INSEAD

Executive Master’s Thesis

Consulting and Coaching for Change

‘Willful Blindness’ – Narcissist’s at Work

Susan Kay

January 2014

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ABSTRACT

Given the damage Narcissistic Leaders have recently done in organisations and the concern that current narcissistic leaders may be incubating further problems, how can organisations identify and deal with them? No study or research has explored what role HR plays in identifying or dealing with them, therefore this thesis draws on research literature on psychopathy and narcissism to better understand - how do organisations identify and deal with narcissistic leaders and what is HR’s role?

I conducted a qualitative study split into several stages. The first stage involved field research, doing 14 semi structured interviews, with senior executives. All either, did or had, worked in companies from the London Financial Times Stock Exchange (FTSE 250) or organisations that consulted in to them. The aim of the interviews was to determine their experience of working with, or for, senior executives they believed had narcissistic personality traits. The second phase involved listening to the digital recordings and transcribing notes of each interview. The third phase involved analysing the interview notes to determine key themes and patterns, which I then compared with information gathered from the academic research and clinical theory to determine any similarities, differences, new patterns or insights.

Based on the results I critically reflected on the implications for boards and argue that:- a) social defences may explain why organisations find it difficult to spot narcissistic leaders and intervene b) the role of the Board in identifying and dealing with them is more significant than HR’s

2 c) Boards need to manage the ‘behavioural risks’, associated with narcissistic leaders, with as much diligence as financial, operational, and reputational risks d) Boards can do this by adopting and extending traditional approaches to risk management to implement better ‘checks and balances’ and e) given the typical short term nature of narcissistic leaders, and in response to political interventions (to drive improved levels of disclosure and increased shareholder power), boards need to review their approach to senior executive remuneration and consider:-

 extending time horizon of long term incentive plans (e.g. from 3 to 5 years plus),

 using bonus claw back mechanisms linked to longer term performance

 shift from a focus on pay, governed by performance measures, to a broader

approach to wealth that considers stocks of executive shareholdings with longer

time horizons or other holding conditions linked to performance

KEY WORDS:

Psychopathy, Narcissism, Behavioural Risk, Willful Blindness

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CONTENTS

Abstract ………………………………………………………………………………………………………………………. 2 Key Words …………………………………………………………………………………………………………………… 3 1. Introduction …………………………………………………………………………………………………………… 6 2. Literature Review …………………………………………….……………………………………………………… 8

2.1 Psychopathy .……………………………………………………………………………………………………. 8

2.2 Definition of narcissism ………………………….……………………………………………..…………. 9

2.3 Narcissistic personality disorder (NPD) .………………………………………………………….. 10

2.4 Diagnosing NPD ……………………………………………………………………………………………… 12

2.5 Theories of narcissism ……………………………………………………………………………………. 12

2.6 Narcissism in organisations ……………………………………………………………………………. 14

2.7 Narcissistic leaders ………………………………………………………………………………………... 15

2.8. Social changes ……………………..……………………………………………..…………………………. 15

2.9 Gaps and future areas for research in the academic literature ………………………. 16

3. Method ………………………………………………………………………………………………………………….…… 16

3.1 Research methodology ……………………………………………………………………………..…… 16

3.2 Research context and data collection …………………………………………………………….. 17

4. Findings ……………………………………………………………………………………………………………………….. 19

4.1 Interviews ……………………………….……………………………………………………………………… 19

4.1.1 Spotting the narcissist ………………………………………………………………………….. 19

4.1.2 Impact on interviewee, others and the organisation …………………………..… 23

4.1.3 Dealing with narcissistic leaders ………………………………….……………………….. 25

4.1.4 HR’s Role ……………………………………………………………………………………………… 27

4.2 What I did and did not find in the research ……………………………………………………. 28

5. Discussion .…………………………………………………………………………………………………………………. 32

5.1 Why is it important to identify and deal with narcissistic leaders? ………………. 32

5.2 Why is it timely? …………………………………………………………………………………………… 32

5.3 Why is it so difficult to identify narcissistic leaders? …………………………………….. 34

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5.4 Why is it difficult for individuals or organisations to deal with them? …………. 35

5.5 What can organisations and individuals do? ………………………………………………. 37

5.6 What can be done for the narcissistic leader? ………………………. ……………………. 40

5.7 Limitations of this thesis and future research ………………………………………………. 41

6. Conclusion ……………………………………………………………………………………………………………….. 43

7. References ……………………………………………………………………………………………………………….. 45

Appendix 1 Interview Positioning …………………………………………………………………………………. 50

Appendix 2 Semi-structured interview checklist …………………………………………………………… 51

Appendix 3 Interview data-gathering table ……………………………… ………………………………… 53

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1. INTRODUCTION

“Leaders whose behaviour has become distorted can do untold damage to their businesses”

(Reyner, Cuccio, & Mann, 2013). The extreme damage narcissistic leaders have done in organisations recently has ranged from destruction of shareholder value, through to misguided acquisitions or growth plans, and loss or erosion of talent. The association between narcissism and abuse of power by grandiose, charismatic leaders is well known

(Sankowsky, 1995). Narcissistic leaders in organisations today may be incubating problems that will only manifest themselves at a later stage (Stein, 2013). Rijsenbilt, and Commandeur

(2013) suggest CEO narcissism is a potential cause of fraud. Narcissistic traits have also been associated with abuse of alcohol, opiates (Calsyn, Fleming, Wells, & Saxon, 1996), cocaine

(Marlowe, Husband, Lamb, & Kirby, 1995) and stimulants (McMahon, Malow & Penedo,

1998). Due to the array of negative behaviours associated with them, there is a substantial interest in the study of what Paulhus and Williams (2002) defined as the ‘dark triad’ of personality: narcissism, Machiavellianism and psychopathy.

Whilst some have pointed to the upsides of narcissism, pointing out that narcissistic leaders are often visionaries and innovators (Deutschman, 2005), others argue that the degree of narcissism displayed by senior executives and CEOs can affect important organisational outcomes (Chatterjee & Hambrick, 2006). Although much of the research into psychopathy is developed in a criminal context, Kets de Vries, (2012) argues there is a thin dividing line between the leader in the executive suite who is considered to be a corporate genius, and a psychopath. Boddy (2011) goes so far as to offer “the corporate psychopath” as a theory to explain the recent global financial crisis, while a UK investment banker admitted to using psychometric testing to recruit social psychopaths into senior corporate finance roles

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(Basham, 2011). The narcissistic personality pattern is one of the most difficult personality disorders to deal with (Millon, Grossman, Millon, Meagher, & Ramnath, 2004), which poses real problems for people who interact with narcissists in a corporate setting. Despite this wide recognition, I could find no research into the role of HR in identifying and dealing with narcissistic leaders. The purpose of this thesis is to enable executives and consultants to UK

FTSE 250 companies to share their personal experiences of narcissistic leaders and the role

HR played. To do so, I used qualitative, semi-structured interview methods and adopted a narrative approach. The research question is: How do organisations identify and deal with narcissistic leaders and what is HR’s role?

