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

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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. 16 cites Lapierre 1989, p199). One of Sigmund Freud’s

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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 a considerable

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 essential particularly 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:

1. Grandiose sense of self importance

2. Preoccupied with fantasies of unlimited success, power, brilliance, beauty or ideal love

3. Believes he or she is special and unique

4. Requires excessive admiration

5. Sense of entitlement and interpersonally exploitative, taking advantage of other to achieve

his or her ends

6. Lacks empathy

7. Often envious of others or believes that others are envious of him or her

8. 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.

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(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 Worldcom it was found that the board had surrounded themselves with flunkies,

‘that the board of directors had become a self-serving elite who neither knew nor cared about the

delivering value to their customers’ (Hilder, 2004). Similarly in the case of the collapse of the

Maxwell Empire it 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 Maxwell his 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 price paid 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.

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Given many leaders are narcissists driven by feelings of inadequacy and 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

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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 1994 as 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

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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 hole ie 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

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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).

Personal characteristics that indicate whether someone is likely to attain and maintain a powerful

position are described by (Pfeffer, Managing with Power, 1994) as 1, energy endurance and physical

stamina 2, the ability to focus ones energy to avoid wasted effort 3, sensitivity which makes it

possible to read and understand others 4, flexibility particularly with regards to selecting various

means in order to achieve one’s goals 5, the willingness to engage when necessary in conflict and

confrontation or in other words a certain degree of personal toughness 6, the ability to submerge

ones ego at least temporarily and play the good subordinate or team player to help and support of

others all seem to be displayed by people who are able to acquire and wield substantial power.

When in groups are created they reinforce and protect their own. (Snaith, 1931) Provided an

interesting insight into the literary world where he saw cliques reinforcing and championing each

other and controlling the success of new talent. In organisations people who hold strategically

influential positions are usually highly mistrustful of each other and form cliques fractions and

broader alliances in order to fight each other ruthlessly for career advantages (Higley, 1980). Social

categorization theory indicates that as a result the initial classification of another person resulting

from perceived similarity and consequent liking can pave the way for the relationship to develop

Lord and Maher 1991.

Social identity theory indicates that we show favouritism to people in our own group, and we do this

to protect our self-esteem. When we identify with groups it changes the way people see themselves

via a process of self-redefinition, and members adopt the behaviours and values of the group. The

social standing and prestige of the group will affect members’ self-esteem. The theory proposes that

group members are not passive recipients of social identity but that they try to enhance the image of

the in group by a process of social comparison with other out groups and that individuals will favour

the in groups in discriminating ways (West, 1999). As well as protecting and reinforcing their own,

powerful people dehumanize an out group more; this is especially likely after making a tough

decision that is painful for the out-group, indeed higher order emotions such as love, guilt or hope

are often seen as exclusively human are shown less to groups they dislike or feel rivals. People may

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dehumanize as a response to collective guilt, confronted with information that in the past in-group

perpetrated could hurt collective identity, denying the full humanness of this out-group downplays

their suffering and implications for the collective identity decreased (Stapel, 2010). Experience of

power deceases participants inclination to spontaneously adopt other persons perspective and

dehumanization leads people to ignore the individual viewpoints of others, powerful also tend to be

more psychologically closed to other people and keep more interpersonal distance from others

(Stapel, 2010)

Being part of an ‘out group’ therefore holds many risks, and it is likely that the Executives forming

part of the inner circle will reinforce each other and keep others from joining them.

The organisational culture and climate

(Vries, 2003) highlighted that narcissistic leaders are needed in times of crisis, therefore it would

seem logical that the traits that they exercise will be more prevalent at times such as now when the

economy and business operating conditions are difficult, such as those we are now experiencing.

Large groups and large organisations seem to increase narcissistic tendencies (Jorstad, 1991) so it

would appear that narcissistic behaviour is more likely to be seen in large organisations. (Lynn

Godkin, 2009) defines 11 characteristics of what is described as “the arrogant organizational

disorder” and indicating that seven need to be met they define one of the descriptors as “in and out

group dynamics are polarized and there is considerable evidence of distressing and destructive

internal competition and open warfare” According to (Pfeffer, Managing with Power, 1994, pp. 329-

330) the most common assumption is that organizational power and influence processes impede

performance. He highlights that Tom Peters borrowed a copy of his earlier book on power and

noticed when it was returned in several points in the margin the notation “not in effective

organizations”. The conflict and politics described were not evident he thought in the most excellent

organizations. And Pfeffer thought he was probably right. The Human Synergistics OCI Circumplex

describes 12 sets of behavioural norms, those that relate to building up ones power base, turning

the job into a contest and pleasing those in positions of authority are indicators of

aggressive/defensive ie dysfunctional as opposed to constructive styles of cultures. Dysfunctional

cultural styles are linked to deficits in operating efficiency and effectiveness (Potter, 2006). Politics

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is described by (Clarke, 2003, p. 478) is “the reconciliation of different interests”; it follows therefore

that where interests differ more greatly the incidence of politics and of disparate groups and

alliances forming is greater. Companies with a lack of shared goals, where there are competing

agendas and where reward is based on achieving disparate and unaligned goals are likely to see a

greater forming and incidence of coalitions and in and out groups.

