Friends in High Places: The Effects of Relational Status and Leadership in Decision-Making Groups

Abstract:     
Leaders often establish personal relationships with their subordinates. These relationships are quite useful to both leaders and their followers. Such personal connections allow leaders to better motivate their subordinates, more efficiently communicate with them, increase trust, and receive informal feedback. In exchange, subordinates receive more resources, job variety, promotions and compensation (Graen & Uhl-Bien, 1995). Despite these benefits of personal relationships, leaders are often unable to or fail to establish close relationships with all their subordinates. As a result, leaders create an inner circle of friends and an outer circle of excluded subordinates who are overlooked for their contributions and advice (Dansereau, Graen, & Haga, 1975). This pattern of leadership behavior is commonly referred to as the vertical dyad model of leadership also known as leader-member exchange (LMX) (Yukl, 1999).

Keywords: Leader, relational status

JEL Classifications: D74

Working Paper Series