How does income inequality — currently at historically high levels — affect the types of leaders we get in the workplace?
Our analysis showed that higher parental income during one’s upbringing was related to higher levels of narcissism as an adult, and that higher narcissism was related to lower levels of engagement in relational, task, and change-oriented behaviors. Less engagement in these behaviors was associated with lower perceived effectiveness, and with less helping behavior and more counterproductive behavior in the group. In short, higher parental income indirectly impaired leadership performance by fostering narcissism, which in turn reduced engagement in important leadership behaviors.
Why does this matter for businesses? Well, narcissism has a complicated relationship with leadership. It has been linked with being evaluated positively and with the potential to emerge as a leader in groups of people that are not well acquainted. And in brief interactions (like a job interview), narcissists can often leave very positive impressions. But narcissism has also been linked to bad outcomes in the long run, because tendencies to prioritize oneself over others has negative effects on interpersonal relationships and group functioning over time.
Our findings suggest that a high-income background does not always translate into better performance, because while it might afford certain benefits, it can also foster a deep self-preoccupation that can impair leadership abilities. Conversely, and encouragingly, our findings suggest that people from humbler backgrounds often can succeed and perform just as well as people from greater wealth because they may not be prone to the same level of narcissistic tendencies.
Related research shows that higher income is related to lower concern and compassion for other people and lower tendencies to help them.