Working with a fantastic employee that almost “read” your mind is a great experience. You have a great rapport, you co-create new ideas and things are getting done in an extraordinary way. This is the stuff that makes great performance and results.

But, there is also a potential danger in this.

It lurks in the daily interaction between the leader and team members. The difference with which we treat employees is both a source for motivation and frustration. When we (most likely unconsciously) create “In” and “Out” groups, we also foster dysfunction within the team, distort the feeling of psychological safety and hamper the team’s internal collaboration.

We foster Envy! The poisonous emotion that is toxic for the team system.

When an employee and a leader are connected, a lot of good things happen. When there are several employees with whom the leader “clicks”, they frequently become the “In-group”. It is very beneficial to be in this group: Easy access to the boss, but no micro-management, gives a feeling of influence and autonomy. Hence, the level of personal motivation is high, and so is the level of engagement, feeling of connectedness to the company and performance. A great relationship between the leader and team members has a lot of power.

On the other side, employees who are not having the same quality of relationship with the leader often feel that their level of influence is limited, they may not get the same attention, and frequently are seen having a lower level of engagement and performance. It may sound hard, but the fact is that these employees are in the “Out-group”.

Research on this so-called “Leader-Member-Exchange” situation is something a good leader should be aware of:

The members of the "in-group" are positively impacted by the good relationship with the leader. But the out-group members are negatively impacted. They have a lower level of identification with the organization, are less engaged and on average, they perform lower. (Meta-study by Ilies, 2007 and Ning, 2014).
The full team, consisting of both the “In” and “Out” groups, have more negative emotions, a lower level of collaboration and overall perform at a lower level. Here the envy kicks in, poisoning the entire team system, hampering performance.
In a change situation, this combination of envy and a dysfunctional team environment is particularly poisonous. If employees feel they are not treated fairly now, how can they hope that the ‘change’ will be good for them? In fact, this situation will probably foster fear and resistance.
Beware, because as a leader, you may not fully grasp the situation your team is in. The correlation between how a leader sees the situation and how the team experiences it is often very low. Schriesheim et al (1998) established that the correlation only 0.21.

Therefore it must be a primary objective of the leader to ensure that they are aware of how their team feels, and create a balance in their relationships with their team members, ensuring that employees are allowed to have a constructive relationship with the leader.

In order to avoid being the source of poison for the team-system it pays off for the leader to reflect a little on personal views and behaviours:

Whom of my staff do I praise most?
What are the specific reasons for doing so?
Whom of my staff receive little praise?
Which opportunities of praising them, may I have overlooked?
How can I expand my “In-Group”?
Ask your staff how they see it!

In conclusion: When a manager is able to establish a positive connection to more people in the team, it not only reduces the level of envy for individual persons, it also drives out toxins of the team-system, increases the level of psychological safety, raises morale, engagement and performance.