CEOs behaving badly

How on earth do you deal with the CEOs from hell? Stefan Stern reports

“Well, that’s enough about me,” said the chief executive, leaning back contentedly in his chair. “Let’s talk about you. What do you think of me?”

The joke is an old one, but the problem remains as fresh as the day it was first made. How on earth do you deal with those self-obsessed bosses who seem to think that reaching the top job entitles them to behave as abysmally as they see fit? Is there anything we can do about the CEOs from hell?

Companies are not democracies. CEOs are appointed, not voted in. And while they may be accountable to shareholders and to the board, CEOs possess remarkable freedom to lay down the law and dictate the course of action.

Or rather, they are as free as fellow directors allow them to be. Perhaps the chief conclusion of Derek Higgs’ 2003 inquiry into non-executive directors was that genuinely independent voices had to make themselves heard in the boardroom if good governance was to be maintained. But it can be very difficult to create a dialogue at the top, and not just endure a CEO-delivered monologue “enjoyed” by all the nodding dogs sitting around the boardroom table.

Professor Jay Conger of the London Business School once joked that he had discovered the one certain way leaders could get what they wanted from their board. Having just become a father himself, Conger declared that bursting into tears and screaming seemed to be a very effective way of getting people’s attention.

In fact his joke is not so wide of the mark. Some psychiatrists argue that the destructive and self-indulgent behaviour patterns displayed by the most tyrannical bosses do indeed have their roots in the childhood of the CEO in question.

As Sigmund Freud wrote: “If a man has been his mother’s undisputed darling, he retains throughout life the triumphant feeling, the confidence in success, which not seldom brings actual success along with it.”

Scratch the surface of a CEO (not literally obviously - you’ll be fired on the spot) and you may well find a narcissist underneath. The lay definition of narcissism usually focuses on personal vanity, the idea that our own image is both fascinating and gorgeous.

In the Greek myth, Narcissus was a beautiful young man who rejected the advances of all, men and women, who fell in love with him. The goddess Nemesis overheard his rejected lovers cursing the aloof beauty. She intervened, and Narcissus was condemned to fall in love with his own reflection when he knelt down to drink from a stream. He could not overcome his own feelings, and pined to death. Even as his ghost was being ferried across the river Styx in the underworld, it leant over to get one last glimpse of itself in the water.

Professor Manfred Kets de Vries of the Fontainebleau-based business school Insead has made a career-long study of the personalities and behaviour of CEOs. Later this year he will be publishing Leaders on the Couch, a thorough analysis of the varying personality types to be found in the corporate hot seat around the world.

Consequences

In his new book, Kets de Vries argues that narcissism lies behind so many of the extraordinary acts and utterances of nightmare CEOs. “If we’re to understand life in organisations, we have to understand narcissism,” he says. “There’s no place where the vicissitudes of narcissism are acted out more dramatically than on the organisational stage, where narcissistic leaders can find themselves but followers must lose themselves… The combination of a leader’s overly narcissistic disposition and his or her position of power can have devastating consequences.”

We have seen elements of this so often before. Most notably, there was Bernie Ebbers at WorldCom, sentenced ultimately to 25 years in jail for fraud, but not before he had pummelled his corporation into exhausted acquiescence.

At an admittedly far less serious level, there was “Chainsaw” Al Dunlap, former CEO of Scott Paper and the Sunbeam Corporation. While he never behaved illegally, he was accused of frightening the life out of those around him. Some of his quotes convey the impression of a man with a, shall we say, unsentimental approach to business. “If you want a friend,” he said, “get a dog. I’m taking no chances. I have two.”

Dunlap reportedly rejoiced in his role as the “CEO we love to hate”. He trumpeted his own efforts, even as disaster loomed. And he relished his “fat cat” status. “The best bargain is an expensive CEO,” he once stated.

In recent times Jean Marie-Messier, the former CEO at Vivendi, was criticised by some for demonstrating several of the traits of the narcissist CEO on occasions. Not for nothing was he known as J6M: “Jean-Marie Messier moi-meme maitre du monde”. His grand ambitions ultimately led Vivendi astray. Hollywood has provided us with Gordon Gekko in Oliver Stone’s Wall Street, a narcissist- (and fantasist-) in-chief.

But narcissism (and with it its abandonment of objective reality) may not be restricted to the commercial world. Successful politicians are often equally culpable. According to a possibly apocryphal story, a former aide to one politician recalls that while striding along behind his boss on the pavement as they hurried to a meeting, the aide could not help noticing that the politician was wearing socks that did not match. “Er, you’re wearing odd socks,” the aide bravely said. “No I’m not!” said the politician, utterly undaunted. As the comedian Eric Morecambe used to say: “There’s no answer to that!”

Narcissists are capable of losing touch with reality so badly that it can become almost impossible to get them to see the truth. This is a function of their intense ambition and desire to succeed.

Denial

As the psychiatrist Dr Raj Persaud has written: “Psychologically embedded in the relationships of the powerful are the seeds of their eventual destruction, and many remain in deep denial about that. People with elevated power become disposed to elevated levels of risk-taking. They are more mentally oriented to potential rewards and oblivious to pitfalls.”

But let us not be too harsh on the narcissist. Their robust self-esteem can make them confident and assertive, allowing them to be very effective as leaders. So-called “constructive narcissists” have a vision that extends beyond themselves. They value co-operation, and can become inspirational, “larger than life” figures.

It is when self-esteem descends into destructive egotism that the difficulties arise. Egotists tend to show a lack of empathy, and fail to acknowledge proper boundaries between themselves and their colleagues. This might involve shouting and bullying, and failing to deal calmly with bad news.

These “reactive narcissists” develop an exaggerated sense of self-importance and self-grandiosity, and with it a need for admiration. As Kets de Vries says: “They are unable to perceive and understand how others feel. They live in a world of instant gratification, exhibiting excesses of pomposity, arrogance, envy, greed, rage, and vindictiveness in dealing with the external environment. Their disregard for rules and the conventions of social structure leads them to behave [unethically], while their tendency to blame others if things go wrong leads to a culture of fear.”

We need to be on the look-out for these people. “With their need for power, status, prestige and glamour, many narcissistic personalities eventually end up in leadership positions. Because narcissists are motivated by selfishness their successes are ephemeral.”

But it is no use journalists sneering from the sidelines. We are complicit in the myth-making and reputation-building of narcissist CEOs. We talk them up when the going is good, and put them on the front covers of our newspapers and magazines. When the inevitable crash comes we are very wise after the event, and tend to forget what we wrote earlier. In this way the media mimics the market, which too has no memory. But our running commentary boosts the already over-large egos of the people in charge.

What is to be done? We need effective CEOs, but we do not need tyrants. Genuinely collegiate boards, with shared responsibilities for decision-making, may help calm narcissists down. “Erect barriers against runaway leadership,” Kets de Vries advises. And for goodness sake split the job of CEO and chairman, particularly in larger corporations.

Professor Manfred Kets de Vries also suggests coaching and counselling as another option to help the frenzied leader to get a grip. Tricky one, that. Do you want to tell him, or shall I?

Stefan Stern is a columnist on management for the Financial Times.