Do you think you are a tough-minded CEO, immune to the impact of flattery on your decision-making? Think again. New research reveals that buttering up one’s boss can steer the firm in a bad direction — and pose a surprisingly serious threat to the CEO’s job.
The impact can be significant. The study reveals that in firms with a high degree of flattery coupled with extended underperformance, the likelihood of a CEO’s dismissal can increase by as much as 64 percent.
In a new study titled “Set up for a Fall: The Insidious Effects of Flattery and Opinion Conformity Toward Corporate Leaders,” a research team from Northwestern University’s Kellogg School of Management and the University of Michigan’s Ross School of Business provides a unique look at the impact of flattery on senior executives, a little-studied aspect of corporate performance.
“Most research on interpersonal influence looks at its effect on the person doing the flattering,” says Ithai Stern
, an assistant professor of management and organizations at the Kellogg School of Management and one of the study’s authors. “Until now there has been little research about the impact on the person who is being flattered.”
The study, co-authored by Professor James Westphal and PhD student Sun Hyun Park at the Ross School of Business, explores what the authors describe as “the potentially negative consequences for corporate leaders of being subjected to high levels of ingratiation in the form of flattery and opinion conformity from other managers and board members.”
The researchers found a pattern that starts with subordinates praising their boss or going along with the boss’s opinion about the firm’s strategy, even if the flatterers disagree. When performance lags, however, the praise and opinion support from subordinates tends to continue. The CEO, affected by the flattery, remains convinced that the strategy is a good one, and so stays the course. However, board members expect change in times of low performance, and when change is not made, the CEO may be fired — a victim of flattery.
“Once self-enhancement is increased, the likelihood of making changes to the firm’s strategy in response to low performance decreases. That is the heart of it,” says Stern.
Stern and his colleagues conducted surveys with CEOs and the people who report to them. The researchers combined that information with data on the firm’s performance, such as decisions about changes in advertising, investment in R&D and purchases of plant and equipment. As a result they found a strong correlation between flattery and poor performance.
To avoid the pitfalls of flattery, Stern recommends that chief executives seek opinions from colleagues who are not their subordinates.
“We all like to be flattered, but when you are in power, knowing how to take flattery with a grain of salt is critical,” Stern says. “Seek out the views of people who don’t depend on you for their job, people who are smart and will be candid with you.”
The research appears in the journal Administrative Science Quarterly