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The Importance of Status in Your Business Career with Radek Czahajda

Radek Czahajda & Valueships

The Importance of Status in Your Business Career with Radek Czahajda

Executive summary:

In this episode, I went through some recent research in the field of power and status. It is a broad topic that influences pretty much everything that we do in our day-to-day lives, so I just chose some articles that I find very practical and easy to implement. The topics I discussed include:

▶ the influence of narcissism on firm performance and an interesting way to measure it;  

▶ physical signals of status that can be used in communication;

▶ the influence of status and power on negotiations and the way you can control them;

▶ the social benefits of hierarchy and;

▶ the relationship between power and authenticity.

If you like this episode, please share it with someone who would also find it inspiring. That's the best way to help us keep grow it!


Radek: Welcome to Science of Business Podcast by Valueships. My name is Radek. And together with experts from various industries, we discuss new research pieces and their application in business life. If you're a manager or you want to be up to date with science that can be applied in your work, this podcast is made for you. 

Today, I chose the topic of status and power, and went through some research that I found interesting and might be interesting for you also to explore it. It's really a broad topic. So, it would be impossible for me to brief you in about everything on status and power in this one episode. So just be mindful about that. And I just cherry-picked some really cool research that I find quite practical to implement and giving a little bit of insight on those two phenomena. 

Maybe to start with a little bit of difference in theory, in the definitions of those two, so “status is earned, this is the respect that you earned with your behaviors with your actions and this is perceived, so you're going to have high status in one eyes and low status in the others. While power is given, it’s related to your hierarchy to the job title you have, you can have power over someone but they can still speak not that well about you. And that would be it for the introduction. Now let's jump straight into the research. The first article that dragged my attention is actually not that much about power and status but about narcissism which sometimes relates to that. 

So when we are high in status we might also be narcissistic and this is exactly what the researchers tried to discover. And even the method that was used, it’s super interesting in this research. So, Alicia Ingersoll and her colleagues, they went through the annual reports of 1500 companies from the S&P. And based on those reports they evaluated narcissism of the CEOs and also search for some correlations between that and the risk taking and questionable behaviors of those CEOs. Yeah. And maybe you haven't seen an annual report of any of the S&P companies and you wonder okay. But do they actually tell about the narcissism of the CEOs inside the report? 

And this is where it gets really interesting because the scientists used some previous research that have shown that depending on different things that you can actually see in the annual report. So, the amount of quotes from the CEO, the difference between their salary and the salary of the subordinates and even the size of the picture, and if in the picture there is just a CEO or the entire board, all those relate well with narcissism. So, you can actually know how narcissistic is the CEO based purely on their annual report. And I find it fascinating. So now before going to the results and the influence narcissism have on the companies, I think it's already something interesting to look into. 

So how do we shape our communication and how large proportion of it is dedicated for the CEO and then also what are the differences in the salaries. And if that's in any way fair for the value the CEO is providing to the company because… well, you will see in a second, basically it's not that good to have a narcissistic CEO. Just reading through the introduction you can know that narcissistic leaders do indeed take aggressive risk-taking decisions that sometimes put the entire organization at risk. They also make some questionable decisions that are sometimes not that ethical and this reminded me of a case study. I was recently reading on Enron Company from 2001, so we might not remember about it. 

But the fraudulent accounting decisions of the top management have made the company to fill in the bankruptcy with shareholders losing 11 billion dollars, and the decisions leading to those fraudulent behaviors, the Sumatra Goshal claims to be related to the way we teach management and this highly competitive approach to management but maybe narcissism also had something to say about it. It's hard to tell from the past but the current research is more about the present and about the prediction rather than the post-mortem analysis of a company that already died a while ago. 

So back to the current research, for the method, I told you already 1500 companies, we evaluate narcissism based on the exposure of the CEO and based on their salary, while we also have some dependent variables and this included risk taking. And this was calculated using the data about the research and development investments, capital expenditures and acquisitions during the tenure of the CEO. And then the questionable behavior was evaluated based on abnormal accounting practices noticed in the annual report. So, there were three different types of those practices and the quantity of them the… how the cash flow looked like. This was also this measure of questionable behavior of the particular CEO. 

