The Role of Narcissistic CEOs in Business
The CEO of any firm needs to demonstrate strong leadership and sound decision-making. However, narcissitic CEOs can involve their companies in risky ventures that put the stakeholder's funds at risk. Such CEOs feel that they have decision-making skills that are superior to their peers.
Impact of Narcissistic CEOs on Firm Performance
An overconfident CEO can come from any region in the world, but they mostly come from countries where an individualistic culture is prevalent. In some instances, a narcissistic CEO is an asset to the firm, but the investors need to determine whether they need an overconfident CEO. A narcissistic CEO exhibits negative traits which are detrimental to the operations of the business because they tend to serve their interests first at the expense of the activities of the company and they tend to attribute success to their actions and failure to bad luck which is a reinforcement of confidence.
Diagnosis
Narcissistic leaders are usually overconfident, and they possess high self-esteem. Results and people boost the narcissistic CEO's self-esteem. Moreover, they adopt risk-taking behaviors because of their sense of worth from the compliments and attention the society accords them. Narcissism is directly linked to leadership since most leaders have a narcissistic personality dimension (Grijalva et. al 24). It acts as the driving force towards attaining a leadership position. It is possible to identify the level of narcissism in a leader through their actions. Such CEOs believe that they cannot rely on the loyalty or love of anyone but simultaneously require others to affirm their power, status, and superiority (Vries and Miller 588). Additionally, they have a dire need to rely on themselves rather than others to gratify their lives' needs.
Distinguishing Between Narcissistic Behaviors and Positive Self-Esteem
Furthermore, such individuals tend to have exploitative tendencies where they believe that they deserve to be served and accorded with special consideration in life. Distinguishing between narcissistic behaviors and positive, safe regard is possible. Self-esteem is the ability of a person to accept who they are, like the person they are and have respect for themselves. Despite the fact that narcissism and self-respect correlate, the two align because they both involve self-admiration. The self-esteem of a narcissist is high but very fragile. They are also arrogant, self-entitled, and they have a continued need for affirmation. Furthermore, the narcissist has an exaggerated self-confidence due to external factors and an internal disposition.
Causes of Overconfidence in Narcissistic CEOs
Narcissists are overconfident, and they feel that they are entitled to be served by others. As such, their needs must be met at the precedence of others. However, they do not assume mutual responsibility, and some will act surprised or angry that others refuse to do as they wish. The overconfidence among such individuals leads them to think that they are entitled to more positive outcomes in life than others (Cole). They have an unrealistic level of self-appraisal and they are undeserving of the attention and praise they crave, which masks an underlying sense of inferiority that makes them feel inadequate.
Effects of Lack of Empathy in Narcissistic CEOs
Additionally, the overconfident narcissist lacks empathy for others, and they only care about their feelings. They often take advantage of other people for their gain. It is impossible for the narcissist to maintain a healthy relationship with anyone. The sense of entitlement and the need to exploit others is the driving force of their lack of empathy. A narcissist is aware of the harm they cause to others, and they disregard it entirely. They often demand service from others at all times regardless of the other person's situation. The lack of empathy develops because the individual focuses too much on achieving power, status, and money.
Impact of Narcissistic CEOs on Employees
CEOs must be confident for them to take the necessary risks in decision making. However, when confidence crosses the line to overconfidence, it can have a detrimental effect on the operations of the firm. According to research, overconfident CEOs lead their firms to compensate high acquisition premiums, take up mergers that destroy value, and inflate estimates of payoffs (Ward). The higher the hubris score of the CEO, the higher the chances of the firm becoming involved in risk-taking behavior. Moderation is vital in risk-taking behavior. When the egos of CEOs inflate, and their actions are overreaching, they may have a negative impact on the performance of the firm.