After defining the concepts of psychopathy and clinical theories of narcissism, I go on to present the results of my interview findings and discuss some of the key themes that emerged. The implications of these findings are then discussed in terms of practical steps for the organisation, boards and HR, as well as some of the difficulties to be overcome and reasons why HR and boards find this issue so difficult. Areas for future research are also proposed: These include:

 Are there any differences in family-owned businesses, government/public sectors,

or across industries?

 Are narcissists drawn to industries with more managerial discretion?

 What impact do narcissists have on their direct reports and their career

trajectories?

 Would narcissism and narcissistic leaders manifest themselves differently in

different cultures?

 Clinical descriptions of narcissism – is it a trait, domain, dimension, type or disorder?

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2. LITERATURE REVIEW

2.1 Psychopathy

The term psychopathy comes from the Greek words psyche (soul) and pathos (suffering or feeling). The fourth and fifth editions of the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders (DSM) include a diagnosis of Antisocial (Dissocial)

Personality Disorder (ASPD) which states it is a ‘pattern of disregard for, and violation of, the rights of others, that begins in childhood, or early adolescence and continues into adulthood. This pattern has also been referred to as psychopathy, sociopathy or social personality disorder.’ The widespread recognition of psychopathy can be traced back to

Cleckley (1941) and although not used in organisational settings, assessments of psychopathy characteristics have been widely used in the criminal justice systems of some countries for some time. The most common psychopathy assessment is Canadian psychologist Robert D. Hare’s Psychopathy Checklist–Revised (PCL–R). Hare (2003) defines the key characteristics of psychopaths on multiple dimensions or factors, facets and items.

Factor 1 involves interpersonal or affective (emotion) personality traits, while Factor 2 involves either compulsive-irresponsible or antisocial behaviours. Factors and facets are shown in Table 1.

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Table 1: Hare’s Psychopathy Checklist Revised (PCL–R)

FACTOR 1 FACTOR 2 OTHER ITEMS Facet 1: Interpersonal Facet 3: Lifestyle  Glibness/superficial charm  Need for  Many short-term marital  Grandiose sense of self-worth stimulation/proneness to relationships  Pathological lying boredom  Promiscuous sexual  Cunning/manipulative  Parasitic lifestyle behaviour  Lack of realistic, long-term goals  Impulsivity  Irresponsibility Facet 2: Affective Facet 4: Antisocial  Lack of remorse or guilt  Poor behavioural controls  Emotionally shallow  Early behavioural problems  Callous/lack of empathy  Juvenile delinquency  Failure to accept  Revocation of conditional responsibility for own actions release  Criminal versatility

One correlated factor that emerged from Hare’s PCL–R was that psychopathic patterns

typically represent a narcissistic personality variant – self focus, which supports Millon’s,

(1973) view that “psychopathy has at its core a deficiency in concern for others or lack of

conscience or morality”.

2.2 Definition of narcissism

The term narcissism is derived from the Ancient Greek myth of Narcissus – the beautiful

young man who, although loved by everyone, will love no-one in return. His refusal

provokes Aphrodite, goddess of love and beauty, who curses him so that when he gazes into

a pool he falls in love with his own reflection and spends day after day pining after his own

reflection and his inability to possess it. In his pursuit of ‘oneness’ with his own self-glorified

image he drowns himself in the pool. The myth suggests narcissists are unaware of the

intensity of their self-love and how it affects others. The act of unknowingly taking himself

as a lover ultimately leads Narcissus to a life of desperation, loneliness and self-destruction.

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Most of us have some narcissistic traits – indeed Kets de Vries (2011) suggests we all need a modicum of narcissism in order to function – but what is important is the ‘amount and intensity of our narcissistic predisposition’, which Kets de Vries distinguishes as constructive

(healthy) and reactive (unhealthy) narcissism. High levels of narcissism can manifest in a pathological form as a personality disorder. Kernberg (1970) proposes a spectrum of pathological narcissism, with today’s psychopath or antisocial personality at the high end and narcissistic personality disorder at the lower end.

2.3 Narcissistic personality disorder (NPD)

Turning to formal definitions, although in the International Classification of Diseases (ICD-

10) The World Health Organisation refers to psychopathy as a synonym for dissocial personality disorder, it does not include a narcissistic personality disorder in its taxonomy.

The American Psychiatric Association’s DSM-IV-TR defines that narcissistic personality disorder is indicated by five or more of the following criteria:

- Grandiose sense of self-importance (exaggerates achievements and talents, expects

to be recognised as superior without commensurate achievements).

- Is preoccupied with fantasies of unlimited success, power, brilliance, beauty or ideal

love.

- Believes that he or she is ‘special’ and unique and can only be understood by, or

should associate with, other special or high-status people (or institutions).

- Requires excessive admiration.

- Has a sense of entitlement, i.e. unreasonable expectations of especially favourable

treatment or automatic compliance with his or her expectations.

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- Is interpersonally exploitative i.e. takes advantage of others to achieve his or her

own ends.

- Lacks empathy: is unwilling to recognise or identify with the feelings and needs of

others.

- Is often envious of others or believes that others are envious of him or her.

- Shows arrogant, haughty behaviour or attitudes.

According to Millon et al. (2004), narcissistic personality disorder affects 1% of the population. As a result of clinical experience and a review of other narcissistic personalities Millon et al. have suggested several sub-types, as shown in Table 2.

Table 2: Millon et al.’s (2004) adult sub-types

No. Sub-type Characterised by 1 The Unprincipled Arrogant sense of self-worth, indifference to welfare of others and Narcissist fraudulent and intimidating social manner. Fearless in the face of threats; plot and scheme in their calculations to manipulate others. A conman and charlatan, dominating, contemptuous, deceptive and vindictive. 2 The Amorous Erotic and seductive orientation, indifferent conscience, aloof to truth Narcissist and social responsibility. Skillful in bewitching, tantalising the needy and naive. Devote their energies to construct intricate lies to exploit others, and extract what they believe they are due through pathological lying and swindling. 3 The Suffered wounds in early life and seek to make up or compensate for Compensatory early life deprivations. They glorify their public persona, have an Narcissist inflated and over-valued view of self and look down on others as devalued plebeians. Pursue leading role in a false or imaginary theatre. 4 The Elitist Self-assured, arrogant and energetic, persuade others of their Narcissist specialness rather than put the work in to achieve attainments. Unrivalled in their pursuit of becoming number one by convincing others. Social climbers. Driven by need to be celebrated or famous.

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2.4 Diagnosing NPD

Identification of narcissistic personality disorder is not a medical diagnosis but a

determination of whether an individual represents a ‘case’ and how his/her personality is

tied up in the meaning of past and current problems (Millon et al., 2004). Diagnosis is made

more complicated by numerous definitions, sub-definitions and assessment instruments.

These include:

 self-report instruments like the Narcissistic Personality Inventory (Raskin &Terry, 1988);

 clinical interview led diagnostics like the Structured Clinical Interviews like the DSM-IV

Axis ii Personality Disorders – SCID-11 or Diagnostic Interview for Narcissism (DIN); or

 the Millon Clinical Multiaxial Inventory-III (MCMI) used with adult patients in psychiatric

contexts developed by Millon, Millon, Davis, & Grossman (2009);

 the Pathological Narcissism Inventory (PNI) developed by Pincus et al. (2009) to clarify

criterion issues and determine appropriate structure for pathological narcissism.

