Stop Playing Favorites

All managers have in-groups and out-groups, Here's how to manage those dynamics more
effectively. by Ginka Toegel and Jean-Louis Barsoux

In recent work with a Scandinavian robotics company, we noticed something worrisome:

During leadership team meetings the CEO mostly addressed and consulted with just three of
his nine reports, while the rest simply looked on. When we later asked him about this
dynamic, he was taken aback--both surprised to hear that he had discernible "favorites" and
unaware of the impact his favoritism might have on the other executives. The issue had never
been raised in upward feedback exercises.

This is an all-too-common problem. Although most managers believe that they give each of
their team members equal attention, respect, and consideration, four decades' worth of
empirical research says otherwise. Studies show that nearly all bosses have -- or are seen to
have in-groups with whom they have warmer, more personal relationships and out-groups
with whom they operate more transactionally. Evidence also suggests that when employees
find themselves on the wrong side of these divides, engagement, job satisfaction,
commitment, and ultimately collaboration, innovation, and performance suffer.

No matter the function, organization, industry, or geography, subordinates pay close attention
to how they're treated in comparison with colleagues of equal talent, work ethic, and status.
They quickly pick up on differences in leaders' tone, sincerity, body language, style,
emotional support, flexibility, criticism, and praise. And when they see or feel that a manager
is less likely to solicit their views, build on their suggestions, encourage their initiatives,
notice their efforts, or consider their needs and preferences as if they work for, not with, the
person---they often become disillusioned, distressed, and even hostile, One executive told us,
"My boss described me as a *valuable resource, intending it as a compliment. [But] I can tell
you it didn't make me feel particularly human or valued," given the glowing terms he'd used
to describe other team members. We? 've seen some people who were driven to tears by
managers' favoritism; others who have vented about it outside the team, damaging everyone's
standing; and many who have simply quit in search of an in-group elsewhere, even if it meant
taking a pay cut.

Bosses usually argue that any differentiation is unintended and that their reports are reading
too much into minor disparities. Both claims may be true. However, it is the view from below
that counts, Perceived unfairness has real consequences. So it is critical that managers first
acknowledge these issues and then work hard to head off or repair conflicts. Those who don't,
risk losing key contributors, exacerbating the challenges presented by underperformers,
ruining team performance and morale, and hurting their own reputations.

Understanding the Issue

A study by Joe Labianca and Daniel Brass in 2006, when both were professors at the
University of Kentucky Gatton School of Business found that 8% of work relationships were
downright negative. But recent data on employee engagement and the influence of bosses on
voluntary turnover suggests that for boss-subordinate relationships the problem stretches well
beyond that,

In a 2023 Gallup survey of more than 120,000 workers, 59% reported feeling disengaged (a
group the pollsters and others have dubbed "quiet quitters"), and 18% said they were actively
disengaged ("loud quitters," who were vocal about their dissatisfaction and likely to
demoralize colleagues). And although bosses aren't the only factor driving employee
engagement, they are a strong one. For example, a 2021 McKinsey study found that 52% of
people who quit their jobs did so in part because they didn't feel valued by their managers.

To date, most scholars of boss-subordinate relationships (also referred to as leader-member

exchange) have focused mainly on the benefits of high-quality ones. However, we must also
consider the ill consequences of low-quality ones, characterized as contractual and weaker on
dimensions such as trust, liking, respect, and exchange. Our research and that of others shows
that because less-favored subordinates often feel resentment or "relative deprivation" (as the
University of Oklahoma professor Mark Bolino calls it), they may exhibit active mistrust,
dislike, contempt, and avoidance, That prevents them from engaging in effective cooperation,
team problem-solving, knowledge sharing, and discretionary effort, thereby solidifying their
out-group status.

A longitudinal study we conducted with a global insurer highlights this conundrum. Prior to
engaging in a large-scale development program, executives received feedback from all their
direct reports to help them identify areas for improvement. The leaders then received tailored
training, one-on-one coaching, and peer mentoring at regular intervals over a year. Afterward
the same employees were asked to re-evaluate their bosses on the same dimensions, and
although all the managers had made clear progress, it did not register evenly within their
teams. One might expect the harshest critics to be the first to notice and the most appreciative
of change, but we found the exact opposite: Subordinates whose initial ratings were one
standard deviation below the mean proved the least likely to acknowledge subsequent
improvement.

