Is your CEO a narcissist and does it matter?

Wednesday, 05 March 2014


    A recent study found that companies led by less narcissistic CEOs significantly outperformed those led by their more narcissistic counterparts. But is having a narcissistic CEO necessarily a bad omen?

    The study, conducted by the Macquarie Graduate School of Management (MGSM), analysed the returns of companies in the S&P/ASX 100 over an 18 month period (September 2011 – March 2013). It found that the least narcissistic CEOs experienced the highest returns. In fact, the 10 least narcissistic CEOs more than doubled the performance of the most narcissistic CEOs.

    According to the research team’s leader Professor Alex Frino, narcissistic CEOs crave authority and sometimes have a sense of superiority. They tend to have a sense of entitlement and to be exhibitionists.

    The research demonstrated that narcissistic traits tend to manifest themselves in the speech of people. Narcissists use words like “I”, “me”, “my”, “mine” far more often than “we”, “us” and “our” when talking about their position in the company.

    “They love talking to the media and the research found that photos of them often dominate the annual report,” says Frino, MGSM’s Dean. “They respond very well to positive reinforcement. They crave it and they obviously love the limelight.”

    But he notes that as CEOs of ASX 100 companies, they would be very clever individuals and many would have tuned into their personality traits and shortcomings and tried to compensate for them.

    “So having these traits does not necessarily mean they are going to be bad leaders. It just means they have certain personality traits that could cloud or affect the way they operate,” says Frino.

    “Narcissist leaders can inspire others and are very effective in situations where you need change and creativity.

    “If you take two steps back, it’s really all about hiring the right person for the right situation. So fundamentally, that’s my best tip for the board.”

    Frino points to a paper in the Harvard Business Review in 2000 in which Michael Maccoby argues that the type of leader you need depends on the situation and implies that narcissists are ideal leaders in buoyant markets with many opportunities because they are risk takers, inspire others and go for big projects.

    “However, if you have a situation where the company is operating in very tough trading conditions and you need cost cutting and control, a narcissist will be a weaker point. In that type of scenario, you may be better off appointing what Sigmund Freud would have called an ‘obsessive’ – someone who is really focused on the detail,” says Frino.

    He notes that the period in which his research was conducted was characterised by fairly tough trading conditions. “If we looked at a period where the market was more buoyant, we might see different results. But that research still needs to be done.

    “What really counts is self-awareness. If you have a narcissist who is self-aware and can deal with his or her deficiencies, that person is going to be a much stronger leader than an obsessive who is not aware. So when interviewing people, boards should not only look at whether the individual is a narcissist, but also whether he or she is self-aware and able to overcome personality shortcomings.”

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