Narcissistic Leaders: Does your leader’s dark side pose a threat to successful business thinking?
Have businesses turned into a “Me! Me! Me!” world of narcissism? Current developments in society have stimulated increasing public interest in this topic, especially in relation to leadership. According to statistics, narcissism is particularly prevalent in younger adults today, also described as the “Generation Me”. So, we really need to know more about how narcissism affects business thinking.
Social scientists locate it in the so-called Dark Triad of Personality: Narcissism, Machiavellianism, and Psychopathy. Individuals with these traits lack care and concern for others. They are driven by thrill-seeking, lack remorse and manipulate others.
Narcissists, however, critically depend on external self-affirmation. Their charming yet vulnerable egos require constant positive feedback. Narcissists may not intend to cause harm, but they are oblivious to others’ wellbeing as long as their own needs for self-affirmation and external validation are fulfilled. At the same time, the success of most businesses depends on people, their knowledge, skills, and cooperation. Do narcissistic leaders pose a threat to successful business thinking?
In a recent article, I reviewed evidence to answer the question on how leader narcissism relates to business outcomes at three levels: in leader-follower relationships, in teams, and in the entire organisation. The evidence stemmed from 45 original research articles published in scholarly journals. To begin with, findings confirmed that narcissists often claim leadership. Others respond positively to their bold and daring visions, but narcissists are not necessarily effective leaders. Especially narcissistic female leaders are punished for egocentric actions and are seen as less effective than their male counterparts. Time and context also play a role in this regard.
One study suggested narcissistic leaders appealed to others in initial interactions, but they failed to build positive relationships over the course of twelve weeks. Another study demonstrated narcissistic leaders do not fit ethical business contexts. In ethical organisations, narcissistic leaders were perceived as unethical and ineffective. And indeed, teams led by narcissists were less successful in problem-solving. For example, team members failed to share relevant information with each other. Finally, evidence suggested that narcissists at the executive level can hamper overall business success. Narcissistic CEOs ensure their own profits; they earn well, drive high-risk strategies and entrepreneurial orientation. A study of the 31 largest German manufacturing firms found that CEO narcissism predicted growth in internationalisation strategies (ratio of foreign sales to total sales). Narcissists are focused on driving wins, but fail to pay attention to potential losses.
In another study, CEO narcissism was negatively related to returns at the start of a crisis period and positively related to returns in the post-crisis period. In Mergers & Acquisitions, narcissistic CEOs typically initiated takeover processes. However, when both acquirer and target businesses’ CEOs were highly narcissistic, the probability of actual deal completion decreased. Some of the research also suggested CEO narcissism resulted in “window dressing” activities rather than sustainable action. This concerned Corporate Social Responsibility practices, but also allegations of fraud and corporate tax sheltering.
All in all, can you trust narcissistic leaders? The answer, unfortunately, is probably not. There are very specific areas, such as entrepreneurship or visionary boldness, where narcissistic leaders are likely to drive business performance. However, narcissists’ dependence on external views can vault them into vicious circles, which ultimately put businesses at risk. Narcissists strive for positive recognition from the public, the media, and their shareholders. If the warm glow of success carries them away, narcissists may do what it takes, ignoring the needs and interests of others as well as legal boundaries.
If we cannot trust narcissistic leaders, what does this mean for future business thinking? Keep in mind the following when working with narcissistic leaders: firstly, narcissists can be “fit-for-purpose” in some areas of business thinking. Asking them to work on corporate visions and scenarios for future investments is one area of strength. Secondly, give narcissists their “stage to shine.” Narcissistic leaders whose contributions are publicly acknowledged are more likely to contribute to team and company performance. Thirdly, create boundaries for acceptable conduct and collaboration. Your corporate values need to be clear and transparent to guide narcissists’ interactions with others. The right ethical values and guidelines create a sense of humility in your business.