"The way they look at each other is disgusting," groused Jim as he watched his boss rest a hand on a co-worker's shoulder and guide her into his office.

The woman sharing closed-door confidences with Jim's boss also was vying with him for a promotion.

Added Jim, a corporate accountant: "Even if we weren't up for the same job, that kind of relationship is not good for office morale. As it was, I didn't feel I was going to get a fair shake."

"Favoritism is one of the most prevailing if not perplexing human-relations problems," says Thomas Affourtit, an industrial psychologist who heads the Interaction Research Institute in Fairfax.

"It is a natural tendency to associate with people who complement your needs and value system, but this tendency can lead to problems in the workplace.

"If a boss is rewarding someone who performs well, that serves as an incentive for other employes. But, when the rewards are due to some other reason, it puts other employes at an unfair disadvantage," says Affourtit, a counselor on work relations between bosses and subordinates in both government and private sectors.

How supervisors relate in different ways to different members of a work group is only beginning to be studied by psychologists. According to Affourtit, most studies before the '70s correlated specific leadership styles with employes' performance. Now studies are looking at what happens when supervisors vary their styles.

The results show, says Affourtit, that most supervisors develop in-groups and out-groups. In his own four-year study of about 10,000 marines around the world, 72.6 percent in one sample reported favoritism in their commands.

Favoritism, says Affourtit, may be perpetuated when the needs of both the supervisor and favored worker are met.

Take the example of Rick, a rising young insurance company executive, who chauffeurs his boss to work every morning and keeps Saturdays open in case he calls for a golf game. His dress is dictated by his boss' taste and most of his decisions are tested on his boss' reaction.

Rick ingratiates himself to his boss not only because he wants to smooth his rise up the promotion ladder, but also because he needs the "favored-son" treatment.

The boss awards him a special-person status in exchange for the homage he needs to dispel his own self-doubts. The two are locked in an unspoken pact, one pledging fidelity and the other granting favoritism.

Rick's office peers, who ostracize him with jibes such as "brown noser," resent his short cut to success.

Supervisors defend favoritism, claims Affourtit, as a means of assuring loyalty, reliability and high productivity from at least a percentage of their workers.

"What they don't take into account is that in the balance they may be losing in overall productivity. There is a direct correlation between how unequally workers are treated and how frequently they exhibit absenteeism, declining performance, drug and alcohol problems and turnover."

Jim, for example, was unhappy with his job for weeks once he realized he was closed off from the sexual pact between his co-worker and boss.

The tension spread throughout his office. "Everyone was divided into camps with the two of them against the rest of us.

"I felt immobilized. I considered filing a grievance, but I thought that even if I won, I would still end up losing because of the emotional toll.

"There are no legalities to prevent my boss from choosing someone for purely subjective reasons so long as all applicants are qualified and no one is preselected.

"I never had anything more than circumstantial evidence, but it was still unnerving. Just the perception of favoritism is enough to cause problems for the rest of the office."

Because most people, says Affourtit, cannot avoid some favoritism, the solution is not to try to eradicate it, but to "neutralize" it, with objective standards of job description, employe evaluation and salary levels.

Good communication is equally important. "Jim could have gone to his boss immediately with his grievances and possibly avoided weeks of tension. And, his boss could have discussed the problem with both candidates."

Instead, Jim's boss avoided a confrontation by selecting a third candidate from outside the company, and, in effect, drove Jim to job hunting.

To avoid such polemics, some companies are encouraging employes to air grievances and contribute to decision-making in group meetings called "T groups," "team building" and "quality circles:" Issues are tied to solutions in a structured setting to avoid an "emotional free-for-all."

When Affourtit was called in to aid a company with a 53 percent turnover, quality circles were part of his prescription.

"The company had hired a super- star boss to raise profits. He took the expedient route of hiring friends and relatives he could trust and knew were competent.

"In our surveys, employes reported that the placement of newcomers in high-level slots made them feel, 'There is no way I can advance.'

"When the boss was confronted with his employes' dissatisfaction at a quality-circle meeting, he explained he needed familiar people around him in order to move the company ahead.

"The boss in this case was able to get away with it because he allowed his employes to vent their anger, and because he received positive points for a charismatic personality.

"In addition, the boss made a trade-off with his employes by saying 'I'm going to keep my style of cronyism, but I am also going to institute new evaluation and salary structures to balance it out.' "

The superstar's style of cronyism differed sharply from Rick's boss; he encouraged his select group to talk candidly and to disagree with him. Rick, on the other hand, worries constantly that he will slip from his privileged position if he fails to reinforce his boss.

Pro and con feedback and an open door to all subordinates, says Affourtit, work both to offset favoritism and to provide supervisors with needed data.

Marine commanders in his study, for example, learned to skip the perfunctory question, "How is it going, Marine?"--which would elicit only the standard, "Okay sir"--and learned to ask direct questions like, "Can you tell me how you feel about discrimination?"

Companies, says Affourtit, are most willing to try new techniques when favoritism--and declining performance--can be tied directly to profits. (Affourtit estimates it costs $2,800 to replace an $11,000-a-year, production-level worker and twice as much, or more, for a mid-level supervisor.)

"The humanitarian approach of the '60s, which says you should be fair because it is just or it will make people happy just doesn't have the same impact," he says, "as the pragmatic approach which says favoritism is going to cost you money."