Social identity in financial services

When considering leadership theories that may apply to what I have witnessed at Fidelity, one that should be considered is Hogg’s (2001) social identity theory of leadership. Hogg’s (2001) social identity theory argues that people derive part of their sense of self from the groups they belong to. Since all groups exist in relation to other groups, comparisons between groups help people understand not only their place within a group, but how their group compares to surrounding groups. These groups are defined by prototypes, which are mental ways people use to cognitively define a group, often in a way that increases between-group differences while reducing in-group differences. Hogg (2001) argues that people want a positive social identity both to increase their self-esteem and lower the level of uncertainty in their life.

Based on what I have seen at Fidelity, employee’s do derive a part of their social identity from working at Fidelity. Employee’s take great pride in working at Fidelity, and use several distinguishing characteristics, such as how they treat employees and the company’s stellar reputation in the financial services industry, as a way of increasing their self-esteem. While any job is likely to increase someone’s self-esteem, by giving them purpose, and lowering their uncertainty, by offering financial security, the sense of identity Fidelity employees derive from their job goes beyond other companies.

Hogg (2001) discusses how people tend to be willing to help those who are in the same social-in group as themselves (and thus share a social identity) more so than those in the out-group, partly because helping those whom they cognitively deem as similar to themselves is one way of affirming one’s own self-esteem and self-concept. A tangible example of this at Fidelity is in the candidate recruiting process, as Fidelity is known to like hiring internal, as opposed to external, candidates. All Fidelity employee’s resume is kept on file in their internal system, so when recruiters try to fill a position, all employees are automatically considered, even if they never applied. Thus, people can receive promotions and new positions from other divisions within the company without knowing they are being considered.

Other examples of how employees derive part of their social identity from working at Fidelity is the pride people take in working at Fidelity. While any job is likely to increase someone’s self-esteem, by giving them purpose, and lower their uncertainty, by offering financial security, the sense of identity Fidelity employees derive from their job goes beyond other companies.

What is interesting at Fidelity is that, given its size, the part of people’s identity they get from working at Fidelity is made of multiple components. While there is a distinct identity among Fidelity employees, there is also different identities between the different locations and divisions/departments. Each office has its own sense of identity and unique distinguishing characteristics. Thus, there is a prototype of the type of person who works in each office. For example, I work in the New Hampshire office, which is where the technology centers are based. As such, there is a different type of person who tends to be drawn to working in technology, as opposed to the asset management division in Boston. There is some competition among the different divisions, which is partly based on the prototype of the division. The asset management division is known to expect preferential treatment and display some arrogance (thus constituting some characteristics of their prototype). Part of this is because they manage the money that is at the core of Fidelity’s business.

What is interesting about these competitions is while there may be some intergroup competition, the component of their identity that relates to working at Fidelity seems to override identity derived from one’s office location and division. Some of the factors Hogg (2001) argues that affect the saliency of group identity includes how much the identity accounts for one’s self esteem, and how important the similarities and differences are between groups. I suspect that employees receive more self-esteem from working at Fidelity than from their respective divisions, because the individual divisions would not exist without the company itself. Also, the differences between intercompany divisions are less noticeable and important to one’s identity than the differences between Fidelity and competitor companies. Thus, people unconsciously comparing their experience working at Fidelity to what it could be like at other companies is likely significant enough to lower any intercompany identity related tensions.

One area, however, where my experience at Fidelity contradicts Hogg’s (2001) theory is explaining who becomes leaders. Hogg (2001) argues that those who are more prototypical of the group and best embody the behavior are most likely to emerge as leaders, as those who are less prototypical subtly change their behavior to conform to the group prototype. At Fidelity the CEO, Abby Johnson, is in the position not because she is highly prototypical of Fidelity, but because her family founded the company. No one but a Johnson has, or likely will, ever be CEO of Fidelity. Therefore, the leader of the company does not necessarily represent the prototype of the company, as Abby would have influence regardless of whether she represented the prototype or not. I suspect that it is more of a top-down versus bottom-up approach to defining the prototype in which the leader, based on her position, defines what the prototype is, as opposed to the followers defining the prototype.  However, I have never met Abby myself, or seen her speak in person, so I cannot definitively say whether this is true, but this will be one point that I think will be interesting to observe as my time at Fidelity continues.

One thought on “Social identity in financial services

  • July 16, 2019 at 11:07 am

    Really thoughtful application and reflection. I’d be interested to know if the various regional or departmental groups ever serve as out-groups to one another (or potentially to Fidelity as a whole)? Likely something that is harder to observe than that which you’ve discussed. As for the prototypicality of the leader, it may be that given the leadership has always been part of the Johnson family that the Johnson family did help cultivate the prototypes for the various divisions/departments? Again, given that you are not proximate to the CEO, it is harder to observe. And of course, each Johnson who has run the organization is different (to some extent) – so one cannot presume that each has cultivated and perpetuated/managed the same prototypes.

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