“The customer comes first” is one of the three great lies of the modern corporation, according to a recent cover story in Across The Board, The Conference Board magazine.

The other two lies: “We make our decisions on behalf of our shareholders” and “Employees are our most important asset.

“In the wake of corporate scandals and the ‘jobless’ semi-recession, none of these lines are persuasive,” says Art Kleiner, research director of the Cambridge, Mass.-based Dialogos consulting firm and author of the article. “But there is always some group of people on whose behalf the company operates. These are the people who really matter, who set the organization’s direction and drive its behavior.”

This core group does not necessarily include the people at the top of the organization chart, and it generally includes only a handful of members of the board of directors. Despite conventional wisdom that says the board and the half-dozen top executives are the people who run the company, the reality is that every organization has a hierarchy grounded not in formal power but “informal legitimacy.” It overlaps with the authorized hierarchy, comprising the people who are truly responsible for the success or failure of the organization itself, whether they know it or not.

“You probably know who the members are in your own organization,” says Kleiner. “They’re the people who come to mind when an initiative begins to circulate. They possess the ability to greenlight or kill a project and they’re the ones whose interests therefore must be taken into account early in the process. Some have gained power and influence within the organization through their title and position, while others have it through their political smarts.”

Every company’s core group differs in number, breadth, focus, and deviance from the top of the organization chart. In high-tech start-ups, the core group often consists of the few engineers who had the original vision plus the financiers.

The core group sets the organization’s direction. The organization becomes whatever its people perceive that the core group needs and wants it to become. If a goal is perceived as irrelevant to the core group, then it will not be reached, no matter how worthy it is, how ardently it is advocated, or how many rules and governance structures hold the organization accountable for achieving it. If a goal is perceived as close to the heart of the core group, then the organization will get there.

A Head-Over-Heels Corporate Experience

“For most people, being in a core group is a powerful, energizing experience,” says Kleiner. “It’s as if the organization has fallen in love with you: a passionate, head-over-heels kind of love that is present beneath the surface of every conversation. The organization does all the things for you that infatuated lovers do. It anticipates your desires and needs before you’ve even articulated them to yourself.”

The most significant perks for core group members are the intangible ones. They are taken seriously in a way that few other people enjoy. Core people are invited to solve problems, even when they don’t have any special knowledge or skill. Everyone sees to it that the core group members’ solutions work. Their virtues are publicly recognized and their mistakes unseen. They are routinely credited with the insights of others.

Kleiner makes it clear that the core group structure is not inherently bad. While there are many dysfunctional core groups, there are also many core groups that exist as a source of vitality and energy – just ask anyone who’s started a company. Kleiner says that “behind every great organization there is a great core group.”

The more conscious workers become of the core group dynamics, the more effective they can be at moving and influencing the group. People who are not in the core group sometimes lose sight of the fact that their jobs are defined by contract (implicit or explicit). As an employee of “mutual consent,” contract workers are not the objects of the organization’s infatuation. These employees bargain for every perk or promotion they can get, because organizations are aware they can take advantage of getting the most out of these people for the least possible investment.

Source: “The Customer Comes Eighth” Sept/Oct 2003 Across The Board, The Conference Board