What is your social status? What about the status of your organization? And what have you done for your status lately? Status refers to the hierarchical positions individuals and organizations occupy in a social system such as the position of an individual in an organization or an organization in a market. Whether we focus on individuals or organizations, most of us care a great deal about status, and many of us strive to attain higher status.
We persist in comparing ourselves and our organizations to other individuals and organizations and we use these comparisons to form effective and efficient impressions that help us navigate complex environments. Thus, status is an important form of social evaluation that can be a valuable asset or costly liability because it shapes how we interact with each other. Specifically, status entails expectations about your quality and what types of activities you engage in.
The advantages of status are many. More resources and opportunities accrue at the top of status hierarchies, and status signals the competence and quality of the individuals and organizations occupying the top positions. High-status individuals tend to be healthier, better educated, with better marriage and career prospects, and high-status organizations can often charge a premium for their products, while keeping their costs of producing a given level of quality relatively low.
In this blog, I will discuss how to manage your individual status and that of your organization, i.e., 1) how to attain status by moving up in the status hierarchy, 2) how to protect your status by not moving down in the status hierarchy, and 3) how to maximize the value of your status?
1) How to Attain Social Status?
Status can be attained in several different ways. Some inherit their status such as when progeny inherit status from their parents or parent organization. However, most individuals and organizations have to create their own status, which is typically done in either of the ways discussed next.
The most straightforward way to move up the status hierarchy is to exceed the expectations to your current status by investing in whatever defines quality in your social system. Developing a positive reputation for quality by exceeding the expectations to quality for your current status positions you to move up the hierarchy ahead of your competitors through a promotion or by making your organization more attractive to high-status exchange partners.
Status attainment also occurs though high-status affiliations. Because quality can be difficult to observe directly, individuals and organizations are often evaluated based on their affiliations, not the quality of their labor or products. Graduates from prestigious universities, employees at high-status organizations, and organizations with prestigious venture capitalists, investment banks, suppliers, and alliance partners are therefore seen as high status themselves.
Winning a prestigious award represents a sudden positive status shift, the entry of an individual or an organization into a group of elite peers. Whether awards are for particular products or consecrate achievements over a period of time, they are highly salient status markers that immediately increase access to resources and opportunities. Because winning awards is somewhat unpredictable, status mobility through awards is an uncertain undertaking.
Quality, affiliations, and awards focus on upward status mobility within the current organization or industry. When upward status mobility in the current organization or industry is hard, moving to another organization or industry could make status mobility easier if their status hierarchies are less entrenched and competitive or if the new organization or industry are themselves higher status. A change of battlefield might be necessary to win the status war.
2) How to Lose Social Status?
Status can also be lost several different ways. Failure to invest in quality to meet the expectations to current status, affiliating with low-status individuals and organizations, and staying in an increasingly obsolete low-status industry obviously increase the risk of gradually losing status. Scandal represents a more sudden way of losing status.
Scandal refers to the disruptive publicity of misconduct. Scandal questions the character and competence of involved individuals or organizations, which increases the risk that external resource providers caring about their own status withdraw. Moreover, when multiple individuals and organizations are involved in a scandal, the high-status individuals and organizations are more likely to be targeted for enforcement actions, exposing them to additional status loss.
3) How to Maximize the Value of Your Status?
The discussion above implies that the best status strategy is to maximize your status to maximize your access to status advantages, i.e., to move up as high as possible in the status hierarchy. However, it is necessary to also consider the disadvantages of status to fully understand how to maximize the value of your status: maximum value is not necessarily maximum status.
Status not only provides access to resources and opportunities, it provides a social identity that embeds individuals and organizations socially and culturally, thus making sudden upward status mobility potentially disruptive. As individuals and organizations move up in the status hierarchy, expectations not only increases, they might also change qualitatively, which could force them to change in ways that hurt their performance and authenticity, diminishing their external appeal.
Specifically, status circumscribes behavior by setting minimum quality expectations and normative business boundaries including ruling out potentially profitable business opportunities that nevertheless are considered out of bounds for high-status individuals and organizations. Ignoring how status circumscribes behavior, at least if it implies substantial deviation, is likely to be difficult and costly because of the increased external scrutiny as you attain more status.
Finally, because resources and opportunities accrue at the top of the status hierarchy, individuals and organizations reaching the top also risk becoming increasingly complacent and inertial. As individuals and organizations move up the status hierarchy, they become increasingly invested in the business models and technological standards that currently define success but also risk being less responsive and agile as new business models and technological standards emerge.
In sum, my discussion of how to manage your status and that of your organization is based on research taking place in the last decades. However, the world has changed dramatically recently as it has become increasingly global and digital and increasingly economically and politically divided.
Can shared expectations still provide the foundation of status positions as organizations and markets have become increasingly heterogeneous? Are affiliations still important conduits of status even though more interactions are mediated by social media and more communication happens through video conferencing?
Is it still important to build a reputation for quality to move up the status hierarchy or has reputation become commoditized because everybody has easy access to technology that flattens quality distinctions? This question is difficult to answer because quality itself has become broader and more diffuse as more heterogeneous constituents contribute to define quality.
With increased heterogeneity, social identity has become more important, which raises questions about the importance of social identity and if social identity results in more fragmented status hierarchies or it provides an opportunity to integrate already existing fragments hierarchies into new unifying hierarchies.
Michael Jensen is a Professor of Strategy at the Ross School of Business, University of Michigan