Symptoms of Narcissistic CEOs
Narcissistic CEOs often portray strong leadership abilities since they seem to have a vision, confidence, and pride in what they have accomplished, but the excellent leadership they represent in their charisma is often overcrowded by their wrong habits. Due to their high self-esteem, such leaders may want their employees to act in similar ways. They surround themselves with people they deem as inferior. They yearn to be admired, and they have some followers who follow them faithfully. They are gifted in attracting followers because they have excellent verbal skills and articulation due to their charisma (Stein 291). The direct consequence is too many overconfident employees in the workplace, which is detrimental to the organization. Overconfidence leads to inadequate production when the quality of work does not match the person's grandiose capabilities. Moreover, the firm will have to deal with numerous conflicts because there is a thin line between disagreement and overconfidence. When people fail because of their detrimental techniques, they will tend to find someone to blame instead of taking accountability and responsibility.
Impact on Employees and Organizational Goals
An overconfident CEO will tend to take more risks because of their belief in their capabilities. Throughout the life of a CEO, they are awarded for their capacity to take risks and show their self-confidence. The grandiosity and preoccupation with fantasies of success lead narcissistic CEOs to get involved in projects that are incredibly bold. They have a transformational leadership style as opposed to a transactional leadership style. The motive is to portray mastery and brilliance to an invisible audience (Jackson). The grand scale projects are often destined for failure because they often reflect the CEO's desires instead of the reality of the situation. They, therefore, end up putting too many resources at risk. The narcissistic CEO will not listen to the advice of others because they feel that they have the capability to make a sound judgment. Even in the face of crisis, the narcissistic CEO will not admit their errors, and they are susceptible to criticism. Eventually, they end up blaming others when the situation has entirely deteriorated because they cannot be responsible for anything negative. The direct consequence of such risk-taking behaviors of narcissistic CEOs is the potential to ruin an organization's reputation and possibly lead the firm to bankruptcy (Dodgson). The most strategic risk of most executives is the company's reputation. They tend to overinvest because they believe that the firm has a certain amount of cash flow, which is higher than the actual figures and primarily in mergers and acquisitions.
The Impact of Narcissistic CEOs on Employees
Any CEO has employees who look up to them, and the employees may begin to take up the character traits of overconfident CEOs. Such employees are in need of attention and fame. Any leader can awaken the primitive tendencies of their followers. As such, reckless executives are often charismatic, and they can efficiently work on the natural urges of their employees. Under such executives, some employees will feel grandiose and proud while some exhibit helplessness and reliance. As such, narcissistic executives will knowingly or unknowingly exploit their employees' feelings. Some of the employees will embrace the idea of a leader who can fulfill their dependency needs (Jackson). Additionally, the employees will exhibit similar traits in a bid to get the attention and praise from overconfident leaders. Other employees who have opposing qualities may get adverse reactions from such executives. The direct consequence of such tendencies is that employees who adopt a risk-taking behavior from observing their bosses may end up making risky decisions, which will have a negative impact on the organization. The cycle is similar to that of their boss, and they will not take responsibility for their actions, and they will blame others instead. Overall, such habits are detrimental to the organization because the employees' goals are not to act in the best interests of the organization. The goals of the managers and subordinates should always be in tandem with the organization's goals.
Effects of Overconfidence in Decision Making
As a result of overconfidence and high self-esteem, narcissistic CEOs may become big-headed in the way they make decisions because of the previous recognition of their achievements. Most CEOs often cultivate their public personas, and they grace the cover of various magazines for their accomplishments. When investment decisions turn out badly, it is not hard to blame it on the CEO. The decisions that a CEO makes and the outcomes, especially in stock options, are a measure of their overconfidence. As an example, some overconfident CEOs when looking at mergers will tend to focus on businesses that are not in their line of business (Grijalva et. al 35). A merger or an acquisition has the potential to bankrupt or put the company at risk. If the CEO makes a wrong decision about mergers and acquisitions, the result will be bankruptcy, which will tarnish the reputation of the firm. The overconfident CEO believes that the company's resources are undervalued, which has the potential to deplete the resources of the organization and expose the business to financial risk. As such, it is essential to oversee the actions of an overconfident CEO to determine whether they are making decisions too fast.
