Do children of the wealthy grow up to be bad managers and leaders?

Steve Kelman explores a new research paper that connects income inequality to narcissism and leader effectiveness.

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There has been a lively debate in recent years about the consequences of growing income inequality in the United States. I find this an important debate, but its substance is beyond the scope of this blog.

However, I just read a fascinating article in the Academy of Management Journal on a topic that does fall within this blog’s purview – the effects of coming from a wealthy family on one’s effectiveness as a manager. It is called Echoes of our upbringing: How growing up wealthy or poor relates to narcissism, leader behavior, and leader effectiveness, by Sean Martin of Boston College, Stéphane Côté of the University of Toronto, and Todd Woodruff of West Point.

The paper's basic argument is fairly straightforward: Higher parental income during the years when a child is learning to navigate his or her social environment leaves an impression that is difficult to alter and has repercussions for leadership later in life. “Higher parental income is associated with higher levels of narcissism in adulthood,” which the authors define as “grandiose self-views, impulsiveness, reduced empathy, beliefs that one deserves special treatment, strong feelings of uniqueness, and a dominant orientation towards others.”

The reason, the paper argues, is that high income allows people to get goods and services they need, “thereby reducing dependency and increasing separation from others, while those growing up poor “struggle to meet their needs on their own,” making them more dependent on others and closer to other low-income individuals.

Narcissism, the paper argues, in turn has impacts on how managers behave in important elements of their jobs and, through that, on their effectiveness as managers and leaders. (One study shows that narcissists in a group are initially rated more positively by other group members, but after seven weeks in the group are seen more negatively.) The paper distinguishes among three elements of leadership behavior -- how well leaders show concern for followers (“relational behaviors”), divide up work and delegate responsibilities (“task-oriented behaviors”) and communicate a vision/encourage innovative behavior/sharing ideas among followers (“change-oriented behaviors”).

To take one example, there is evidence that narcissists seek to show they are more capable than others, stifling the self-initiative of followers and reducing their desire to associate with the leader. And the authors close the loop by arguing that managers/leaders who are good at these three behaviors are more likely to be effective than those who don’t.

This is a scholarly paper, and so the authors pay attention to how one would develop evidence for their theories. The authors’ respondents come from active-duty military graduating from West Point (a plus for this paper from a public management perspective, and quite an unusual source of respondents for papers in this journal, which mostly covers business management) three and five years earlier.

These officers are fairly junior military leaders; each one was also asked to nominate five subordinates to complete a survey about the leader. The paper gets information about parental income from the students’ earlier applications to West Point, and information about leader narcissism through an existing psychological scale called the Narcissistic Personality Inventory. Data on how well or badly the leader does on the three management/leadership dimensions is gathered from responses by the subordinates to questions on their perception of the superior’s behavior on these areas from existing scales used in management research. Finally, the subordinates also provide perceptions of the leader’s overall effectiveness, as well as of the extent to which people in their workgroup “volunteer for things that are not required” of “help others who have heavy workloads,” and to which people in the workgroup engage in counterproductive behavior such as putting “little effort into the work” and “neglect[ing] to follow a leader’s instructions.”

What did the research find? The first central finding was that the higher the parents’ income from when the leader was younger, the higher the leader’s level of narcissism. Second, higher leader narcissism was associated with lower follower rating of the leader’s behavior along the three leadership dimensions. Last, the leader behaviors were generally (though not always) associated with overall leader effectiveness, and perceptions that in the workgroup there were high levels of good organizational citizenship and low counterproductive behaviors.

Pretty convincing, and very interesting.

The authors only have data on their respondents’ parents’ incomes, but they also want to suggest that growing income inequality may make these narcissism forces stronger: If narcissism is nurtured by high parental income, the better-off the wealthy are relative to others, which occurs when inequality is high, the greater the predicted narcissism.

Generally when I report on scholarly research in this blog, I like to point out the practical implications of the research for improving managerial practice in government. At the end of this paper, the authors themselves try to suggest some practical implications of their findings for managers. In my view, however, this was the least-convincing part of their paper -- but I hope it’s enough that the paper sheds light on the management implications of an important phenomenon.

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