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Want a Corporate Board Seat? Try a Little Flattery

9/19/2007 --

Top managers who engage in ingratiatory behavior toward their CEO are more likely to receive appointments to boards on which their CEO serves or is connected.

ANN ARBOR, Mich.—When it comes to getting a seat on a corporate board, flattery will get you everywhere, says a University of Michigan business professor.

Research by James Westphal, professor of strategy at Michigan's Ross School of Business, and colleague Ithai Stern of Northwestern University finds that top managers who engage in ingratiatory behavior toward their CEO by using flattery, agreeing with their opinions and providing favors are more likely to receive board appointments at other firms where their CEO serves as director and at boards to which the CEO is indirectly connected in the board interlock network.

This is especially true for women and minorities and for those who lack elite social and educational credentials, they say.

"Interpersonal influence behavior directed at individuals who control access to board positions provides an alternative pathway to the boardroom for corporate managers," Westphal said. "Ingratiation can substitute to some extent for the social capital provided by an upper-class background, attendance at elite educational institutions or membership in prestigious social clubs. Displays of ingratiation toward the CEO may reduce uncertainty about social fit on boards of managers who lack elite backgrounds or demographic majority status."

On the other hand, once named to a company board, women and minorities are rewarded less than their white male counterparts for their ingratiatory behavior—receiving fewer recommendations to serve on other corporate boards and getting less credit for positive behaviors such as providing advice or sharing information. Moreover, they are punished more than white men for monitoring senior management and offering constructive criticism.

Two separate studies by Westphal and Stern—one on the use of ingratiatory behavior to gain a board seat in the first place and the other on its use to ensure success once appointed to a board—both revealed a subtle form of social discrimination in the corporate elite.

"Although ethnic minorities and women may not come up against a 'glass ceiling' that prevents them from assuming central positions in the board interlock network, they also do not receive equal treatment in the director selection process," Westphal said.

In the first study, published in Administrative Science Quarterly, the researchers surveyed more than 1,000 top managers at 350 large and mid-sized U.S. companies.

They found that high levels of flattery, opinion conformity and favor-rendering can help even the playing field for women and minorities when it comes to getting appointed to a corporate board. And since there is considerable evidence that widespread norms of director conduct tend to favor deferential behavior toward the CEO, ingratiation tends to reduce uncertainty about a manager's "social fit" on boards of large companies, they say.

In the second study, forthcoming in the Academy of Management Journal, Westphal and Stern polled 760 directors at 300 firms. While they found continuing discrimination against board members who are women or ethnic minorities, they say that for all directors—regardless of race or gender—success has more to do with ingratiatory behavior than with a penchant for actively monitoring or trying to control the decision-making of management.

"Directors who provide frequent advice and information to top managers rather than exercising control over them are attractive board candidates because they contribute to strategic decision-making without threatening the decision-making autonomy and authority of senior managers," Westphal said. "While this has a positive effect on the likelihood of gaining further board appointments, the effect of ingratiatory behavior directed at board colleagues is much stronger in magnitude.

"The most efficient means of gaining board appointments and achieving a central position in the board interlock network is to engage in a high level of ingratiation toward fellow directors who control access to board positions."

Westphal and Stern say their findings have important implications for corporate governance. It may be necessary to require boards to select more non-managers for outside director positions and to rely less on CEO-directors for nominations.

"The reluctance of outside director to exercise control over management decision-making and behavior has been implicated in a variety of negative organizational outcomes, including strategic inertia in the face of declining performance, ill-advised corporate acquisitions, accounting scandals and white-collar crime," Westphal said. "Given that outside directors are formally independent of management and located above management in the corporate hierarchy, they are uniquely positioned to objectively evaluate management decision-making and force any needed changes in corporate strategy and policy.

"Thus, from this perspective, shareholders would be well-served if directors who engage in decision control vis--vis top management were favored in the director labor market and afforded central positions in the board interlock network."



For more information, contact:
Bernie DeGroat
Phone: (734) 936-1015 or 647-1847
E-mail: bernied@umich.edu