Most employees work in multi-layer organizations. Perhaps it’s a large manufacturer, a computer giant, the military, or a major university. In these organizations, employees are part of a particular division as well as part of the organization as a whole. Whether you’re a CEO, executive, or manager looking to maximize performance, a recent study underscores the importance of understanding where employees derive their strongest sense of identity. Do they see themselves more as a member of their specific division or more as a member of the bigger organization?

To find the answer to those identity questions, a multi-national research team -- Gies Business Professor Jeffrey Loewenstein, Raveh Harush from Israel’s Bar-Ilan University, organizational psychology expert Motti Klang (Central District, Israel), and Matthew Rubin, a senior researcher for INSEAD (Fontainebleau, France) -- looked at students in a university setting and soldiers in the military.

They found, in both the university and the military, individuals were most likely to think of themselves as belonging to whichever unit was most prominent. If individuals belonged to an elite division, they were likely to identify most strongly with that division. Otherwise, individuals were most likely to identify most with the larger organization.  Where individuals identified most predicted where they were most likely to put in additional, optional effort. The researchers published their results, “My Department or My Company? Group Status, Identity Configurations, and Citizenship Behaviors” in Group and Organizational Management.

“A university offers many identities to its members,” Loewenstein noted. “They have hats and shirts, rituals and routines, offered by departments, colleges, and the university as a whole. The same is true for companies. Do I say 'I work for Alphabet' or do I say 'I work for Google?' Do I say 'I work at Ford', or do I say 'I work on the Thunderbird?'”

The study found that individuals tend to choose where they identify most based on which unit gives a person the greatest status, whether that be the division or the larger organization. That result was true in both the university and the military setting, and Loewenstein suggests the tendency is likely to occur in any multi-level organization.

“Identities matter because they guide where you fuel your effort and attention, especially your discretionary effort and attention,” Loewenstein said. “For example, individuals in elite divisions were more likely to volunteer for additional responsibilities. They were particularly likely to volunteer to help their division. In contrast, individuals not in elite divisions were likely to direct their volunteer efforts to the organization as a whole, rather than their own division. In short, where an employee finds recognition, appreciation, and status is likely where they are going to identify and that’s where they are likely to give extra effort."

Loewenstein trained as a psychologist and is positioned in a top business school because he specializes in how people work together effectively. His studies focus on creativity, negotiation, and leadership.

“I’m really interested in the human side of business,” Loewenstein said. “My focus is not just understanding how people tick but what makes them tick well.”

One of the implications of these studies for leaders is to recognize how status differences across divisions create a sort of Matthew Effect, or a tendency for those with advantages to accumulate more advantages over time. Specifically, high status divisions likely get more discretionary effort from their members than lower status divisions, and that added effort would help them maintain their standing. Leaders might need to intervene if divisions currently lower in status are critical to the organization’s future.

“For most divisions, their high status is based on yesterday’s wins,” Loewenstein said. “But if our focus is on tomorrow’s wins, maybe a different division should get more extra effort. Although organizations might tend to lift divisions that have raised the organization’s status the most in the past, for less high-profile divisions to get what they need for the organization’s future, leaders likely need to intervene to encourage support for those divisions.”

Loewenstein notes an additional role for leaders as well. “Leaders may need to step in  to get members of elite divisions to participate in organization-wide efforts. For example, they might emphasize the elite division could suffer if the whole group doesn’t succeed.”

“It’s important in every organization that members do what they’re expected to do,” Loewenstein explains. “But individuals have leeway to just do what is required or to go above and beyond. To get people committed to going above and beyond, one avenue leaders sometimes rely on is encouraging members to identify with the organization. These studies indicate leaders can’t just assume employees are all focused on the organization as a whole.”

Loewenstein suggests these tendencies are likely to  apply to any organization with multiple, nested levels. “There is real value if you can get people to buy into multiple identities,” added Lowenstein. “You can encourage employees to identify with both their division and the organization. It is possible to both care that you are a Gies Business person and a University of Illinois person, for instance. Leaders can help members see both as valued identities and valuable places for them to contribute.”