So, when speaking of the results, this research was yet another one to add to the growing body of evidence that narcissism is also connected with risk taking and with questionable behavior as a CEO. So, we do need to be cautious about how do we behave if our behaviors are narcissistic and then we should account for that and maybe have someone else to help us with the decisions not to be too risky or too questionable. But then what this particular research contributed to is that, it also taken into account the gender of the CEOs. So, back in the days we got to know that men are more likely to be narcissistic than women. And then also we do know that the power and status come together with narcissism. 

But then does it mean that on high levels on the CEOs and big firms is there also a difference in the way we behave if women CEOs are just as narcissistic as men. And, well, no, they're not. So even on the high stakes positions, it's still that the male CEOs were more likely to be narcissistic based on this study and this was the biggest contribution. So, yeah, I think we, this is yet another evidence to support women for leadership positions. But also I think it's a lesson for men to be open to hear other perspectives and to get this feminine insight when they make their decisions for the benefit of the companies they run. If you want to read this paper; search for power, status and expectations, how narcissism manifests among women CEOs, published in journal of business ethics 2019. 

After this article I just found a gold mine of knowledge about status. In 2020, a special issue in current opinion in psychology, journal was published and guess the topic. Power, status and dominance! Over 20 different articles that tackle this topic and I just, I don't know. I will probably stay here for the entire night reading it and briefing it to you. Let's start. The first one that caught my attention is about the non-verbal expression of power, status and dominance. So how do we… by the pure looks how do we make other people feel that we are important? And it's really a cool topic because I remember when I was reading a book about status, what took my attention is one particular case study. 

One particular thing that you can also consider when you walk on the pavements and it will be a new adventure from now on. So, basically when you walk on the pavement and someone walks straight towards you and then you somehow decide who moves to one side or the other. And this is where status comes into play. So, when you move away unconsciously, this is because you see the other person to express higher status, then when someone moves out of your way, that means that you present the status that is perceived higher by that person. And then when you dance like crazy altogether, it means that the mixed signals were there and you weren't sure either of you who should actually move away. 

So, there are some signals that we send that give people the perception of the importance they should give to us. And I think it's pretty cool for leaders to have this feeling around them that people feel safe, that they feel ready to follow, and I think it's something to work to know. So, let's see that. So, the article combines the signals, we think that are associated with status and the things that are actually associated with status. I will skip the first part to save you some time but you will just like always have a reference, so you can find the paper and read it for yourself if you'll be curious and let's focus on what actually is associated with status. The first one is pretty funny from childhood is the eye gaze. 

So, if you look into the eyes of the other person or if you avoid it, this gives the signal of status. If you do look into the eyes of the other people, you do signal high status. If you avoid the eye gaze, you also signal this inferiority. So, something to pay attention to is if during the conversations you look away, especially when the topic is difficult and you want to escape from it and hard one-on-one conversation, make sure you survive the eye contact and give this confidence that your team members need about our bodies and how we behave in conversation. So, when our bodies take a lot of space, so we have open posture and we are not shrinking physically. 

This also presents high status. Same goes for controlling the gestures. So, if you have control of your gestures, if you do them but in a very natural manner in that support the message that also gives information about high status. And then if you're not afraid of close distance during the conversation, that's also informing about high status. If you move away that's the information of signal of the lower status. And lastly, speaking louder, speaking longer and interrupting others, that's also signal of high status. Well, after I presented all of those behaviors, I hope you have mixed feelings about them. Like, do I actually want to interrupt other people or do I want to make them feel awkward by close distance when I speak with them? 

And the answer is no and basically this also gives us a little bit of feel to talk about how to play with status and what does it mean in our relations because… well, it's not good to build your status always. Sometimes it's good to build the status of other people. So, for instance in your team what you can do is to increase the status of other people, which some other research shows that is related with the dopamine shock that really brings up our mood. You can simply give them space to talk, give them time to be listened to and that's simple as that to increase the status of others. And then also if you have too high power distance in your team, you might not create safe environment for people to tell about their problems about what they're afraid of. 