Time-consuming assessments, dependent on a clinically trained therapist, or distortions of

desirability factors associated with self-report instruments are common problems. The DSM-

IV also highlights difficulties that can arise in differentiating narcissists from other antisocial

personalities, given the similarity of some characteristics.

2.5 Theories of narcissism

Clinical theories of narcissism are predominantly drawn from psychodynamic, interpersonal

and cognitive perspectives. Freud’s initial psychodynamic theory on narcissism emphasised

two phases of healthy child development, known as primary and secondary narcissism, in

which the child directs its libido initially towards the self and then transitions to external

12 love objects, especially the mother (Freud, 1914/1925). When individual’s or love objects that the libido was directed towards was not returned Freud suggested the child regressed to an unhealthy state of narcissism referred to as secondary narcissism, in order to love and gratify them, as a compensatory mechanism. More recent psychodynamic theories of narcissism centre on two formulations, either Kohut’s (1971) self-psychology or Kernberg’s

(1970) object relations theory. Kernberg (1984) argues that narcissism is a compensation and defence against early developmental arrest and failure to develop integrated conceptions of self and other object-images. To achieve a more cohesive self, narcissists fuse the ideal self, ideal object and self-image. This fusion of self-image and ideal self, explains narcissists’ grandiosity, omnipotence, need for admiration and sense of entitlement. Kohut’s (1971) theory was based on a child’s early years in which the mother nurtures the child until it realises that rewards come from the external world, rather than self. At this point uncertainty about whether its needs will be met sets in. The resultant vulnerability causes the child to seek to return to primary narcissism by idealizing the parent and grandiose self. In healthy development this is eventually given up and transformed into more realistic ambitions. Narcissism is seen as a manifestation of defective development if the grandiose self continues and the transition to more realistic ambitions does not occur.

In contrast to Kernberg and Kohut’s, whose theories both portray NPD as a compensatory or defensive mechanism, Benjamin’s (1996) interpersonal theory suggests that parental over- evaluation, or a need for the child to be perfect, lies behind NPD. The discipline parents administer during toddlerhood is crucial – if parents over-indulge their child and fail to point out how its actions affect others, the child may become inconsiderate, insensitive, egocentric and unempathetic.

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Cognitive theories of narcissism focus on dysfunctional beliefs (automatic thoughts, beliefs, assumptions about the world, self and others), interpersonal strategies and cognitive distortions or errors in rational thinking (Beck et al., 2001).

2.6 Narcissism in organisations

The research on narcissistic organisations is less voluminous. However Stein (2003) suggests that organisational narcissism can occur under the following conditions:

- When an organisation is felt by its members to be special and unique, pride is

exaggerated (hubris), resulting in delusional views that the organisation is flawless.

- This hubris is associated with unconscious omnipotence where anything of any

power is felt to be either part of the organisation or under its control. In other words

“the organisation deludes itself in to believing it has powers with no limits” (Stein,

2003).

- There is an unconscious omniscience, that is, all relevant information is believed to

be accessible to the organisation.

- These delusions enable the organisation to be dismissive of other organisations,

people and information and to treat them with triumphant contempt, with any

problem perceived as lying in the larger environment, not the organisation.

Stein (2003) argues that these features of hubris, omnipotence, omniscience, dismissiveness and triumphant contempt shape the socio-technical design of the organisation beyond just the organisation itself.

There is limited research on narcissism within specific organisational functions, or business units, although Amernic and Craig (2010) highlight accounting as a facilitator of extreme

14 narcissism in susceptible CEOs, as evidenced in recent unethical financial reporting and spectacular corporate collapses in the banking sector.

2.7 Narcissistic leaders

Although Chatterjee and Hambrick (2006) found companies headed by narcissistic and non- narcissistic leaders were equally profitable, Duchon and Drake (2009) argue that a greater concern is the impact they have on the organisation, their lack of moral identity and in extreme cases their inability to behave ethically. As narcissistic leaders become self- obsessed they use their sense of entitlement, self-aggrandisement, denial and rationalisation to justify anything they do.

Following the introduction of anti-corruption and bribery legislation in the US and Europe and global events such as the recent financial crisis, boards and company secretariats are putting increased emphasis on organisations’ ethical and behavioural standards. This has implications for more ethical leadership: Hoffman et al. (2013) suggest that in highly ethical contexts narcissistic leaders are perceived as ineffective and unethical.

2.8 Social changes

There are several reasons why this topic is becoming increasingly important. First, Wilson and Sibley (2011) report evidence of “narcissism creep” and age-related differences showing that younger people are more narcissistic than their forebears. Second, narcissism in is on the rise. Bergman, Westerman, and Daly (2008) suggest narcissism has risen in US college students over the last 25 years and is more pronounced in business students than in any other disciplines. Westerman, Bergman, Bergman, and Daly (2012) go so far as to question

15 whether universities are creating “millennial narcissistic employees” and present the negative implications of narcissism for the future workplace environment.

2.9 Gaps and future areas for research in the academic literature

Overall the study of narcissism is fragmented and under pursued; future studies need a multidisciplinary, integrative approach (Blais & Little, 2010). As there is no research on HR’s role in spotting and dealing with narcissistic leaders, I focus on this gap in this research.

3. METHOD

This research addresses the question of how organisations, in the corporate world, identify and deal with narcissistic leaders and the role of HR.

3.1 Research methodology

In an attempt to understand the research question I interviewed 14 senior executives who were either working or had worked in companies from the London FTSE 250 companies or organisations that consulted in them. Their experiences of working for or with executives they believed had narcissistic personality traits has been the main source of my findings and proposals. Three of the senior executives either were, or had been, group HR directors. The number of senior executives interviewed was determined by the point at which I did not believe any new themes were emerging from interviews. The research design involved four key stages. First I gathered data through semi-structured interviews that, with the

Interviewees’ agreement, were recorded using a digital recorder. All interviews were conducted over a three-month period and were conducted face-to-face either in the

Interviewees’ or my own office in London, or in restaurants. During the interview I also took notes of my own exploratory observations, what was I observing or learning, what was

16 different about this interviewee or organisation, what was I not hearing and how I felt during the interview.

The second phase of the research involved listening to the digital recordings and transcribing each interview verbatim, under each of the semi-structured questions. I also captured notes on any new exploratory observations or feelings I had.

In the third phase I adopted the grounded theory generating method developed by Glaser and Strauss (1967), a suitable method when the researcher wants to discover new patterns or explore new fields (Hylander, 2003) rather than having a preconceived theory that the researcher is trying to prove. I analysed the interview notes and made mind maps of any emerging categories, patterns or themes, using verbatim comments extracted from interview notes as substantiating evidence.

Having organised the information into key themes I then compared the categories with information gathered from the academic research to determine if there were any similarities, differences, new patterns or new insights.

The final stage of the research involved drawing conclusions from the interviews to generate new ideas, develop hypotheses for further evaluation or identify further areas or research.

3.2 Research context and data collection

The executives interviewed were recommended by colleagues or other participants in the

CCC programme (opportunity sample). None of them worked in my own current organisation. They worked in a range of private industry sectors including banking, professional services, education, retail and manufacturing. Out of the 14 interviewees 13

17 were British nationals and one a US citizen. Five interviewees were female and nine male.

