Understanding the Factors That Influence Whether an Executive Forms Part of an Inner Circle

Inner Circles

Understanding the factors that influence whether an Executive forms part of an inner circle

Jo Flaxman

April 2012

Introduction

For an executive to have their voice heard, be recognised, rewarded and promoted they need to form part of an organisations‘inner circle’, or at least work strategically within its influence. Having seen inner circles operate in different organisations I wanted to understand what theories (if any) existed to explain their formation and the way they operate. My belief being that if I could understand what was driving the behaviours I was observing, I could help an executive become part of this inner circle or very least operate safely within its dynamics.

Before commencing this to help clarify my thinking I used the SSM approach of defining a root definition and then following the steps of defining the CATOWE steps to clarify my thinking about how I would approach the topic. I choose SSM as a methodology given it enables complex social problems to be examined with a particular perspective at exploring politics. I drew rich pictures to both define the process of my research and the inner circles operating. I also compared the espoused systems of decision making to the systems actually observed in organisations. Having conducted a literature review I then drew a further rich picture to outline and make sense of my findings. Having identified from literature what I believed were the key factors influencing I then conducted interviews with Executives for their views on the factors that they had seen influence whether people formed part of the inner circle. I have interviewed four Executives (I have one still to interview). Interviews commenced with me asking them the open question of what factors they had seen influencing whether someone formed part of the inner circle and then following their train of thought. I was careful not to discuss or reveal any of my findings to date. Whilst the views contained in the interviews reflected those outlined below I have not transcribed and systematically analysed them consequently they are not included, other than the descriptors they provided of being ‘in’ and ‘out’.

I am defining an inner circle as the people a CEO will consult with ‘off the record’ and make key strategic decisions with, that are later ratified by the formal decision making processes. All Executives whom I spoke with described times when they had been both in and out of the inner circle. The times that they were out of the inner circle coincided with them leaving the organisation. Executives describe not being in the inner circle as feeling “isolated” wondering “whether I have got a future” that you “miss out on communication” are left “not knowing what’s going on” are “surprised” by information and find it “depressing” wondering “why bother” and “whether there is a future”. This is contrasted with when they are in the inner circle when they feel “part of it” “in the know” “valued” “consulted” and “empowered”. The descriptors and emotions were strongest and more detailed in describing what it felt like to be out of the inner circle. Executives also commented that they felt their performance deteriorated when they were out of the inner circle.

Four key themes were identified to explain the factors that influence whether an executive forms part of the inner circle namely; the personality of the leader, connectivity with the leader, the culture and climate of the organisation and finally ‘tribalism’.

The leaders’ personality

The personality of the leader at the centre of the circle was the first theme identified to explain whether an executive will form part of the inner circle. Narcissistic personalities are frequently encountered in top management positions, indeed narcissism and leadership are intricately connected (Vries M. K., 2001). A narcissist’s need for power, prestige and glamour means they end up in management positions. Managing, directing, realising ones visions creating systems and leading human beings in a pursuit of a goal of all these activities requires that a leader have a certain feeling of potency( Vries M. F., 2003, p. 16cites Lapierre 1989, p199). One of Sigmund Freud’s pupils Alfred Alder found connections between feelings of inferiority and a “will for power” in many people (Adler 1992 as cited by Jorstad, 1991, p. 23). It would therefore seem aconsiderable numbers of leaders become what they are for negative reasons; feeling a strong need to make up for the wrongs done to them at earlier periods in their life. Having been maltreated they are determined to show they’ve amounted to something (Vries M. F., 2003). The mere fact of being in a leadership position overstimulates narcissistic processes and provides a reduced capacity for self-criticism and ability to distance oneself from one self. Whilst a degree of narcissism is necessary to be a good leader, (and indeed is essentialparticularly in times of crisis) it can also drive envy and spite. Given at the core the narcissist suffers from shaky self-esteem (Vries M. F., 2003)they may continually manoeuvre others into strengthening their sense of self-esteem,preoccupied with thoughts of getting even for hurts real or imagined during childhood.

