Referential Treatment

BusinessWeek

November 13, 2007

by Marshall Goldsmith

The concept of referent group can be a useful tool for understanding many differences in organizations, both on a global and local scale. A referent group can be defined as any group that people see as a source for their identity. Our referent groups define a large part of who we are. Our primary referent group can be defined as a group that is the major source of our identity. As our organizations become more global and more diverse, it becomes more critical that leaders understand how different referent groups can impact behavior.

Members of different referent groups tend to define ethics or morality from the perspective of their group. We all tend to judge others as being right or wrong from the perspective of our referent group. It is critical that global leaders learn to understand others’ perspectives without coming across as judgmental.

Defining Referent Groups

The size of our referent group may range from “the world” to “me,” and almost anything in between. For example, some people see themselves as citizens of the world. They may even be willing to sacrifice what is good for most living humans in order to do what they think is right for the long-term survival of the planet. On the other extreme, some people are focused on “me” and are willing to sacrifice what is good for the world to benefit themselves. In most organizational life, either extreme can often produce a problem.

Some major referent groups include: gender, philosophy, country, geographic area, ethnic group, race, sexual orientation, corporation, work team, extended family, and nuclear family. For each of us, varying parts of our identity are connected with multiple groups. This may vary with age. For example, “family” is a major referent group for children ages 6 to 12, while “peer group” becomes a more important referent group between the ages of 12 and 15. Younger people tend to have less identification with the organization as a referent group, while older, more tenured employees tend to have more corporate identification.

Changing With the Times

Historical events can change our referent groups. In the U.S., World War II caused many young people to strongly identify with America. The Vietnam War caused many young people to have less identification with America. Before World War II, identification with race was much more common. After World War II, primary identification with race has become much more unacceptable. Leaders need to be sensitive to these changes and know how they can have an impact on the perceptions of employees.

There may be major differences between the referent groups with whom we pretend to identify and those with whom we really identify. For example, in the 1950s American corporate world (of Sinclair Lewis) it was “politically correct” to pretend that the corporation was more important than ourselves or even our family. While the essence of capitalism is self-interest, it has often been considered inappropriate to overtly demonstrate self-interest when working for a major capitalist corporation.

Today, many workers with great potential define themselves as “free agents.” While managers in a different referent group may perceive them as selfish, free agents can still be great team players in an organization that recognizes their perspective and builds win-win relationships.

Action Speaks Louder

One of the best ways to understand the power of referent groups is to focus on behavior more than words. By observing behavior and then asking ourselves, “Which referent group is the person really serving?” we can begin to understand the deeper rationale for behavior that may have previously appeared illogical.

Many of the differences that exist among people are easily understood when we know their different referent groups. If you believe that the encroachment of the Western world will lead to the demise of your “pure” culture, and your primary referent group is this culture, it is perfectly acceptable (or even noble) to do almost anything to stop this encroachment.

In a corporate setting, if you believe that your family is your most important referent group, it can be perfectly logical to go home early and not worship the corporate God. It can be noble to turn down promotions (even though this may show a lack of ambition to others).

Sound Philosophy

In discussing referent groups, I am not implying that “cultural relativism” is an inherently good philosophy. In fact, cultural relativists can be just another form of a referent group. They can define themselves as “intellectually superior” to people who have a well-defined set of core values. Many organizations have clearly defined values that relate to key referent groups. It is important for leaders to understand that multiple referent groups (that may not be on the values statement) can also be a key part of an employee’s identity. This is especially true outside the Western world.

My suggestion is that we can all increase our own interpersonal effectiveness by better understanding the powerful concept of referent groups. We can better understand that perfectly logical people have very different views on the world. We don’t have to agree with them (or even respect them), to be able to see their point of view. By understanding our own referent groups and the referent groups of others we can often agree to disagree without wasting our time on trying to convert each other.

Even more important, people in our organizations can more easily disagree with each other without having to judge each other. The Center for Creative Leadership’s research on successful cross-cultural leaders has shown that “understanding without judging” is a key predictor of successful leadership. A deep understanding of how referent groups impact behavior can help leaders achieve this goal.