Executives were partners, board members or executives representing the top 100 senior executives within their organisations. They ranged in age from 43 to 69 with an average age of 51. The years of business experience they had ranged from 20 to 44 with an average of

25. All interviews were scheduled for an hour and lasted between 60 and 90 minutes. The interviews were initially verbally positioned, and then positioned in a follow-up email as being research for this thesis as part of the INSEAD Masters in CCC programme. I reinforced that all interviews would be confidential and anonymous so that it would not be possible to identify individuals in the research report.

The data-gathering approach was based on a semi-structured interview that was structured in three parts. The first part involved gathering background information from the

Interviewee regarding their role, age, years of experience, etc., their understanding of narcissism and establishing a common definition. The second part then focused on their experience of working with, or for, other executives they believed had narcissistic personality traits. The objective was to understand their lived experience through their story; the impact it had on them or others in their organisations; how they, or their organisations, spotted and dealt with narcissistic leaders; and what role HR played. The third part of the interview focused on what, if anything, they believed HR’s role should be in the future and any other ideas or suggestions.

The interview brief, questions and data-collection table are shown in Appendices 1–3. I began by asking open questions and then individually adapted follow-up questions based on the interviewees’ experience/story. Interviewees were asked to report on experiences, or critical incidents, that were most profound for them, or events they recalled as particularly

18 striking or important. A couple of the interviewees reported more than one example; these were recorded as separate cases within the same set of interview notes. In addition to the digital recording I made written notes of my own observations and feelings during the interviews.

4. FINDINGS

In this section I describe the results of the data gathered, my findings and my interpretation of the analysis from my interview notes. From this analysis I derived key themes that I then put in the context of the existing literature and used to derive future recommendations (see discussion section).

Although I cannot be sure the experiences of these senior executives were with Leaders with NPD, as no formal clinical diagnosis was done, for the purposes of this thesis I will be referring to them as “narcissistic leaders” as described by the interviewees, who believed these leaders did display characteristics associated with NPD.

4.1 Interviews

Through the semi-structured interview process personal experiences and cases of memorable critical incidents appeared easy for interviewees to recall. Some of the experiences had occurred more than five years earlier but were readily recalled by interviewees as if they had occurred recently, suggesting profound personal experiences.

4.1.1 Spotting the narcissist

Many of the executives described how they, or their organisation, did not initially, or for some considerable time, spot they were working with a narcissistic leader. Most

19 interviewees recalled that at the time of the experience they were unable to “recognise, name or understand the behaviours” they experienced in the context of narcissism as they did not know enough about it at the time. For many it was not until several years later, either having reflected on their experiences with colleagues, consultants or other professionals, or had some exposure to literature on narcissism, they were educated enough to begin to understand their experience. For example, one interviewee admitted it was several years before she realised she had been “manipulated” and may have “worked for a boss who had narcissistic tendencies”, having described her experiences and the impact it had on her to a psychologist who prompted her to read up on the subject. Even when interviewees did have some prior knowledge of narcissism it was still difficult for them to recognise it at the time. One interviewee described herself as being “blind” for not seeing or realising what she was going through, even though she had some knowledge of narcissism.

I discovered interviewees described two sides to the narcissistic leader they experienced.

The more positive characteristics, which they and others often initially admired, included being visionary, charming and results or commercially orientated. These characteristics appeared to be more prominent in the early stages of relationships. The other side, which was much less complimentary, included an exaggerated or inflated view of themselves or their capabilities to the point where a couple of interviewees believed the narcissistic leader may have lied, had weak teams who didn’t challenge them, had a sense of entitlement for special or favourable treatment from others, had poor relationships with peers and direct reports and better relationships with superiors, autocratic leadership styles and showed little or no empathy for others. Where the characteristics were described in two or more

20 interviews these were categorised and are summarised with supporting evidence/statements, shown in Table 3.

Table 3: Characteristics of narcissistic leaders

Theme Common Characteristics Visionary Inspirational Convincing at persuading others, particularly upwards, about their vision Had a halo effect regarding their personal brand for being known to be visionary Charisma & “Highly charismatic” charm “Seductive” Used charm to manipulate e.g. “He tapped into my personal ambition” “Fragility to it though as was always in service of themselves” “Fine line between being dynamic versus a subtle bully” Drives for Driven to deliver business results and commercially orientated results “He turned around performance of that business from a cost perspective” “She was commercially focussed in delivering results” “The business valued the results he/she delivered” Exaggerated or Exaggerated their own achievements and talents: “She believed she was the inflated view of best in the world at customer service” themselves Unrealistic fantasies: “She claimed sporting achievements at Olympic level we could not verify” Fantasies and lies: “He told me he was brought up by nomads in North Africa and they had taught him how to talk to snakes” Team (direct High levels of attrition in the team: “In the three years, of a management reports) team of 12, he made 36 changes” Not particularly strong: “He brought in ‘B’ players who did what he said” No generational legacy “No ready now successor”: weak bench strength for succession planning purposes Sense of Expected extravagance: “excessive personal use of company plane” entitlement Expected special treatment from others: “Her mentor – it was as if he was a father figure to her” Granted her direct report an excessive severance package: “We found out afterwards she was in a relationship with the direct report so this severance package was in service of herself” Relationships Good at managing upwards with others Relationships weaker with peers or direct reports than upwards Based on what they wanted out of you: “ Used people and then dropped them like a stone when they have got what they wanted from you” “Paranoid and overly defensive, suspicious of others” Jealous of others Believed others were jealous of them: “He believed everyone was jealous of him”

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Would not share information with others Appeared good with more junior people from a mentoring and coaching perspective – however this was in order to “clone them into being like him and doing what he wanted“ Challenge from Resent any form of executive challenge from others (particularly if they others believe challenger is subordinate) “Would not compromise with others when challenged” “No discussion with others who disagreed” Decides everything for themselves with limited, if any, input from others “He was un-collaborative” and would “fake collaboration when he needed to in front of others more senior” “Reactions to challenge can lack any logic, it was all emotional” Operated solo: “He created a fiefdom” “There was a veneer of rationality in his meetings based on data and analysis although most knew his view and would not challenge or raise alternative views as he would ignore, dismiss or belittle you if you did.” Self- and short- Him/herself – they lacked integrity: “Decisions were always in pursuit of own term focus goals” Self-interest was at the forefront of everything: “She was obsessive regarding her own personal self-interests and goals” Results-focused but short-term versus long-term: “Mr X built a career based on short-term victory” “Poor track record of building or delivering anything that was sustainable – was all short term” Appeared to Shame: “She worked hard to cover up the fact that she was dyslexic” work hard to Intellectual weakness: “He worked hard to conceal he was intellectually weak cover up their and we were an organisation that valued intellect” own personal Lack of experience/depth in domain they had accountability for: “His lack of weaknesses experience was glossed over” Lacked experience: “As a result of rapid progression having been promoted too quickly” Leadership style “Authoritative, micro-manager” Command and control: “He would give double messages re decisions so you were never clear on what the decision actually was – it was a form of control” Loyalty – expected loyalty but also double messages: “You were trusted – but needed to regularly check in with him” Ruthless: “She told me she wrote people’s name on a piece of paper and put the paper in her freezer box at home to freeze them out, as well as taking them off the talent list” “Created dependency from others and a disempowering environment” Patterns of inconsistent behaviour and behavioural change: “Can be volatile”; “We would get urgent requests to do things – 7am and 8pm meetings were the norm”; “Decision making was unclear” Empathy – Had no empathy for others and disregarded the feelings of others: “He unable or show humiliated, belittled or patronised others in public” empathy or Unable to genuinely empathise: “He gave a flowery apology after being such genuinely a jerk I always had a sense that it was about how proud/well he was at his

