• Some leaders, including Airbnb's CEO, argue that favoritism can nurture excellence.
• But it can also breed resentment and further detachment among employees.
• Experts suggest balanced recognition to maintain motivation and prevent tensions.

Playing favorites at work is something some swear by, but it can be a risky strategy.

Airbnb's cofounder and CEO Brian Chesky, for example, told Fortune in November that he believed that nurturing high performers helps foster a culture of excellence.

"If you can't have favorites, if you can't say this is a high performer, and this is what excellence is, then you are going to be in big, big trouble," he said. "That's just not good leadership."

Chesky admitted that playing favorites "would be considered unfair and not systematic" at most companies and that doing so has to be done in the right way — free from bias and discrimination.

In fact, a bit of healthy competition can boost productivity and engagement among colleagues, but giving a select few people blatant and unfair preferential treatment will only fester resentment among teams in an already detached workforce.

Beth Hood, the founder and CEO of leadership and management training platform Verosa Leadership, told BI that favoritism in the workplace "is a slippery slope."

"While recognizing and nurturing high performers can drive excellence, if not handled carefully, it risks creating a culture of resentment and undermining team cohesion," she said.

"The challenge for leaders lies in striking a balance between celebrating outstanding contributions and maintaining the motivation and engagement of the wider team."

Nurturing high performers

Research from the Stevens Institute of Technology, the University of Illinois Chicago, and Hang Seng University of Hong Kong, published in the journal Personnel Psychology in 2022, found that one upside of workplace favoritism is that it can help clarify roles within teams and guide collaboration.

Hood said that for individuals who are highly motivated by positive reinforcement, "being openly acknowledged can act as a powerful catalyst for continued high performance. In this sense, leaders can use recognition as a tool to set a standard of excellence that inspires others to raise their game."

But favoritism can also get leaders into trouble.

Leena Rinne, the vice president of coaching at Skillsoft, a corporate training platform, told BI that favoritism is often "in the eye of the beholder."

"A leader can have really good intentions and still be perceived as playing favorites," she said.

"Recognition by a senior-level person does feel special," Rinne added. "So if that senior-level person is just even talking to or corresponding with or inviting people to different meetings, all of that can be perceived as unfair."

In a Harvard Business Review article published earlier this year, the authors pointed to the CEO of a Scandinavian robotics company who addressed just three of his nine direct reports in leadership meetings, and was seemingly unaware of the bias he was showing.

Pitting colleagues against each other — on purpose or not — can be hugely detrimental, Hood said.

"While in the short term this may seem like a powerful lever to pull, in the long term it is likely to cause significant performance challenges," she said.

Hood added: "It's a cynical leadership style that rarely ensures leaders can fully leverage everyone's potential, as it is predicated on a win/lose psychology."

Everyone appreciates recognition

Recognition is always appreciated, and it doesn't have to be big or costly.

Rinne said some of the most profound recognition she has heard people speak about years later is an email they received from their company's CEO.

"It takes almost no time on anyone's part, but really impacted how valued people felt, how seen they felt," she said.

If there are people in the organization shining brightly but not being recognized, you risk them feeling undervalued and ultimately leaving.

Rinne said praise works best when leaders communicate the link to performance, "ensuring that people feel that it's justified and fair."

Dilan Gomih, the founder and CEO of workplace performance and wellness consultancy Dilagence, told BI that words matter.

She said it's fine for leaders to favor people who are passionate about their work and do it tremendously well, but everyone has to be given the tools and opportunity to do so.

"It's got to be an equal playing field for anybody to be a favorite," she said.

Overall, Gomih said she struggled to see the benefit of having employees worry about being a favorite rather than about their work.

"Do you really want people wasting their mental energy thinking about favoritism? Or do you want their brains thinking about 'how do I perform my best at the job that I've been hired to do?'" Gomih said. "Because if they're doing that, it's win-win."

A better tactic may be to make that competition external and say, "It's us against the world," she said, to boost camaraderie and teamwork.

Rinne also said that the idea of "healthy competition" in companies could be reframed.

"It's always the team competition, the collaborative competition, that gets the organization the results we want," she said. "In my career, I haven't seen pitting team members against each other work in any context — except maybe the offsite scavenger hunt."

Airbnb declined a request to comment.

