Leadership Essentials #2: In-Groups and Out-Groups.

Leading well requires high quality communication and interaction. Are you an in-group or an out-group member in your organization?  Who is in your in-group?  Are they the right people for your organization? 

Consider the following case:

A web-design company has 50 employees.  John oversees 3 creative major account teams.  The company has 12 large accounts and several other smaller accounts.  Each team is led by a creative director who reports to John. 

The first team is led by Marty and his team gets along with John. They have done a very good job for their clients.  Marty’s team has the reputation of being the best performing team in the company.  It’s team members are always willing to go the extra mile for John.  John shows this team’s work to prospective clients to be able to get more accounts.  Marty and his team feel very comfortable asking John for favors and extra resources.  He provides this team what they need to get their work done. 

The second team is led by Deb.  Deb’s team performs well for the company also, but Deb is not very pleased with how John treats her team.  Deb complains to her team members and to her friends that John treats her team unfairly because he always favors Marty’s team.  John recently criticized Deb’s team for coming up with a web design for a prospective account as too “out there” and as "too risky."  He gave the account to Marty’s team which designed a website that was very complex and not very user friendly. 

The third team’s director is Jim.  Jim is concerned that his team is nowhere near the inner circle.  He complains that they are always given the smaller accounts and assignments.  He thinks that John is not willing to give his team and opportunity to show that they can handle the larger accounts and that they barely have the resources to do a good job with the accounts they have. 


There are many ways to think about leadership.  We can focus on what traits or skills a leader should have.  We can also focus on the context in which leaders and followers exist.  When I analyze different organizations, I often focus on the type and quality of interactions between leaders and their team members.  The details and dynamic of such interactions say a lot about the organization’s ability to be effective and ethical. 

Many leaders approach their team members in a collective way. They understand and interact with their team members as groups of people who share features, interests, motivational patterns and so on.  In an academic setting, the leaders in the administration may approach the people who teach classes as faculty.  They understand and interact with them through intermediaries such as an academic dean or a faculty president.  In a business setting, the leaders in upper management may approach the people who work in various groups such as IT, Research and Development, Human Resources, or Staff.  This is in many ways necessary in organizational settings­–one cannot always approach everyone as an individual.  When this becomes the predominant mode of interaction between leaders and team members, there are several challenges.  As the example above highlights, such challenges are due to the presence of in-groups and out-groups.


In-groups and out-groups exist in most types of organizations.  They are measured by how much, and how well, team members work and interact with leaders and how well leaders interact with team members.  Another way to think of this is to notice that the team members in an in-group have expanding roles and responsibilities; they do more than is required by their formal job description. The leader also does more for them. The members of the out-group have a transactional relationship with their leader: they are usually expected to do their work and go home.  Whether a team member becomes part of the in-group or the out-group depends on two things: whether the team member is interested in taking on new and different responsibilities and whether the leader is receptive to that.

Several studies show that there are several benefits for the members of in-groups:  they receive more information, they have more influence, feel more empowered, and leaders show more concern for them than for members of the out-group.  Such members are also very valuable to their organizations: they are more dependable, highly involved, and communicate more (Danserau et. al., 1975).  In-groups also have interactions between leaders and team members that are based on more trust, respect, and liking and they are more likely to influence each other.

In-groups are more likely to have high quality interactions between leaders and team members and this produces positive outcomes for the organization and its members: less employee turnover, better employee performance, more employee creativity, higher frequency of promotions, greater commitment to the team or organization, better work assignments, citizenship behaviors, better attitude about the job, more attention and support from the leader, more volunteerism and participation, and faster career progress (Graen and Uhl-Bien, 1995; Liden, Wayne, and Stilwell, 1993).  The quality of interaction between leaders and followers will be higher the more empowered the followers feel.  Organizations that have leaders who establish good quality working relationships are organizations that have leaders and followers who feel better, accomplish more, and the organization prospers. 


(1) Expand Your In-Group.

Is your in-group good enough?  Are you sure?  Can you include more members in it who will make your organization a better organization? Expanding your in-group means having high-quality interactions and having more team members who are committed to the organization, love their job, are more creative, and perform better.

(2) Be Fair and Watch your Bias.