22 empathise with own ability to apologise. He was always able to do what he wanted and able others to justify it in some way – after the fact” Dismissive of others: “He referred to others as the little people” Intimidating Could be intense and intimidating and intense eye “When he looked at you it felt like he read right into your soul” contact with “Stared intently at you, at other times X would give no eye contact at all – it others was as if you were not in the room”

One interviewee stood out in terms of spotting narcissistic behaviours fairly quickly because he saw “decisions being taken on a daily basis, it wasn’t an isolated incident but a pattern or behaviour and repeated incidents”. What was different about this interview was the fact that behaviour was described as “so overt” and there was “no masking or finesse – it was a feature of the time and the sector [banking] and is still going on”. The interviewee explained the organisation did force the exit of several of these leaders but their exit was due to business performance-related issues (not making their numbers) rather than, or in spite of, their poor leadership behaviours, style and decision making.

4.1.2 Impact on interviewee, others and the organisation

What was striking in the interviews was the impact at multiple levels, including individual, team, organisation and sector. Equally striking was the nature of the impact. At the individual level, when asked what impact the experience of the narcissistic leader had on them, or others, all interviewees described disturbing mental or physical health impacts.

One interviewee described how several of her peers had “mental breakdowns” resulting in their being off work sick for extended periods; another described a colleague who had

“physically collapsed” during a presentation to the narcissistic leader and then went off sick with stress. Some of the impacts described on themselves or others included being

“damaged” as a result of “burnout” or “confidence erosion”, “self-esteem erosion” or

“confidence destruction being common-place”.

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A couple of interviewees described their experiences as “traumatic”, “painful” and “scary” resulting in their becoming “very wary” of others or its being a “powerful learning experience” given the “cost observed from a human perspective”, which had resulted in their subsequently “safeguarding and moderating their own behaviour”. Half of the interviewees admitted they, and other leaders, had left the company as a direct result of their experience of a narcissistic leader. In all instances prior to leaving, the interviewee, their colleagues or both, had been on their organisation’s succession plan or talent lists.

Although most interviewees were open about the personal and emotional impacts, two interviewees struggled to describe the impacts on them personally beyond comparing or describing their own leadership style versus the narcissistic leader. Despite follow-up questions and probing for more specifics, the interviewees appeared to find it more comfortable to talk about others than about any emotional impact on themselves. One interviewee offered that he was still “reflecting on what impact it had on him at the time and subsequently” and that the interview process had prompted him to consider this.

What also stood out was the climate created at the team or business unit level as a result of the narcissistic leader’s management style, which was often described as “autocratic” and

“command and control”. Interviewees described it as “a business unit where you had to take your vitamins” or an environment of “distrust” with “suspicion of others being common” and teams being “divided”, “un-collaborative – we were not allowed to shared data with others” and generally “competitive”. One interviewee believed the “competitive environment was a form of manufactured conflict and control on the narcissistic leader’s part”.

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At an organisational level interviewees described these businesses as “short-term focused”,

“toxic”, “unhappy ships” with “dark shadows” that ultimately “lost a lot of money”. It was common for business results to have “deteriorated in the medium term” as a result of the narcissistic leader’s behaviour, actions and “fundamental failure to listen or involve others in decisions”. People still in the organisation were described as “tired”, “disillusioned”,

“disappointed”, “let down and cynical” as a result of “great promises that were not delivered by the narcissistic leader” or “how they treated people”. In the banking sector examples, the impacts for some organisations had been catastrophic, resulting in their collapse or massive regulatory fines. Shareholders and employees were described as the

“victims” of these narcissistic leaders. Senior executives were also impacted personally in some cases when they were asked to pay back bonuses (see section 4.1.4).

4.1.3 Dealing with narcissistic leaders

In terms of how organisations dealt with narcissistic leaders the overall findings were that most organisations “struggled” to deal with their behavioural issues, even when they were raised. Most of the senior executive responses to the questions of how did your organisation spot or deal with the narcissistic leader were “initially it didn’t”. Responses ranged from “At best it tried to constrain him and do damage limitation”, to “The organisation made a conscious choice, in the interest of short-term business results, not to deal with him”. Several executives believed there was an institutional bias “not to remove individuals if they were making their numbers”, although one pointed out, “They were exited if they didn’t make their numbers”.

In three instances interviewees explained peers had raised behavioural concerns with board members, their boss or others but they were not tackled. In some instances others who

25 raised the issue were subsequently “exited” from their companies. People quickly learned not to speak up in these organisations.

Other senior executives described a general lack of challenge regarding behavioural issues with concerns “not being raised”, or if they were, they “were not heard” or “ignored”.

In a further three instances narcissistic leaders were promoted after behavioural concerns and issues about them had been flagged to other senior executives, board members or HR.

In one case the narcissistic leader was moved to a different region to tackle a known business problem and then subsequently left the company. In none of these examples were the behavioural issues tackled and although two of the narcissistic leaders were exited from the company, this was some time later and their exit was on the basis of their delivering poor business performance rather than behavioural issues.

In most cases the interviewee had, at some point, challenged the narcissistic leader’s decisions or behaviours and had survived (i.e. were not exited from their company).

However, in one instance the interviewee believed forcing his boss to return an expensive, inappropriate gift from a supplier (a very expensive watch) was the catalyst for their working relationship deteriorating, as he had “dared to challenge him”. In another example the interviewee had provided “thoughtful and honest feedback regarding behaviours” to the narcissistic leader. While on one level she believed “he realised the positive intent”, the reality was “it made no difference in terms of his behaviour” and the feedback was ignored.

Notably, there were no examples of where behavioural feedback had been provided to the narcissistic leader who had subsequently genuinely changed his/her behaviour. At best one

26 interviewee described how one leader had slightly moderated his behaviour on the basis of feedback as part of a board team development day.

4.1.4 HR’s role

Interviewees described HR as:

- “being aware but did nothing”

- “denied it when you raised it”

- “colluding with the line”

- “bewitched” (by the narcissistic leader)

In many instances HR was “not valued or listened to” and therefore did not “have any teeth or influence”. Its role was described by interviewees as either “not being clear enough” or they were “unable to sufficiently challenge and debate senior leaders’ behaviour in the organisation”. One described HR as providing “a reactive service”: they were not asked about governance or behavioural issues and therefore were not involved in spotting or dealing with any concerns. “They didn’t have sufficient weight or influence and didn’t deal with it.” One interviewee believed “the CEO ensured the HR director did not create waves” in terms of any challenge to behaviours by making it clear they would be exited if they did.