Impact on Organizational Morale and Employee Turnover
The lack of empathy is another common characteristic of overconfident CEOs, and they often look down on individuals. The CEO is only concerned with issues that relate to him and entirely disregards the needs of others (Chatterjee). They usually have a total fluctuation of attitude towards their employees. As such, there is a high employee turnover because most employees are either inefficient or too stubborn for him in the case where they oppose the CEO's decisions. Employees often jeopardize projects that require teamwork or the subordinates to take the initiative. The direct consequence is that such behaviors bring down the morale of employees and reduced job satisfaction (Chamorro-Premuzic). As such, there is a high turnover, which is detrimental to the company's operations.
Prognosis for Organizations with Narcissistic CEOs
The high life of most overconfident CEOs renders them out of touch with the needs of their employees. Their inability to treat human beings as equals is detrimental to the morale of their employees. The result of making rash and risky decisions could serve to put the company in jeopardy, which means employees will lose their jobs because of the mistakes of their boss. They do not care about the needs of their employees. They often exploit their employees without compensation. Most overconfident CEOs do not care about how their narcissistic tendencies affect the lives of their employees, and they quickly break ethical norms and rules.
Conclusion and Recommendations
In conclusion, overconfident CEOs exhibit narcissistic tendencies that are self-serving and tend to focus on personal interests as opposed to the benefit of the business. Such CEOs make decisions, which pose risks to the company and the employees. They can never be wrong due to the previous successes, and failure is blamed on others. Some employees will try to emulate their boss's behaviors, but the result is too many overconfident individuals in one firm, which is detrimental. Overconfident CEOs tend to think that their firms are undervalued, and when it comes to making decisions about mergers and acquisitions, they could render the business bankrupt. They do not care about the welfare of their employees. As such, it is essential for employees to recognize the narcissistic trait of their boss. Initially, they should try to be humble and address issues as soon as they arise to avoid escalation. If such actions do not yield fruit, they should pursue further action such as a strike or a walkout to demonstrate the seriousness of their dissatisfaction.
Works Cited
Chamorro-Premuzic, Tomas. “The Dark Side of Executive Narcissism: How CEOs Destroy Companies’ Reputation and Employee Morale” Huffington Post. January 2, 2014. Web. 7 May 2018.
Chatterjee, Arijit, and Timothy G. Pollock. "Master of puppets: How narcissistic CEOs construct their professional worlds." Academy of Management Review 42.4 (2017): 703-725.
Cole, Marine. “The Good, the Bad and the Ugly of Narcissistic CEO’s” The Fiscal times, July 28, 2014. Web. 7 May 2018.
de Vries, Manfred FR Kets, and Danny Miller. "Narcissism and leadership: An object relations perspective." Human Relations38.6 (1985): 583-601.
Dodgson, Lindsay. “There are 3 distinct types of narcissists — here's how to spot them” Business Insider. January 19, 2018. Web. 7 May 2018.
Grijalva, Emily, et al. "Narcissism and leadership: A meta‐analytic review of linear and nonlinear relationships." Personnel Psychology 68.1 (2015): 1-47.
Jackson, Eric. " Why Narcissistic CEOs Kill Their Companies " Forbes.com. January 11, 2012. Web. 7 May 2018.
Jackson, Eric. “The Top 25 Most Narcissistic CEO’s In Tech”, Sep 16, 2013. Web. 7 May 2018.
Stein, Mark. "When does narcissistic leadership become problematic? Dick Fuld at Lehman Brothers." Journal of Management Inquiry 22.3 (2013): 282-293.
Ward, Lisa. “The Surprising Link Between the Economy and Narcissism” Wall Street Journal, June 12, 2016. Web. 7 May 2018.
