No not necessarily.
Where do these psychopaths go – often into the Corporate World?
- Has a grandiose sense of self-importance.
- Is preoccupied with fantasies of unlimited success, power, brilliance, beauty, or ideal love.
- Believes that he or she is “special” and unique and can only be understood by, or should associate with, other special or high-status people (or institutions).
- Requires excessive admiration [regularly fishes for compliments, and is highly susceptible to flattery].
- Has a sense of entitlement.
- Is interpersonally exploitative.
- Lacks empathy: is unwilling [or, I would add, unable] to recognize or identify with the feelings and needs of others.
- Is often envious of others or believes that others are envious of him or her.
- Shows arrogant, haughty [rude and abusive] behaviour attitudes.
In a study of 111 top CEO’s in the computer and software industries they found:
- Highly narcissistic CEOs are much less responsive to recent objective measures of their performance than less narcissistic CEOs. They found the narcissists would continue to make lots of acquisitions as high premiums, even when their company hadn’t been doing well, whereas the less narcissistic CEOs would get more conservative in the face of bad recent results.
- Most interesting though, they found that highly narcissistic CEOs were very responsive to social praise (measured as media praise and media awards) and this would spur them on to increase their pace of acquisitions and premiums paid (which, over time, tended to destroy shareholder value). Less narcissistic CEOs were much less responsive to social praise. In other words, that praise didn’t cause them to feel confident enough to go out on a buying spree for companies.
- The study showed that more narcissistic CEOs spent more on advertising as a percentage of their sales, spent more on R&D as a percentage of their sales, ran up costs more (measured as SG&A as percentage of sales), and took on more debt
- More narcissistic CEOs also tended to do more acquisitions and pay much higher premiums for the companies they bought
- More narcissistic CEOs led companies that had more extreme performance results — sometimes they’d do well and other times they’d do terribly
- They also found more narcissistic CEOs were linked to big performance fluctuations for the companies — for a few years they would do really well but this would usually be followed by several years where they did very poorly
Researchers created four measures to index CEO narcissism:
- The prominence (size) of the CEO’s photo in the annual report
- CEO prominence (number of mentions) in company press releases
- CEO’s use of first person singular pronouns in transcripts of public comments to shareholders
- The gap between the CEO pay (salary, bonus, deferred income, stock grants, and stock options) and the pay of the 2nd highest paid executive
Some notes on rationalising normal and abnormal behaviour:
- Optimism is healthy. Arrogance is not
- Self-confidence is healthy. Megalomania is not
- Believing that you can do a great job as CEO is healthy. Thinking that you know better than others is not
- You need confidence and conviction to succeed as a CEO or in life, but what studies clearly show is that – taken to extremes – narcissism kills companies and kills CEO careers
Finally a second book worthy of considered reading:
At its zenith, the Royal Bank of Scotland was the world’s biggest bank. It had assets of $3 trillion, employed over 200,000 people, had branches on every high street and was admired and trusted by millions of borrowers and investors. Now the mere mention of its name causes anger and resentment, and its former CEO, Fred Goodwin, is reviled as one of the architects of the worst financial crisis since 1929.
In Shredded, Ian Fraser lifts the lid on the catastrophic mistakes that led the bank to the brink of collapse, scrutinizing the role played by RBS’s directors who failed to check Goodwin’s hubris, the colleagues who were overawed by his despotic leadership style, the politicians who created a regulatory free-for-all in which banks went virtually unsupervised, and the investors who egged Goodwin on.
As more and more toxic details emerge about the bank’s pre- and post-bailout misconduct, which stretches from the ruination of numerous small businesses in the UK and Ireland to the criminal fiddling of Yen Libor, and from the alleged manipulation of global foreign-exchange markets to the wholesale ‘mis-selling’ of US mortgage bonds, Ian Fraser examines what the future holds for RBS and whether it can ever regain the public’s trust.
In short, keep your feet on the ground while you keep reaching for the stars.