Two other accelerating trends - virtual and hybrid workplaces and the push to make teams
more diverse - can make in-group/out-group dynamics even more difficult to navigate,
because they increase the potential for miscommunication, divisions, accusations of bias, and
feelings of neglect.

Here are three key takeaways for team leaders: Strained relationships are more prevalent than
you think. The impact of even perceived favoritism is greater than you realize. And the
longer these problems go unnoticed and unsolved, the more damage they cause.

Heading Off Conflict

Consider two examples. Léa, an ambitious executive at a European conglomerate, was hired
four years ago by the company's COO to help the nine managing directors overseeing
business units to restructure their portfolios and models- with a promise that she would
subsequently move into one of those roles. Instead her original assignment has been extended
three times, despite turnover and advancement among the MDs, and she still feels like an
outsider, waiting for her chance to run a unit. She told us that she gets fewer opportunities to
talk to her boss than her peers do, and when they meet, he's evasive about her development
path. She feels taken for granted, resents being "strung along,"" has lost trust in the COO, and
is considering exit options-- all unbeknownst to her boss.

Aisha, an extremely capable pharma executive recently hired for a high-level position on a
global team, is based on a different continent than her manager and colleagues and has
therefore spent the past three months attending team meetings by video conference. She told
us that her boss makes little effort to bring her into the conversation or solicit her input on
issues outside her remit. He seems to give her less consideration, guidance, and
encouragement than he gives others on the team and has barely gotten to know her; indeed,
she said, they haven't had a single meaningful conversation. *He's just so frustrating, she
confided, adding that she was already thinking about reactivating her still-warm job search.

The point is that talented, productive employees can easily begin to feel like outsiders, owing
to neglect or errors of omission--such as failing to ask questions of, listen to, support, praise,
or help develop them. Since those are not transgressive behaviors, leaders are usually
unaware that anything is wrong for significant periods of time. Moreover, recent research by
Nikos Dimotakis of Oklahoma State University and colleagues suggests that the quality of
relationships between managers and direct reports can fluctuate even from week to week.
That's why it's so important to regularly evaluate how you're managing everyone and head off
potential tensions.

Borrowing from the Dimotakis team's research methodology, we advise managers to start
with a short audit at the end of each week--a natural time period that's long enough to make it
representative but short enough to recall the details of your various interactions. For each
direct report, ask yourself three simple questions to gauge the strength of your relationship.
(To overcome self-serving or socially desirable responses, we suggest simple yes-or-no
answers.)

T. Did you seek the person's company? Did your interactions extend beyond immediate tasks
to discuss big-picture issues or to engage in social conversation?

2. Did you acknowledge the person's capabilities? Did you elicit input (opinions and
suggestions) in meetings or defer to the subordinate's ideas?
3. Did you assist the person's growth? Did your words or actions contribute to learning and
development, such as through stretch assignments, coaching, or constructive feedback?

If the answer to even one of these questions is no--particularly if that happens two or three
weeks in a row--you must address the deficit. To build greater rapport, reach out and identify
common ground you may have overlooked (for example, children, hobbies, or upbringing).
Perceived similarity is a strong driver of liking. To make your people feel more competent,
invite their suggestions or ideas, and give them a chance to tackle problems their way.
Acknowledge their expertise and accomplishments and stay open to explanations if they
underperform.

To foster growth, discuss their career aims and give them challenging tasks, upward
visibility, and public praise for successes.

Repairing a Relationship

When leaders fail to adequately manage their out-groups, frustrated members can reach a
boiling point that becomes impossible to ignore. We recently saw a dramatic example of that.
Hashim, a partner in an investment bank, learned from a peer that one of his direct reports,
Stefan, was bad-mouthing him behind his back. "He would sit quietly during meetings and
say nothing," Hashim recalled. He realized that this was partly his failing; because he didn't
have the same chemistry with Stefan that he did with others on his team, he was treating him
differently. "T probably wasn't paying sufficient attention or asking myself how he was
doing," Hashim conceded He decided to clear the air.

However, when he approached Stefan to discuss the problem, he was quickly rebuffed. "No
way I can work with you," Hashim says his subordinate told him. "And by the way, I'm
interviewing for a new job." Stefan didn't get the role, and Hashim couldn't fire him while his
performance remained satisfactory.

In cases like that--even when the relationship seems beyond repair - you can temper your
employee's negative emotions and possibly turn the situation around. We recommend three
steps.