A couple of the interviewees had raised concerns with HR but “HR didn’t get beyond calling it and were not effective in dealing with it”. One interviewee described how the narcissistic leader was in HR and that the group HR functional leader “really struggled” to deal with it

“despite others raising concerns and data points to demonstrate something was not right between the messages she was giving upwards versus the reality”. When probed about what action was taken, the emphasis was on “damage limitation” with talent moved out

27 from underneath the narcissistic leader to protect them. Eventually (two years later) the narcissistic leader was “moved out with a severance package”.

Most interviewee’s touched on the impact of incentive schemes. One described HR as being

“complicit and reinforcing of damaging and dysfunctional behaviour through the incentive schemes it implemented”. Generous bonus schemes, deferred bonus plans and long-term incentives (three years maximum) were some of the examples provided. Interviewees believed these had driven flawed decision making, such as acquisitions to inflate revenue or profit and loss profiles. They believed that personal financial self-interest drove narcissistic leaders’ decisions and judgement; although a media backlash regarding bonuses resulted in at least one of the CEOs giving back his bonus, other prominent leaders in the banking sector had refused to do so.

4.2 What I did and did not find in the research

Once people were aware of the research topic it was easier than I had imagined to source willing interviewees, with examples of personal experiences provided fairly readily during the interviews. What was more difficult to discover during and after the interviews was what appeared to be going on below the surface at a meta level (values, ethics, paradigms, language and beyond the here and now) in terms of clinical organisational complexity. The following sections attempt to draw out some of these themes.

 Language and metaphors Many of the interviewees used rich, colourful language or

metaphors when describing their experiences. Narcissistic leaders were described as

“crocodiles in swamps”, a “lion who you wanted to put into a cage to control”, a “rat

who gnawed at you”, a “smiling assassin”, “no one would say boo to the goose as the

28 goose was nasty” she was like a shark who was the most effective, ruthless, killing machine ever seen, and like a shark operated solo and still hasn’t changed her modus operandi or evolved, despite others evolving around them”.

Many of these metaphors were evocative of teeth and eyes. Some interviewees described how the narcissistic leader had turned on them. Their language also featured images of biting: “It was like he ripped me apart”; “She constantly nipped at our heels after we had left the company”.

Eye contact also came up in the context of general descriptions. One interviewee described that when the narcissistic leader looked into your eyes “it felt like he read your soul”, while another admitted they had to “retire, and be away from him, before I could look him in the eye again”.

Metaphors were also used to describe the environments the narcissistic leader created, which included “a world of shadows”, where “he was gunning for my scalp” and “you had to fight to survive and kill each other”; or “we operated like planets in a solar system

– some were big planets others very small”; people were also described as “destabilised and frozen”.

In recalling the impacts the narcissistic leader had on them, people described themselves as “blind”, “bewitched” and “duped”.

Metaphors to describe HR’s role ranged from “HR don’t have any teeth, they are less powerful than if they were quiet”, through to (at best) “Heroes” with “courage” who

“will either get killed or survive” in “the guerrilla wars”. Another described the situation as like “a scene from the Emperor’s new clothes – would HR deal with it or not?”

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 The significance of the role of company boards I started this research with an emphasis

on the role of HR, and what it should be in the future, but the more significant role to

emerge from the interviews was that of the board – the role played by the chairman,

CEO, executive directors and non-executive directors in defining and upholding company

values and the moral and ethical compass of the business. Interviewees emphasised that

boards had accountability for stewardship in the organisation and therefore should have

a more significant role than HR in spotting and dealing with narcissistic leaders.

 The paradigm of the HR role HR has traditionally been described as a function that

should be a champion for employees, representing their concerns to senior

management (Ulrich, 2008). However raising issues with HR can be fraught with

difficulties if HR ultimately reports to the senior management team that is causing

concern, or if the concern is about someone in HR. The extent to which HR is

independent, if it operates as a trusted advisor to senior management was questioned

by several interviewees. Many believed HR’s remit was not clear, particularly with

regard to challenging business leaders; they did not believe HR, as a function, had

sufficient power and influence to deal with the narcissistic leaders in their organisations.

In terms of suggestions about what HR’s role could be in the future, interviewees

emphasised that clearer definition was need about HR’s role, its position with regard to

the board, its way of working with the board and HR’s reporting line in the organisation

structure.

 Know how, confidence and courage Knowing how to spot and deal with narcissistic

leaders was a problem for most organisations. In one organisation where the narcissistic

leader was in HR, even the group HR director struggled to deal with it, despite multiple

people flagging data points and concerns to him. Having the confidence and courage to

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deal with the behavioural issues, particularly if business performance was good, was a

challenge in most of the organisations. Many of the interviewees talked about their

organisations making a conscious choice of choosing to leave a narcissistic leader in

place because he/she was delivering results. They traded off poor leadership behaviours

against achievement of short-term business results.

 Behavioural risk Although traditional approaches to managing financial, operational

reputational risk were in place in most organisations, managing the key element of

behavioural risk, associated with the assumption and exercise of power, was typically

unaddressed. Proof points and metrics associated with financial, operational and

reputational risks were described by interviewees as easier to define and consciously

tracked, unlike underlying behaviours and dynamics, which organisations were often

described as being “blind” to.

 The importance of remuneration and incentive plans as a driver, and reinforcement, of

behaviour Interviewees believed that the focus of narcissistic leaders on short-term

decision making and results was driven in part by their companies’ incentive schemes.

The schemes operated in the companies discussed reinforced short-term (from one to a

maximum of three years) decision-making processes and in some sectors, e.g. banking,

were believed to be excessive.

 Safe reflective space The interviews were a form of reflection and provided a safe

reflective space that enabled interviewees to engage at a deeper level. Some

interviewees described the interview as “a cathartic experience”, and recognised “the

strength of emotion” they still felt regarding their personal experiences, including

feelings of “anger”, “sadness”, “betrayal” and a sense of injustice, which, in some cases,

they had not necessarily realised prior to the interview.

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5. DISCUSSION

5.1 Why is it important to identify and deal with narcissistic leaders?

Given the potential damage narcissistic leaders can do in organisations and the negative impact they can have on others, boards need to be clear how they will manage the behavioural risks. Keller and Price (2011) argue that to out-perform competitors in terms of key financial metrics, organisations need focus on both the health of their organisation (in terms of its management practises) and its performance (financial and operational metrics).

Leadership is a key management practice in any of the organisational archetypes that Keller and Price define, depending on whether organisations need to improve their alignment, execution focus, or renew themselves and therefore the quality of leadership practises should be an area of focus and improvement for all organisations.

5.2 Why is it timely?

Emerging views of leadership are shifting from the concept of leadership as a relationship to the concept of leadership as a social process, which contains complex relationships drawing on the ethics of the individual. The context for boards is also changing in terms of their role, executive remuneration and a shift in focus from short-term performance to delivery of more medium- and longer-term shareholder value. Boards are paying greater attention to executive remuneration as a result of three key drivers that are changing the current remuneration context:

1. External environment Shareholders, media, government and the general public

continue to put more focus and scrutiny on remuneration, particularly executive pay.

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2. Reputational damage Over the last few years numerous companies, e.g. Trinity Mirror,

AstraZeneca and Aviva, have sustained substantial damage to their reputation as a result

of significant adverse votes against their remuneration policies, with consequential

resignations by executive and non-executive directors in several cases.