Clinically, DSM-Indicators describes narcissism “a pervasive pattern of grandiosity (in fantasy or behaviour) need for admiration and lack of empathy” (Lynn Godkin, 2009 cites First and Tasman 2004, p1258) that can be diagnosed when any five of the criteria are met below are met:

Grandiose sense of self importance
Preoccupied with fantasies of unlimited success, power, brilliance, beauty or ideal love
Believes he or she is special and unique
Requires excessive admiration
Sense of entitlement and interpersonally exploitative, taking advantage of other to achieve his or her ends
Lacks empathy
Often envious of others or believes that others are envious of him or her
Shows arrogant, haughty behaviours or attitudes

Leaders driven by excessive narcissism may disregard subordinates legitimate needs and take advantage of their loyalty, this type of leader is exploitative callous and over competitive and frequently resorts to excessive use of depreciation, ultimately the behaviours fosters submissiveness and passive dependency stifling the critical function of subordinates. Power and prestige are more important to the narcissist than commitment to performance and their energy maybe therefore directed toward projects that are politically expedient, their main concern being the preservation of their position and importance and they are contemptuous of the needs of others of the organisation. (Vries M. F., 2003). Many are too willing to tolerate sycophants and some leaders may begin to imagine that these reactions are their due. “Messengers of bad news will be sacrificed on the alter of denial and rationalization” (Lynn Godkin, 2009, p. 48). Following the collapses of US corporations such as Enron and Worldcomit was found that the board had surrounded themselves with flunkies, ‘that the board of directors had become a self-serving elite whoneither knew nor cared about the delivering value to their customers’(Hilder, 2004). Similarly in the case of the collapse of the Maxwell Empireit was found that his Executives had been ‘cowed by his aggression repressed by his secrecy beguiled by his incentives and rewards and they could only survive by giving in and keeping quiet’. “showing politeness, speaking in respectful tones and diligently obeying rules were precisely what Maxwell senior had steadfastly and proudly rejected. Yet he expected those qualities from both employees and his families”(Vries M. F., 2003, p. 106). Whilst these executives surrounding the leader had reached very high positions and it could be assumed had high levels of intellect rather than challenge the regime they saw they had aligned and identified with it. In his re-writing of Machiavelli (Hutchings, 2006, p. 195) cites Demack 2002 who identified seven principles of power, the first of which is to ‘trust people to service their own interests’. He quotes him in saying “There is a social covenant which regards self-interest as a form of weakness. It is so strong that most people are blind to the extent of their self-interest if you seek power you must recognise and exploit this blindness”.

People being led by an overly aggressive leader, i.e. someone with strong narcissistic tendencies are likely to adapt their behaviour as a coping and protectionist mechanism. Identifying with an overly aggressive leaders arises from the overwhelming need of individuals to retain some element of psychological security consequently they transform themselves from those who are threatened to those making the threat, the would be victims hope to acquire some of the power that would be aggressor possesses (Vries M. F., 2003, p. 94). Whilst making the point that Alan Sugar was not an aggressor on the scale seen by such extreme authoritarians he describes how within the Amstrad boardroom people sprouted beards to look like Alan Sugar. In the case of Maxwellhis son Ian was seen “wearing the unfashionable but colourful bow ties favoured by his father’ (Vries M. F., 2003, p. 106). The more absolute the tyranny the more debilitated the subject the more tempting for him to regain strength by becoming part of the tyranny and enjoy its power. In accepting this one can attain some inner integration through conformity but the pricepaid is to identify with the tyranny without reservation and give up autonomy. In everyone there is some willingness to merge with the autonomous crowd and to flow comfortably along with it people in positions of power exploit this.

Given many leaders are narcissists driven by feelings of inadequacyand have very flaky levels of self-esteem, it follows that there might be a greater tendency for them to let people into their inner circle who bolster their self-esteem. Executives who are highly independent and challenge their leaders may find it more difficult to enter the inner circle, as their natural style whilst well intentioned may fuel feelings of inadequacy. Therefore they may be more inclined to favour those with more sycophantic tendencies. What would seem essential for those wishing to enter the circle are extremely high levels of concern for impact and interpersonal awareness(the ability to develop a good understanding of the feelings and needs of others, what makes them tick and the ability to anticipate and respond to these). This would appear to be particularly necessary for those introducing change or in strategic roles, the nature of which is to challenge the status quo. History is littered with innovators who have been punished for coming up with new ideas which eventually proved to be the salvation of their industries (Hilder, 2004). What also seems pertinent is that the narcissist personality is required more in times of crisis; it follows therefore that within the current environment Executives and indeed employees subject to the negative impacts of the personality and those who are of greater independent thought may find that they are more likely to be excluded from key decisions.

Connectivity

The ‘connectivity’ between the Executive at the centre of the circle was the next theme identified to explain why some Executives form part of the inner circle.