And just to remind ourselves that this was exactly the reason of the disaster of Colombia Space Shuttle, where an engineer was too afraid to tell about some issues with insulation that later caused damage to the shuttle. So, we do need to create this close distance and we can achieve that by decreasing the status of ourselves. And the way I play with that in my workshops is that, I increase the status of my knowledge in the field, so I make sure there is no clumsiness in the information I provide, backing up with some of the achievements I had being listed of the top educational influencers in Europe and blah, blah and so on. 

But then in terms of our relationship, I can show clumsiness, I can make laughs of myself of how bad flip charge I draw, and make jokes about being one of the worst trainers I know and so forth to have this balance and to make sure that I’m not really trying to put myself over the group but actually buy in with this low status behaviors. So, if I were to sum it up, I think it's quite simple to get more control of our bodies and the way we behave in certain situations. And then we can use it to build our status in situations that require it when we need to show confidence in front of our new customers during the negotiations periods and so on. 

But then we can also use it to decrease our status and invite our team members to build up their status and their feeling of power to manage the relationships we have in our teams. And I think this is one practical outcome from this particular research. If you want to find it and read more; it's called the non-verbal expression of power, status and dominance; published in current opinion in psychology, June 2020. Okay. The next one, since I just used the example of negotiations in terms of status and power I couldn't omit the paper on power and negotiation review of current evidence and future directions. And yeah, let's dive into it. So how power plays a role in negotiations? 

So, firstly the researchers say that powerful people are more likely to make the first offer which sets the tone for the negotiations and this always brings you advantage because this will set an anchor around which you will negotiate and some previous research showed that it's for the benefit of the person who presents the initial proposal. And then if you feel more in power, your first initial offer will be even higher. So, you have higher advantage and higher anchor to start with. Then being in power also means you're less vulnerable to the interpersonal tactics that might influence your opinion. So, if the other party will get angry or if they will feel sad about your proposal, you're not that likely to withdraw it and change your mind. 

Seems interesting! So then what gives you power in negotiations? Let me quote the scientists in here, “it is the probability that a negotiator will influence a negotiation outcome in the direction of their ideal outcome”. So, the more likely do we feel we can succeed in the negotiations the higher power we have. So, the first and most frequently researched, source of such power is our Batna, so best alternative to a negotiated agreement. In practical terms this means that before entering negotiations, you list all other potential solutions to your problem and then figure out which one would be the most optimal in case the negotiations do not succeed. 

So, then you know what are the limitations of your capacity to agree on the proposal. Beyond that information also gives you power in negotiations. For instance, information about the Batna of the other party, so what's their best alternative to what you can offer? Then we go more into status. So, if your negotiator is a person respected and admirable by the other party, this increases the chances that you will get a more generous offer. Something that is related is also social capital. So, the more connections you have or the amount of people that follow you on LinkedIn give a message that you might have very easy access to other partners and then give you a better start for the negotiations. 

Lastly, the authors of this paper also listed research that shows this dominance from the pure meeting; so speaking louder, interrupting and so forth… But, I think I would treat it as a risky tactic to use in your negotiation endeavors. I think it's always better to build alliances than to fight for your results. But, yeah, the research is also clear in here that the threatening and aggressive behavior also gives you a better offer. But I think it's not only about the offers. I like this paper because it's relatively short, written in a very easy language, and I think it's open also -- open access. You can find it under information, power and negotiation review of current evidence and future directions and it was published in current opinion in psychology, 2019. 

One more paper that I want to bring up in this review is about the benefits of Cherokee. And I think in modern times when we talk a lot about Agile, Holarctic, Teal organizations where hierarchy plays less of a role and we want everyone to be equal. I think its worth to see what hierarchy actually means to us and how it is perceived by the human - animals we are. So, firstly because the social status is natural for us, so like you know this walking on the pavement is natural. We also process Cherokees easily. So, we do understand them, they bring us at peace, we do know what to expect from Cherokee. 

Some research have shown that children as young as 10 to 15 months old can actually identify dominance and they expect it to be stable over time which is the very essence of Cherokee. Then at the age of 17, infants expect the more dominant individuals to get more resources, whatever they are, toys or treats. Then in more business contexts, it appeared to be way easier for people to understand the hierarchical structures when, you know, who is the superior and who is inferior in a given relation, who gives orders and who receives them than when it was not in that way, so people could give order one to each other. 

