“If I only had a little humility, I'd be perfect.” If that remark qualifies Ted Turner as a narcissist, he would seem to have plenty of company among prominent CEOs. According to one much-cited book on leadership
, narcissism (that is, a greatly inflated sense of self) aptly describes such corporate luminaries as Apple's Steve Jobs, General Electric's Jack Welch, Intel's Andy Grove, Microsoft's Bill Gates and Southwest's Herb Kelleher.
Is narcissism as much of an an asset in the corner office as such names would suggest? Not according to an ingenious new study that provides the first systematic examination of this trait among chief executives
To be presented at the annual meeting of the Academy of Management (Atlanta, Aug. 13-16), the research finds that narcissistic CEOs "tend to pursue dynamic and grandiose strategies [and] generate more extreme performance— more big wins and big losses—than their less narcissistic counterparts."
But, as to whether narcissists perform any better than less colorful types, "the results were null," write the study's authors Arijit Chatterjee and Donald C. Hambrick of Penn State University. "There was no indication that CEO narcissism... generate[s] systematically better or worse performance."
Moreover, this was the case even though the study focused on the computer hardware and software industries, exactly the kind of adventurous enterprises that should lend themselves to the bold dynamism associated with narcissistic leaders. "We might reasonably expect that [such leaders] would have a negative effect in more stable settings," the authors pointedly add.
Chatterjee and Hambrick define narcissism as "the degree to which an individual has an inflated sense of self that is reflected in feelings of superiority and entitlement and a constant need for attention and admiration." A major challenge of their research was how to measure the narcissism of their 111 subjects, CEOs of large computer software and hardware firms who began tenures of at least four years within the period 1992–2004. It would not have been feasible to use the Narcissistic Personality Inventory, a standard instrument used by psychologists, since "top executives of public companies are very reluctant to participate in survey research; questions about traits as sensitive as narcissism would yield especially low response rates; and answers would be greatly influenced by social desirability bias."
Instead, the authors relied on six "unobtrusive measures" from the second and third years of each CEO's tenure:
• the prominence of the CEO's photograph in the company annual report
• the CEO's prominence in company press releases
• the length of the exec's Who's Who entry
• the frequency of the words "I," "me," "my," "mine," and "myself" in CEO interviews
• the CEO's cash compensation and noncash compensation divided by those of the second-highest-paid executive in the firm.
Comparing these measures of narcissism to various aspects of firm strategy and performance during the CEO's subsequent years, the authors found more narcissism to be associated with (1) more shifts in company strategy; (2) more and bigger acquisitions of other companies; (3) extreme financial results -- higher highs and lower lows compared to the industry averages; and (4) more volatile profitability.
As Chatterjee and Hambrick put it: "While less narcissistic CEOs may be inclined to pursue incrementalist strategies that entail refining and elaborating on the status quo, narcissistic CEOs gravitate to more extreme choices. In particular, they engage in substantial strategic change and considerable acquisition behavior [that] particularly highlight the role of CEO narcissism in generating bold strategies."
The findings, the authors observe, are in accord with a growing body of evidence that company strategies "are highly susceptible to human factors in the executive suite." But until now, they add, management scholars tended to "see executive narcissism as incidental to organizational functioning—annoying to those who must endure it, grist for jokes about self-absorbed CEOs but little more." In contrast, the new research suggests that inflated CEO egos "may matter greatly to individual organizations, their stakeholders, and entire social systems."
Noting that this study is the first of its kind, the authors comment that "it would be useful to explore whether narcissistic CEOs are more prevalent in some industries than others...They may be drawn to, and rise to the top in, high-discretion industries such as computers, media and entertainment, and fashion; but they may not be commonly found in low-discretion, more constrained settings, such as utilities, insurance, or basic metals."
Whatever the distribution of narcissistic CEOs, though, Hambrick believes that there are many more of them than there once were. "Three decades ago," he says, "the typical CEO was likely to be a Steady Eddie, CEO as steward, who would hold the organization together, want to leave it in good shape, deliver satisfactorily for all parties involved. Contemporary CEOs are much more likely to be risk-takers who are flamboyant and colorful and view themselves as something akin to celebrities.
"That's why I think it's important to take their measure," he adds. "In the top ranks of the corporate world, these are the folks we must live with now."
The paper, entitled "It's All About Me: Narcissistic CEOs and their Effects on Company Strategy and Performance," will be among thousands of studies presented at the Academy of Management meeting. Marking its 70th anniversary this year, the academy is the largest organization in the world devoted to management research and teaching. It has close to 17,000 members in 90 countries, including some 10,000 in the United States. This year's annual meeting will draw about 7,000 scholars and practitioners to Atlanta, Georgia, from August 13th to 16th for nearly 1,500 sessions on a host of subjects relating to corporate organization and investment, the workplace, technology development and other management-related topics.
Source: Academy of Management