• Rocket Lab CEO Peter Beck views paranoia as a leadership superpower.
• Experts warn Beck's mindset may lead to burnout and a toxic work environment.
• Effective leadership requires resilience and fostering a culture of trust, workplace pros say.

Peter Beck doesn't sleep soundly and thinks paranoia is a "superpower."

The founder and CEO of the aerospace company Rocket Lab told CNBC in an interview that going home and sleeping soundly every night "just doesn't seem a tangible possibility."

He also described himself as a "chronic workaholic" and a "micromanager," and said he was "paranoid about everything, especially failure."

While some other leaders share Beck's views, workplace pros think it might be a recipe for burnout and stress.

Heather Lamb, a workplace well-being expert and author of "How Not to Be a People Pleaser," told Business Insider that while constantly being on your toes may feel like a way to stay sharp, this mentality "breeds a toxic work environment."

"Instead, constant stress and fear of falling short can inspire anxiety, self-doubt, and burnout that is damaging to productivity and well-being alike," she said.

A recipe for success?

Beck became the "newest space billionaire" in November, according to Forbes, with his 10% stake in Rocket Lab worth $970 million, and having accrued $65 million from selling shares.

The company is currently valued at $11.2 billion, according to CNBC.

Still, he is lagging behind other space entrepreneurs, including Elon Musk (worth $354 billion) with SpaceX and Jeff Bezos (worth $240 billion) with Blue Origin.

Rocket Lab's stock price surged to an all-time high at the end of November. While the company rivals Musk's SpaceX, Beck previously told BI he has no intention of colonizing Mars.

Instead, Rocket Lab focuses on building and managing rockets and satellites.

"Rocket Lab will never have the capital that Jeff and Elon have," Beck told Bloomberg News in an interview. "But all that means is you have to be a bit better at hustling, a little bit better at being innovative. You can't break the laws of physics no matter how much capital you've got."

Caution vs fear

Beck believes that his paranoia and micromanaging have helped his career.

In the short term, paranoia and a hyper-vigilant mindset can drive exceptional results, Edel Holliday-Quinn, a business psychologist who has worked in senior roles at Citi and PwC, told BI, especially in high-stakes industries like aerospace.

Breese Annable, a licensed clinical psychologist and career coach who has worked with many high-achieving professionals, also told BI that some level of alertness can be valuable for leaders.

"Anticipating challenges and planning for contingencies are facets of strategic thinking," she said. "However, when vigilance crosses into chronic hypervigilance, the psychological and relational costs outweigh the benefits."

Lamb told BI that leaders who are always anxious about the next misstep may lose sight of their own well-being.

"The world thrives on fear — yeah, people take pride in their work, for sure," she said. "Wanting to do good work is a fine goal. But if paranoia is at the heart of it, you are working to inhibit yourself rather than improve."

There's a difference between exercising caution and being immobilized with fear of failure, Lamb added.

"Realistic caution is the practice of thinking about the future, having contingency plans, and being mindful of all of the hurdles we face," she said. "But it's about managing those worries in a way that won't overwhelm you."

Negative impacts are individual and workplace-wide

Sleep deprivation significantly affects cognitive functioning, decision-making, and emotional regulation, Annable said, and if it is experienced long-term, it has been linked to higher risks of cardiovascular disease and weakened immune function.

Chronic stress can also have physiological effects by contributing to chronic illnesses like high blood pressure.

And it's not just the individual who is affected.

Worrying too much about the future can have a lasting impact on the workforce as well.

Leaders who are on edge and driven by failure are likely to be micromanagers, Holliday-Quinn said, which can create a toxic workplace culture.

"Research consistently shows that employees under micromanagers experience lower job satisfaction, decreased engagement, and higher turnover rates," Annable said. "This creates a ripple effect that can undermine long-term organizational success."

Over time, this can lead to high turnover and low employee happiness.

"Employees may feel disempowered, undervalued, and overly scrutinized," she said. "Which stifles creativity and collaboration."

True effective leadership, Holliday-Quinn said, requires "resilience, self-awareness, and the ability to foster a culture of trust, collaboration, and empowerment."

"These are the hallmarks of leaders who leave a lasting legacy," she said. "Not just in terms of success but in terms of the positive impact they have on their organizations and the people within them."

Beck didn't respond to a request for comment from BI.