We are often biased in favor of the people who are familiar to us just only because they are familiar to us.  Leaders often favor the members of their in-group just because they are close to them, know them well, and trust them.  This may cause us to misjudge the ability of those close to us and to underestimate the team members who are willing and able to do wonders for our organization.  In this way, those who may deserve to be part of the in-group may be treated unfairly.  It seems that this is the case with the second and third teams in my example above.  John should pay more attention to Deb and Jim’s teams.  Moreover, not giving deserving team members the opportunity to show what they can offer could be bad for the organization and its goals as well.  The difficulty with bias is knowing when we are biased, but there are various ways to bypass it and to expand our circle of interaction to include valuable team members.  One such strategy is to have sessions in which leaders and team members may interact.  This accepts the possibility that we are biased and such sessions provide the opportunity for leaders to find team members who want to be, and deserve to be, in the in-group.  They also provide the opportunity and motivation for team members to show what they can offer. 

(3) Know and Work the Three Phases of Leadership Making

Graen and Uhl-Bien have identified three phases of leadership-making that may be applied to the transitional process of team members becoming in-group members.  The first phase is that of a stranger.  Roles are scripted.  The team member does what is in her job description and the leader may interact with the team member only to make sure she is doing so.  Jim’s team in our case above is one of strangers.  Influence is one-way from leader to team members.  Only self-interest is served. The team member follows the leader to gain the economic rewards that the leader controls.  

The second phase is that of an acquaintance.  Roles are now tested.  There is some offer for improved job or career exchanges and these involve sharing more resources or information.  Deb’s team members are closer to being acquaintances than they are strangers.  This is a testing period because the leader is trying to assess the team member’s willingness and ability to take on more responsibilities and the team member is trying to assess the leader’s willingness to provide more challenges to her.  The influence at this stage is mixed.  Team members may persuade the leader that it is time for a new initiative and leaders may influence team members to take on new challenges.  The interests served are those of the self and the other person.  In other words, both the leader and the team member get to serve some of their interests: the leader gets access to a team member who can contribute more to his initiatives or goals and the team member gets access to more resources, information and opportunity. 

The final stage is that of partnership.  This is the phase Marty’s team is in. Roles are now negotiated, influences are reciprocal and the interests served are those of the group.  In this phase there is mutual trust, dependence, and respect.  There is a high degree of reciprocity and mutual dependence on favors and assistance.  This final stage is one in which leaders and team members have a productive relationship that goes beyond the traditional hierarchy that is typical in work relationships. This phase is also transformational in the sense that both leaders and team members may move beyond their own self-interests to accomplish goals good for the organization or the team.   

(III) WHAT SHOULD TEAM MEMBERS DO (if they want to be part of the in-group)?

(1) Communicate Your Willingness and Ability to be Part of the In-Group.   

Some team members do not wish to be part of the in-group.  Their work is meaningful and rewarding to them if they stay in the out-group.  They want to do a good job and go home.  Some team members want to be part of the in-group because they like new challenges and gaining improved opportunities for higher pay, promotions, and creative work.  Team members need to communicate their willingness and their ability to be part of the in-group.  Leaders are more likely to notice team members who have creative ideas and who contribute more to the organization than those around them.  They notice if they know about it, and the team member must make sure that the leader knows.  Even though John is not paying much attention to Deb and Jim’s teams, they can keep sharing their ideas.  They can ask to set up meetings with him to make sure he is aware of the quality of work they can do. 

(2) Know and Work the Three Phases of Leadership Making.

See above.

Team members can have access to more leadership opportunities in the partnership phase than in the acquaintance phase. 


Answer the following:

  • Is your leader or team member(s) pleased with what you do?  How do you know?
  • Does your leader or team member(s) understand the challenges of your job?  If so, how?  If not, why not?
  • Does your leader recognize your potential? If not, why not? What can you do to change that?
  • Would you defend your leader’s or team member’s decision if they were not present to do it themselves?  If so, why? If not, why not?
  • If a good friend asks you to describe your relationship with your leader or team member, what would you say? What does this show about your relationship?


For a free one-on-one leadership coaching session and to discuss how we can help you or your team, email Tony Coumoundouros: Tony@ilead.consulting.

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