It is likely that the people falling naturally into the key player’s inner circle will be people ‘like him or her’. We like people similar to ourselves, whether the similarity is in the areas of opinion, personality traits, background or lifestyle;to the extent that several studies have shown that we are even more likely to favour people who dress like us. (Cialdini, 2007, p. 172). It would seem we prefer to be with people who are of a similar age to us and who mirror our attitudes and personality. Judge and Ferris as cited by (Yih-teen Lee, 2010) established that age differences between supervisors and subordinates were negatively related to supervisors liking of subordinates. It’s also been found that age differences can lower the degree to which group members are psychologically linked or attracted with another in pursuit of a common objective O’Reilly et al 1989 as cited by (Yih-teen Lee, 2010). Attitude similarly acts as one of the most important predictors of attraction and friendship (Bauer and Green 1996; Byrne 1971, turban and jones 1988 cited by (Yih-teen Lee, 2010). Moreover personality similarity contributes significantly to the quality of leader member exchanges especially when there is only little information available Phillips and Bedeian 1994as cited by (Yih-teen Lee, 2010). Perceived similarity between leaders and members is linked to liking Byrne 1971 Eagle and Lord 1997 Turban and Jones 1988 as cited by (Yih-teen Lee, 2010)which in turn plays a crucial role in determining the quality of the leader member exchanges . Research on actor similarity McPherson et al 2001 as cited by (Yih-teen Lee, 2010) indicates that individuals with similar demographic, educational, functional or cultural backgrounds are more likely to interact with each favourable traits as talent, kindness, honesty and intelligence; furthermore we make these judgements without being aware that physical attractiveness is playing a part in the process (Cialdini, 2007, p. 171). It follows therefore that as well as being similar to the key player it may also help if the Executive is good looking!

It is also likely that the Executives forming part of the inner circle will have strong ties with the key player. The inner circle could be likened to the Mafia given the ‘behind closed doors’ way it operates to, and in criminal networks, the core is generally composed of actors connected by strong ties (Gottschalk, 2008). Pfeffer (other. Research has also shown that we automatically assign good looking individuals such 2010, p. 75) believes power comes from the ties one has to powerful others (as well as the control over resources and from formal authority one obtains because of ones position in the hierarchy). Researchers have emphasised that individuals’ informal ties in organisations can increase job satisfaction, performance, access to information, salary power and career advancement (Brass 1984 and Siebert et al 2001as cited by (Yih-teen Lee, 2010). At times political interests coincide with friendship patterns but when friendship or social ties are at odds with self-interest often the social and friendship ties will be the better predictors of action (Pfeffer, Managing with Power, 1994, p. 53).

Another factor influencing whether an Executive will form part of an inner circle concerns their physical location and its proximity to the central player. The physical location in the organisation is the most important reason why an individual is more central to a communication network. That physical centrality affects one’s centrality to communication network is so well known that at least intuitively that people are most concerned about their office location and their nearness to headquarters. (Pfeffer, Managing with Power, 1994). Henry Kissinger as cited by (Pfeffer, Managing with Power, 1994, p. 119) wrote “propinquity counts for much: the opportunity to confer with the president several times a day is of often of decisive importance, much more so than the chairmanship of committees or the right to present the options…every president since Kennedy seems to have trusted his White House aides more than his cabinet …it may be as simple as the psychological reassurance conferred by the proximity just down the hall.” (Moorby, 1991)believes “Chief Executives trusted advisers maybe those that they have known a long time. Those who have expertise in areas in which the CEO is weak or inexperienced or simply happen to be located near to them at head office either physically or psychologically.”

Knowledge, skill and personal attributes are also relevant predictors of who will form part of the inner circle. However, unlike some of the other factors these are more transient as critical knowledge and skills will vary depending on the circumstances, for example the business strategy or crisis being managed by the key player. Not only are particular kinds of knowledge and skill differentially critical across time and settings but personal attributes also become more or less important depending on the setting (Pfeffer, Managing with Power, 1994, p. 78). Because of the inter connected relationship between reputation performance and position if people start off badly it can be very difficult dig yourself out of a holeie when views are formed they are difficult to change. Pfeffer highlights the difficulty of assessing executive performance and indicates that good performance is often seen as being knowledgeable, drawing criticism away from the boss and accomplishing things that make the sub unit and boss look good (Pfeffer, Managing with Power, 1994).

It is also notable that some Divisions/Sub Units have more power than others in organisations, and that people that form part of the more powerful units are likely also to form part of the inner circle. Not all units are equally influential, (Pfeffer, Managing with Power, 1994, p. 157) believes “sub unit power comes from being unified, being able to deal with critical organisational problems and from having a monopoly on the ability to solve those problems. The earliest formulations treating the origins of power emphasized that power came from not only having something that other people want or need but from having control over access to this resource so that alternative sources are not available”. For resources to be a source of power several conditions need to be met but control over them is one of the most fundamental. (Pfeffer, Managing with Power, 1994).