Charles A. O'Reilly IIIThe Frank E. Buck Professor of Management at the Stanford Graduate School of Business
Professor O’Reilly’s research spans studies of leadership, organisational demography and diversity, culture, executive compensation and orga Professor O’Reilly’s research spans studies of leadership, organisational demography and diversity, culture, executive compensation and organisational innovation and change.
There are a number of well-known CEOs, such as Uber’s Travis Kalanik and the late Steve Jobs of Apple, who have historically been described as narcissistic. Much of these leaders’ success has been attributed to personal qualities — including clear, bold vision, a huge amount of self-confidence, and an innate determination to win at all costs — that, though they can obviously be interpreted positively, are typically embodied by narcissists.
This personality type also includes less palatable traits such as entitlement, hostility when challenged, and a willingness to manipulate (all of which you could argue are also present in both Kalanik and Jobs — and others like them). Despite this, the uncompromising vision these individuals have for businesses can establish them as market leaders, and the success of the companies run by these individuals testifies to that.
While it’s easy to correlate success with personality type, let’s say we only see the 10% of narcissists that succeeded — then we call them visionaries. What we are not looking at is the 90% who failed and caused lasting damage to their businesses and the people who work for them. By talking about narcissism as though it might be positive and using the aforementioned examples as proof of this, we are paying an unfairly small amount of attention to how dangerous narcissists can be to the success of a business.
Understanding the narcissist
There are a number of traits that are associated with the narcissistic personality type, including arrogance, self-centeredness, and a lack of empathy. My team and I carried out research to examine the kind of company culture that narcissists inspire by conducting a series of field tests and surveys, one of which was completed by 900 business school alumni from Stanford, Santa Clara University, and UC Berkeley who worked at 56 large, publicly-traded high-tech firms based in the United States.
The research, carried out at Stanford Graduate School of Business, revealed that narcissistic managers tend to prefer and create organizational cultures with less collaboration and lower integrity. For example, they were less prone to agree with statements such as, “I treat people with care and respect,” “I practice what I preach,” and “It is important to maintain harmony in the team.”
We also found that narcissistic leaders were more likely to ignore violations of company policy, and to promote people who were less ethical and willing to do what it takes to succeed. This filtered down into the workforce so that, following the example from the top, those leaders’ subordinates were more likely to exhibit similar behaviors.
Impact of a narcissistic CEO
We all know the benefits of a narcissistic leader. They often build successful global brands which dominate their sectors. They are single-minded, supremely self-confident, and driven to fulfill their dream. Provided that employees buy into their vision, they have the ability to inspire everyone and drive the business forward.
However, researchers generally agree that companies with cultures that are less collaborative and have less integrity – often reflecting their leaders – are more likely to get in trouble and break laws. Other studies have shown that, due to the nature of the culture of the business and the tendencies of the CEO, these companies are more likely to get bogged down in lengthy litigation and manipulate earnings.
This is exemplified in the case of Theranos, where founder Elizabeth Holmes is now facing federal charges of ‘massive fraud’ for exaggerating and misreporting the company’s financial performance and the efficacy of their blood-testing technology.
Boards have to distinguish carefully between true visionaries and harmful personality types when hiring executives. Due to the fact that the prototypical visionary leader profile is so similar to that of a narcissist, boards must be very careful, or risk making the wrong choice when selecting a new CEO.
So how do we avoid hiring the wrong type of person? The good news is that having each candidate undertake a personality test is likely not to be the case. Rather, boards should look at speaking to subordinates about how they were treated by the individual when working for them.
Collecting this sort of data means boards can get a first-hand account of the candidate. Should the person be seen as having plagiarized people’s ideas, abused other members of the team, or acted impulsively in business-critical situations, boards should be wary of this individual displaying a lot of narcissistic traits.
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