So, it's interesting that as much as myself, I’m a supporter of equality and in terms of equal rights to say no, to say this is bullshit, this is stupid, it appears that, it's more tiring also, and something to be aware of that. In certain situations under pressure, under stress, we might lean more towards hierarchy and towards someone giving us guidance rather than always being considerate and being democratic and so forth. I think this is why also some leaders were better at the crisis. So, like Winston Churchill, which was a great leader during the war but lost the elections immediately afterwards because he couldn't provide the same values at peace that were needed, that something else was simply needed. 

And then the second reason why hierarchy is good was a bit surprising for me because hierarchy’s give people the feeling of control. Yeah, but how come? Like, you know, you have someone above your head, someone making some decisions for you and still you feel more control than in a situation where you're all by yourself. And yeah, the reason is closely related to the first one. So, when you are in a predictable environment, when you know the rules of the game and they're very easy for you to process, then you also know you have more personal agency, you're more capable of making decisions because it's a clear situation that you understand. 

And this means you are in control of it, you can control it because you can measure it, you can understand it. And then in hierarchy when you feel more need of control, you can aspire and you can work to get a higher position in the ranks and then you have more control, simple as that. Not that simple in more complex environments. Now it doesn't really work in an unfair hierarchy when you cannot really move up the ranks. So then, yeah, it simply doesn't work. But in a fair one, even people low in ranks will support it because of the understanding of control and this possibility to move up whenever they would like to. So now I’m left with mixed fillings about more egalitarian structures. 

I still do think that they are very valuable and they are the golden growl of western civilization. And what we are working towards. But I think we also need to be cautious about the benefits of hierarchy. And maybe play around with structures to find the gold spot for the needs our team members have and maybe not always move away from some more hierarchy, if it's not necessary in a given time. But I’ll leave it up to you, how you will process this trade-off. If you want to read more, you can search ease and control, the cognitive benefits of hierarchy, published in current opinion in psychology. Okay, at first I thought the previous research will be the last one but the one I found later touched me straight into the fields. 

And I just cannot omit it but I promise it will be short. So, the research is about social power and the self. So, the self… how do we perceive ourselves? Published also in a current opinion in psychology and published by Serena Chen from Berkeley. So, now, yeah, there are plenty of things you can find from this paper. So I do encourage you to read it even after my summary but just one thing I wanted to point out which is the relationship between power and authenticity. Yeah. It touched me straight into the fields as I told you because I think it really resonates with my personal experiences. So, in the beginning of my educational career, I was full of insecurity, I was full of self-dumped and also I tried to mimic some of the… what is supposed to be right for an educator. 

So, you know some behaviors, some ways to present yourself and so forth. And I also didn't feel that some of my styles, some of my humor, some of my joy find its place and you know this professional behavior that is required from us. But then over the time when I got first proofs that actually what I offer is valuable and that most likely I will remain on the market and most likely it doesn't matter if I’m professional or not as long as I provide the value that I bring. I started to play with more of my style, more of humor, more of some personal stories, some personal interests and yeah, so some jokes, all about me basically, and in the training and webinars and workshops… 

And surprisingly I, not only I did feel more authentic, but surprisingly being authentic also brought better results. So, I think, you know, there is this relation between power and authenticity. But I think what is even more important for me is this relationship between powerlessness and lack of authenticity. So, this being scared of whom you are. And that it doesn't fit really what is required from the job you're doing or from your professional role and trying to hide it. And I think that's tiring, that's not really bringing any benefits. So, again it touched me into the fields. And if you feel just the same, if you also feel that being authentic might threaten your social status, I think it's about the time to take a risk and to try it and to see if you are right about it. 

Because I was wrong and I think many of us are wrong in this assumption that your true self is not something to show in your position. So play around with it. Okay, that would be it for today. Thank you for listening and feel free to share this episode with someone that might find it valuable and inspiring. That would mean a lot to me. I think I will come back to the topic of power and status in the future. But also, I hereby invite you to let me know what kind of reviews, what kind of topics would you is interested to listen about in science of business, and I will definitely take them on the agenda and see what I can find in research to answer your questions and your curiosity. 

Thank you for listening today, thank you for listening to this episode of Science of Business Podcast, follow Valueships on LinkedIn and Facebook to be up to date with future episodes and live streams from the recording.