Tribalism

To better understand the factors that influence whether an executive forms part of an inner circle it

is useful to examine the reasons that they form, my belief is that this is due to tribalism and can be

better understood by examining the theories of evolutionary psychology (EP). EP is a relatively new

discipline which tries to apprehend modern behaviour and mental processes in terms of Darwinian

evolutionary biology, the core concept being that the human mind and everyday behaviours are

fashioned by our evolutionary past, that we are the product of millions of years of natural selection

and everything we are think and can do is shaped by the processes human nature our physical

apparatus mental structures and behavioural repertoires have been subject to millennia of selection

pressures which influenced homo sapiens and its predecessors all the way back to the early

pleisocene. (Jorm, 2007) believe that “this kind of explanation for all its importance is downplayed

or simply ignored in modern theories and research explanations”. He argues citing EEA Bowlby 1982

that competition and collaboration in varying degrees and at different societal inflection points help

maintain our way of life our primary role is as hunter gatherers adapted from an existence on the

African savannah or later in the equivalent environments across the world EP calls this the

environment of evolutionary adaptiveness. Given 99% of human existence was spent as hunter

gatherers, and it is only in the last 10 000 years that we began to create agriculture and began to

domesticate plants and animals which led to settlements and signalled the start of the end of hunter

gathering by 5000 years ago farming was widespread. Indeed modernity if dated from the industrial

revolution is not more than 200 years old. Because our existence was, as is now as a social species

we are adapted to exploit the environment in tightly knit bands occasionally meeting other ground

through trading or larger kinship groups perhaps at intermittent or annual festivals or feasts. There

is therefore survival value in being good at things such as detecting danger forming cooperative

alliances with people in our band who can help us engaging reciprocally with others we trust.

Working out quickly the costs and benefits of social exchange and reading social cues rapidly and

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reacting to them as necessary. Increased brain size is naturally selected to solve problems, including

to befriend others for own purposes manipulate social situations benefit from social alliances and to

outwit when necessary overall to balance social benefits against costs. In short primates constantly

weigh the advantages and disadvantages of social life, read others behaviours for positioning

purposes and keep tabs on personal and group relationships. (Jorm, 2007).

Self-interest, in group survival measures, and falling back on trusted tribal members, who collectively

see themselves as battling the rest of the world represents the hall mark of social protectionism,

people will turf protect become tribal if and when it helps shield themselves against threats, try to

out manoeuvre others blame the perpetrators of threatening behaviours toward them and close

down trust and communications with anyone who is dangerous or even merely suspicious. At times

of great stress and pressure mechanisms like turf protection, securing personal rewards as against

others shunning those who represent danger to us striving purposefully through self-interest playing

the political game and falling back on trusted tribal members when needed is particularly prevalent.

We have evolved to be tribal and miss-trusting of each other to have a propensity for survival

through mechanisms such as out manoeuvring others and calculating benefits and costs of alliances

at least to some extent on the basis of self-interest. (Jorm, 2007). Hilder, 2004 describes tribes as

having authority figures who exemplify the values of the group, followers who accept those values

as facts, the group is glued together by attention exchange between the members, tribal members

are ‘people’, outsiders are considered sub human.

Key findings

It is very natural for humans to form inner circles and we feel most at ease with people similar to us.

That we have developed to survive in a harsh environment and to manipulate and use others to our

own advantage means that tribal behaviours of falling back on trusted tribal members and shunning

people who may form a threat is likely. In organisations that are under pressure or are dysfunctional

this is likely to be seen at a greater level. It is clear that being in an out group as well as being

incredibly demotivating is likely to be dangerous to organisational survival, given an in groups

propensity to dehumanize out groups. Consequently those who find themselves on the outside are

unlikely to be treated well. Additionally, given that the propensity of senior executives to exhibit

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narcissistic personality traits those people who threaten the self-esteem of the leader are likely to

form part of the ‘out group’

Next steps

A lot of factors that influence whether an executive will form part of the inner circle are outside their

control. It is very unlikely they will be in a position to choose their boss, and it is very probable that

they will see a movement over time in their hierarchy. Therefore they cannot identify a leader who

shares their values, attitudes, educational background, age and life style or indeed that they have

strong historical ties with. They are also unlikely to be able to have a totally free choice about where

they sit or their role they undertake.

There are though areas that an Executive can influence and ways that they can work more effectively

with the group and this will form the next stage of my research. I will therefore be examining:

How an Executive can learn to scan and interpret the environment to identify the people

who form the inner circle in an organisation. To identify who it would be sensible to form

alliances with. To identify points of danger in their careers and organisational cultures

where their attitudes and values are more likely to be aligned.

How an Executive can identify the behavioural patterns of a narcissist and the impact that

this may have on the way they interact with them, and indeed the dangers of doing so.

The next stage would be to identify how they could develop relationships, networks and

high levels of communication skills, so that they can predict potential reactions and adjust

their style and communication accordingly (particularly if working with a narcissist).

Finally, I will examine how an Executive can develop constructive power. To understand

how power is built and lost, and the roles and functions that are likely to have more power

in their organisations, and how they can develop their own personal power.

It would also be useful for an Executive to understand that they are likely to act in a similar manner

and form their own inner circles with like-minded people, and to help them evaluate the benefits

and risks of doing so. Likewise to understand the organisational implications of tribalism and that

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people will naturally form cliques and alliances would be advantageous. That the more miss aligned

interests are within in an organisation the greater the chances that there will be infighting and

conflict, and that aligned organisational goals are key. That people left to their own devices are

likely to employ clones of them-selves and that it is very unlikely a diverse organisation will develop

naturally. Finally, that introducing change requires great skill given the potential perceived threat to

both the self-esteem of those at the core and of the current status quo.

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