3. New regulations Legislation originating from the UK government’s Department for

Business, Innovation & Skills (BIS) will place greater emphasis on the interaction of

shareholder expectations on executive pay arrangements, including greater

consideration of shareholder views in the formulation of recruitment policy and

termination payments.

As a result of these drivers, key themes include simplified long-term remuneration arrangements and extended holding periods (typically five years instead of the usual three).

Over 20% of FTSE 100 companies now have a long-term incentive plan (LTIP) with a performance/holding period of more than three years (Deloitte LLP, 2013). A number of institutional shareholders and other external commentators have called for companies to move towards simplified long-term incentive models, such as the Hermes Equity Ownership

Paper (2012) and the independent Kay Review (2012). The Hermes discussion paper is the most radical, suggesting periods of up to 10 years and claw backs from executives if economic profit targets are not achieved. The impact of these changes in policy and best practice is likely to trickle down the FTSE to other smaller organisations.

The UK Corporate Governance Code (2012) specifies that board members who sit on remuneration committees have responsibility to shareholders and institutional investors to

“set levels of remuneration such that they can attract, retain and motivate Directors, of the quality required to run the company successfully, but a company should avoid paying more

33 than is necessary for this purpose”. The supporting principle of the code states that “the performance-related elements of executive directors’ remuneration should be stretching and designed to promote the long-term success of the company”. The shift in emphasis to longer-term criteria will present a challenge to narcissistic leaders who typically focus on short-term results or risk being discovered prior to receiving long-term incentives.

5.3 Why is it so difficult to identify narcissistic leaders?

“Madness is the exception in individuals but the rule in groups.” —Nietzsche

One of the strengths of narcissistic leaders is that “they have compelling and, even gripping, visions for companies and have an ability to attract followers” (Maccoby, 2000). Maccoby argues that their skilful oration is one of the talents that makes them so charismatic.

However, trying to spot what is going on below the surface, including the aggressive phenomena in their mental life, is not easy. Many of the metaphors used to describe experiences with narcissistic leaders were described in life or death terms (e.g. “She was a killing machine”) or by references to “survival”. This may be explained Freud’s (1920) definition of the dualistic theory of life and death instincts, which suggests that the death force (in this case in narcissistic leaders) is projected outwards and appears as destructive impulses directed against objects (or people) in the outside world.

Even when board members and senior executives had knowledge, facts and proof points about the behaviour of narcissistic leaders, interviewees recorded their avoidance of dealing with it. Metaphors and references to eyes, eye contact and being “blind” came up frequently in most interviews. Heffernan (2011) suggests that the legal principle of ‘willful blindness’, where leaders selectively filter out information that unsettles their fragile egos and vital beliefs, may explain why leaders, who should or could know, choose not to. An

34 unconscious (and often denied) impulse to obey, and conform, kicks in, which shields them from confrontation or conflict. This also fits with psychodynamic theories of defence mechanisms.

5.4 Why is it difficult for individuals or organisations to deal with them?

Because our society often values narcissistic traits (Lasch, 1978) – powerful visions, charisma, - and conquerors or experts their natural enthusiasm and charm make it easy for narcissists to recruit others to their purpose and to indoctrinate an organisation into their way of thinking about the business. One of the reasons why boards and other senior executives do not intervene can be their recourse to social defences, such as projective identification or collective unconscious. Klein’s (1952) reference theory of projective identification describes the process in a relationship whereby aspects of the self may (in unconscious phantasy) be thought of as being forced into the other person. Recipients of a narcissistic leader’s vision and phantasy may suffer loss of both identity and insight as they become caught up in them and manipulated by the Narcissists Leaders fantasy. This may explain why it is difficult for boards and senior executives to deal with them.

The bystander effect (Darley & Latane, 1968) may explain why people did not intervene when narcissistic leaders were “intimidating” or “belittling” others, as described by the interviewees. When crossed or slighted, narcissists can show their temper and become extremely tricky to deal with. In classic psychoanalytical terms, narcissists may convince themselves that they have become the ego ideal incarnate (Freud, 1914/1925) with their grandiosity becoming so extreme they see themselves as omnipotent and invulnerable, capable of and resistant to anything. They appear as formidable characters or opponents to others. When narcissists are challenged, or presented with information that falls short

35 of/tarnishes, their own idealised self-image, that information will simply be denied or repressed. Narcissists employ elaborate defences, including construction of alternative realities that draw on the substance of the event but change its significance, to excuse mistakes or exploitation and thus save face or portray themselves in the best possible light.

These elaborate defence mechanisms and favourable representations of the reality of their own actions make narcissists very difficult to deal with.

Having to develop people in the team can also “risk stirring up envy in the narcissistic leader” (Obholzer, 1996). This concept of envy in leadership can result in envious attacks, which can take the form of blocking others’ creative ideas or withholding approval of others’ achievements. This may explain what stirred the narcissistic leader described by one interviewee who wrote the names of people on pieces of paper she then placed in her freezer, at the same time as she removed them from company talent lists. Obholzer (1996) argues that leaders need to have the capacity to “recognize that others, perhaps many others, are ‘better’ than him, or her, and to create the climate for such qualities to flourish”.

Although some of the narcissistic leaders described by the interviewees said they wanted great teamwork, one interviewee described the leader as really wanting “yes men”. Their intense desire to compete (Maccoby, 2000), or envious attacks on successors and group projective processes, may be behind what can be described as a “successor vacuum”

(Obholzer, 1996). Obholzer suggests the leader needs to be aware of group projective processes, the projections they carry on behalf of their organisational membership, and the risks this carries to both themselves and their organisation.

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5.5 What can organisations and individuals do?

In most organisations risks are typically understood in terms of the probability or likelihood of an adverse event occurring. However, Turner and Pidgeon (1978) found that organisational disasters rarely emerge out of nothing; they invariably occur after a substantial incubation period during which warning signs are not adequately recognised or heeded. I have argued boards need to manage ‘behavioural risks’ as well as financial, operational and reputational risks; indeed, the Institute of Risk Management (2012) suggests boards need to manage individual executives’ predisposition to take risks, their personal ethics and behaviours as well as the organisation’s risk culture as shown below.

Diagram 1: IRM Risk Culture Framework

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By combining a range of business risk management tools with other profiling tools such as

The Ethicability Moral DNA profiling tool, developed by Roger Steare, boards can assess ethical biases at an organisation, unit, team or individual level and facilitate discussion and action around decision making. This can help to determine the 3 different types of ethical consciences, at a team and individual level, such as:

 Ethic of Obedience (rule compliance, spirit of the law etc.)

 Ethic of Care (empathy, concern, respect etc.)

 Ethic of Reason (wisdom, experience, prudence etc.)

