When we consider governance in organisations, we tend to focus on processes such as risk management or a succession plan. However, the quality of governance is often about an organisation’s leadership and in particular the personality of a CEO. Career success of a CEO and the long-term success of an organisation is to be found in characteristics such as being organised, systematic, practical, efficient and steady in their work. In contrast, the characteristics of being temperamental, moody, fretful and emotionally unstable is usually a recipe for a poor career.
Head- hunters often focus on areas such as extraversion in choosing the next CEO. Extraverts are sociable, talkative, bold, assertive and confident. In fact, head-hunters tend to choose extroverts with a narcistic tendency which means a bit vain, proud and selfish. What is interesting is that studies find that a narcissistic CEO can have either a positive or negative impact on an organisation, depending on the individual.
In 2000, Michael Macoby wrote an essay for the Harvard Business Review (Jan/Feb) called: “Narcissistic Leaders: The Incredible Pros, the Inevitable Cons where he describes the two types. Productive narcissists are those who: “are gifted and creative strategists who see the big picture and find meaning in the risky challenge of the changing the world and leaving behind a legacy …. “
The other side of this are the unproductive narcissists who distrust others and have an inflated sense of self. Macoby adds: “Narcissists can turn unproductive when, lacking self-knowledge and restraining anchors, then narcissists become unrealistic dreamers. They nurture grand schemes and harbour the illusion that only circumstances, or enemies block their success.”
In a study in 2020 by Oregon State University, researchers found that another weakness in narcissists is their inability to learn from mistakes because they fail to acknowledge they made a mistake. The ability to analyse past actions to see what one could have done differently is called ‘counterfactual thinking’ whereby we imagine a different scenario or outcome and it is something most of us do to learn from mistakes. Narcissists, however, blame failure on outside forces or enemies. This is because they believe they are better than everyone else and so they are right and everyone else is wrong. They are sensitive to criticism, lack empathy, are over competitive and dislike developing others.
Maccoby concludes that while a narcissistic can bring transformational change to an organisation, their personality makes them susceptible to certain pitfalls. While researchers Chatterjee and Hayward (It’s All About Me: Narcissistic Chief Executive Officers and their effects on Corporate Performance. Administrative Science Quarterly 2007) conclude that “Narcissistic CEOs favour bold actions that attract attention, resulting in big wins or big losses.” We have also seen in the past evidence that narcissism is associated with financial misreporting and inflating financial results that catches up eventually.
This could explain why many CEOs across private and public sector organisations tend to last for three years or less before moving on. However, the damage they can do is substantial which begs the question – is there a different way to assess CEOs in the future?