continuing as a dominant force within the University.

7. Choose Your Successor

Outgoing leaders often seek to retain influence within the organization by choosing or at least playing a role in the selection of their successor, sometimes by advising, serving on, or even chairing the search committee.  They then use their power to pick someone who will follow their suggestions and recommendations on key organizational decisions. In some countries without strong democratic traditions, leaders who, willingly or unwillingly must give up their leadership position, often arrange that a spouse, sibling or child follow them as leaders. For example, Raoul Castro followed his brother as the leader of Cuba, and Christina Fernandez di Kirchner succeeded her husband Nestor as president of Argentina.

8. Share Leadership

Under special circumstances, two powerful contenders for leadership may negotiate an agreement to share power by becoming co-leaders. The history of such arrangements reveals that they usually develop into a continuing struggle for power, that they do not last long, and that ultimately one of the co-leaders drives out the other. In 1998, Citicorp led by John Reed and the Travelers Group led by Sanford Weill merged to form Citigroup, the largest corporate merger up to that time, with Reed and Weill to serve as co-chairmen and co-CEOs. The personalities, backgrounds, and outlook of the two men were strongly different. Weill was a brash trader, an instinctive decision maker, and skilled corporate in-fighter, while Reed was a cerebral strategist, corporate planner, and experienced bureaucratic manager. Strong disputes about policy quickly arose between the two. Ultimately, in 2000, the board of Citigroup decided to entrust the leadership of the organization to Weill alone, so Reed retired.

9. Divide Leadership

Another strategy for resolving leadership challenges is to divide the organization in parts and give each contender the leadership of a part. That was precisely the solution chosen to end the bitter conflict between the two Ambani brothers that threatened the future of Reliance Industries, one of India’s largest corporations. It was a special situation that few leaders and even fewer organizations would favor.

10. Negotiate a Soft Landing

Finally, when all other strategies fail, try to negotiate the best deal you can to ease your departure. If you have had the foresight to make an employment contract providing for termination payments if you are fired, you certainly want to collect the proceeds; however, you may want to extract other benefits as a condition for your departure, such as the use of an office, company car, continued secretarial assistance, paid membership for a year or two in your favorite club, and an expense account to cover the costs of your transition to being a former leader. The time to negotiate for these things is before, not after, you have submitted your resignation. Before you resign, you still have some leverage to secure these things from the governing board who may readily grant them to you as an acceptable cost for easing you from leadership. However, after you have resigned, the board, having achieved its goal, may see little reason to agree to incur those costs.

Jeswald W. Salacuse is a Distinguished Professor at Tufts University and the author of fifteen books, including Negotiating Life and The Global Negotiator.

Real Leaders Negotiate!