Most of us have heard the expression “teacher’s pet.” In some cases, we have not only heard the expression, we’ve experienced the dynamic in action—either as the teacher’s pet or as the student “on the outside looking in.” What a relief to have left that dispiriting dynamic behind when we finished school, right? Wrong! Unfortunately, the existence of in-groups and out-groups continues into our workplaces as adults.
Leader-member exchange theory attempts to explain the effects of a leader’s behavior on individual staff, as well as on the team and the organization. It recognizes that leaders do not treat all their staff the same. Most leaders form strong, positive, trusting relationships with some staff, but not with others, thus creating in- and out-groups. Staff who are part of the leader’s in-group tend to receive better treatment from the leader, which can include more positive attention generally, information sharing, resource allocation, development opportunities, and plum projects, together with higher confidence and consideration. The employees who are relegated to the out-group are generally less compatible with the leader, based simply on personality and other personal factors that have nothing to do with their actual work performance or capability.
Studies have shown that high-quality leader-member exchanges produce multiple positive outcomes including lower employee turnover, enhanced employee job satisfaction and higher levels of commitment, better performance evaluations, faster career progress over 25 years, and other such outcomes. Conversely, playing favorites can damage a leader’s credibility, result in staff resentment and poor morale, create schism within a team, and cause an organization to suffer the loss of productivity and talent with respect to the out-group.