1. Prepare for the conversation. Role-playing with a coach, a trusted colleague, or even an
empty chair can help. Simply visualize the disgruntled out-group team member and talk to
that person, explaining your thoughts and feelings about how you relate to each other. That
will let you articulate your views on the relationship and help release any negative emotions.
Then physically switch places, pretend you're the employee, and respond to what you just
said from that perspective. You can continue this imaginary dialogue through several rounds
to elicit fresh insights on both sides' thinking in a risk-free way, to understand your
contribution to the problem, to get a more realistic understanding of how the conversation
may unfold, and to help to build empathy for your subordinate, We've found that executives
are more receptive to their counterparts nessages during an actual discussion if they've
challenged their convictions and causal attributions beforehand.

2. Engage. To create an environment in which skeptical subordinates feel they can safely talk
about their out-group pain, bosses must first minimize the power differential. It helps to meet
on neutral ground and set the tone by explicitly acknowledging the employee's right to
see things differently, to challenge, and to disagree, and your own responsibility for allowing
an uneasy dynamic to spiral. You might open the conversation with something like: "T've
been thinking about my working relationships with the members of our team. I sense that a
couple of them, including ours, are not as productive as they might be. I realize that I've
contributed to that situation, and Id like to improve both our relationship and the way I
support you." After that, we recommend turning to the practical guidance on difficult
conversations offered by Harvard Law School's Douglas Stone, Bruce Patton, and Sheila
Heen. Have a "learning conversation" by surfacing and separating out your respective
perceptions of what has happened. the impact on each of you, your contributions, how you
feel about the situation, and how it affects your identities. Useful prompts include "How do
you see it?," Say more about why this is important to you, and "What could we have done
differently?”

3. Make a plan. In our experience coaching top teams, we've learned that a good way for a
boss and a subordinate to start rebuilding trust is to spell out what's critical to each person and
commit to changes.

(See the table "A Helpful Contract.") That signals your good intentions, confirms your desire
to bring your subordinate closer, and creates a joint sense of accountability. Make sure this
plan is developed through a fair process. includes creative options, and has a realistic end
point. The aim is not to become friends but to reestablish a productive and respectful
relationship- in which you can work together toward a common professional or
organizational goal- even if that includes easing the subordinate's transition to another team.

A Helpful Contract

Though managers and disgruntled out-group employees rarely observe a formal code of
conduct, here's an example of how they might set ground rules.
 Boss Report

Personal ● I need you to deliver dependable results to ● I need your active support in preparing for my
Goals support our team's progress. next career move.
● Please do not criticize me behind my back. ● I need access to developmental opportunities
or training to sharpen my skills.

Interactions ● Speak up early if a task seems unclear or ● Don't jump to conclusions about my judgment
you hit unexpected difficulties. or competence if you see an unexpected
● Please follow through when we decide on outcome. Investigate what happened.
a course of action. ● Give me a chance to propose a solution before
● If you keep me fully updated on progress you reel off suggestions.
|'|| feel less pressure to check on you, ● Allow me a voice in how much and what type
● Let's base our discussions on data rather of monitoring works for me.
than just feelings or impressions.

Pet Peeves ● P|ease don't blindside me. Warn me if ● Please don't ask me questions to which you
you're going to miss deadlines or key already know the answer.
deliverables. ● Please distinguish between instructions and
● I don't expect you to be on email at all suggestions.
hours, but 1 do expect timely responses.

Conflict ● If we disagree, let's stay in the present and ● If we disagree strongly, let's invite a mediator
not drag up the past. to help us work - through the problem.

Through a series of facilitated conversations, Hashim and Stefan managed to come to an

agreement whereby Stefan would stop griping and continue to do his job, while Hashim
would support him in finding transfer opportunities. The outcome was more damage
limitation than repair, but it helped. Hashim neutralized a disruptive subordinate, improved
team spirit, and protected his reputation.

Managers often fail to notice that they have out-groups because they get positive feedback
from their in-groups and know they aren't "bad" bosses. But letting any employee feel
neglected can entail big costs. That's why it's so important to recognize when team dynamics
feel uneven; to head off conflicts; and to endeavor to repair any damage already done.
Tremendous opportunity lies in learning to better manage your out-group. Even a modest
increase in consideration, coaching, and appreciation can boost productivity, well-being, and
cohesion.