Whilst the above may provide a practical framework it may not be sufficient to ensure relationships are such that issues are surfaced and flagged. Board’s need to ensure good relationships and communication exists between their Audit committee, management and their Executives. One way to extend the IRM framework could be to draw on psychodynamic and clinical theories regarding the behavioural aspects but also adopt the three lines of defence model, to strengthen relationships, roles, responsibilities and accountabilities for decision making. The model utilised by KPMG Audit Committee Institute suggests the:

 first line of defence is business operations

 second line of defence is the oversight functions (oversight of business process and risks)

 third line of defence is independent assurance providers

The role of the Non-Executive Director’s is essential in this regard for ensuring that CEO’s appoint strong leaders to their risk and compliance functions, are adequately funded and resourced appropriately. This can be argued as part of their duty, known as “enlightened

38 shareholder value”, to ensure the company maintains a reputation for “high standards of business conduct”. These are all relevant factors for identification and management of behavioural risks, typically associated with more narcissistic leaders.

In terms of the role of HR in the future, Howard (2013) argues that it should be focused on four key deliverables:

 performance: improved organisational performance

 talent: improved talent resourcing and development

 change: effective implementation of transactional and transformational change

 operations: accurate, on-time, HR operations and service

Howard (2013) argues that HR can offer a unique contribution in “holding the mirror up to ensure what the organisation does is consistent with its stated values”. However, he goes on to point out that this “can be fraught with danger and requires experience, track record and courage”. Unfortunately, he does not offer any advice or recommendations for how this might be tackled. One of the first steps for any HR function is to be clear on its role, remit and contract with the organisation regarding governance and managing behavioural risks.

Where HR fits in terms of the organisational structure will also be an important feature if it is to be seen to be independent, and if it is to have sufficient power and influence to make a meaningful impact.

Incorporating a clinical lens, such as adopting a psychoanalytical approach to work in organisations, can help as this will enable the recognition of ‘neurotic symptoms’ for example, the use of language and metaphors. A clinical lens can help HR leaders to become

39 aware of repression, containment, organisational and relationship dynamics, often characterised by Habermas (1987) as critical theory in action.

5.6 What can be done for the narcissistic leader?

Most narcissistic Leaders strongly resist executive coaching or psychotherapy. If a narcissist does present for therapy it is likely that he/she is doing so with the purpose of finding some relief from feelings of emptiness and to be helped back to their former grandiose state – not to understand it (McWilliams, 1994).

For those who do turn to an executive coach, Korotov, Florent-Treacy, Kets de Vries, and

Bernhardt (2012) stress the importance of the coach’s ability to understand the “inner theatre” of what lies beneath the surface at multiple levels including “the visible (actions and decisions)” as well as the “hidden (interpersonal and systemic forces that influence beliefs and behaviours)”, for instance drawing on transference and countertransference processes.

Psychodynamic therapeutic approaches based on Kernberg (1984) suggest expressive psychotherapy that is typically more confrontational and includes understanding the origins of conscious and unconscious anger, transference towards the therapist and addressing the use of defences such as splitting and projection.

For those narcissistic leaders who present for therapy, Huggler (2012) argues it is important that a therapeutic alliance between the executive and the therapist is in place before a working alliance in which transference interpretations can take place and be used productively. This involves “(a) a diagnostic understanding of the scope and depth of the difficulties being faced; (b) a critical examination of both conscious and unconscious factors

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(e.g. defence mechanisms) and how this is manifested in the leader’s leadership style; (c) the development of the leader’s observing ego and experiencing ego; and (d) the emergence of various transferences”. In terms of strategies for therapy or coaching, a combination of interpersonal and cognitive strategies may be effective to reduce the sense of entitlement and increase awareness of others’ feelings. Benjamin (1996) suggests that therapeutic strategies for reducing entitlement, envy and arrogance include gentle, consistent and accurate empathy that reflects the narcissist’s own unpleasant inner experience whilst guiding his/her awareness to the underlying causes of that experience.

Therapists need to identify individuals in the narcissist’s upbringing who were emotionally centred on the narcissist and make the connection in the therapeutic situation. Beck,

Freeman, and Associates (1990) suggest the use of role play to find common ground that creates the necessary foundation for empathy with others and alternative ways of relating.

One of the challenges associated with treating narcissists goes back to the problem of diagnosis, and many theories regarding the different forms of narcissism and the degree of overlap with other personality disorders.

5.7 Limitations of this thesis and future research

Some limitations of this thesis include the opportunity sample, the fact that the scope is UK- centric, the small number of interviewees and the fact that they were drawn from people with a range of experience across a limited number of organisational sectors.

Metaphors described in this thesis may fit within a UK cultural context but may not necessarily translate inter-culturally and may need further explanation and discussion.

Narcissism itself may manifest differently in other cultures, for instance collective cultures, such as Japan, versus individualistic cultures, such as the United States and United Kingdom

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(Warren & Capponi, 1995). Warren and Capponi argue that narcissistic structures of self- regard “are relatively self-contained and independent” in individualistic cultures as opposed to collective cultures where the “development of inner self involves intensely emotional intimacy relationships”.

Further research would be beneficial in several areas:

 to explore whether there are differences in family-owned businesses or between the

private and government/public sectors

 to explore whether there are differences across industries, for example, is narcissism

more prevalent in one industry than another? Are narcissists drawn to industries

with more managerial discretion? (Hambrick & Finkelstein, 1987)

 to explore what effect narcissistic leaders have on their direct reports and their

career trajectories

 In terms of the HR Function and Board members per se, research to explore the

dangers, experience, track record and courage of others in tackling difficult, tricky or

complex situations that could provide HR functions and boards with practical advice

and guidance on how to handle narcissistic leaders

 to explore whether narcissism does manifest itself differently in different cultures

and how it is perceived and dealt with – a valuable research stream as our society

becomes increasingly global.

Finally, clinical descriptions of narcissism vary within a wide range of descriptors, ambiguous conceptualizations, different sub-types and inconclusive meta-analytical findings. Further research is needed to clarify whether narcissism is a trait, domain, dimension, type or

42 disorder (Alarcon & Sarabia, 2012) and to identify integrative approaches to identifying and dealing with narcissistic leaders.

6. Conclusion

This thesis was designed to determine how organisations identify and deal with narcissistic leaders and what’s HR’s role? I was struck by how difficult it is for executive leaders, including HR, to identify and deal with them. Although their difficulties may be clinically explained e.g. by psychodynamic theories of social defence or projective identification, the trade-off for profit, or ‘willful blindness’, may also explain why boards who should or could know and intervene choose not to.

Given the following changing dynamics:-

 challenges as a result of the current economic circumstances (recession), following

the 2008 banking crisis,

 changes in the legislation and regulatory regimes, particularly regarding corporate

governance, and

 social changes in terms of increased transparency regarding Board and Executive

remuneration and shifts towards more longer term (5 years instead of 3) incentives

and claw back mechanisms this thesis argues the role of the Board, not just HR, is increasingly important in identifying and dealing with the behavioural risks typically associated with narcissistic leaders. Boards can draw from traditional risk management frameworks, approaches and tools to identify and deal with leaders whose behaviours may be out of alignment with broader organisation and corporate cultures to implement better ‘checks and balances’.

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Given the short term focus of narcissist, and in response to political interventions (to drive improved levels of disclosure and increased shareholder power), boards need to review their approach to senior executive remuneration and consider:-

 extending time horizon of long term incentive plans (e.g. from 3 to 5 years plus),

 using bonus claw back mechanisms,

 shift from a focus on pay, governed by performance measures, to a broader

approach to wealth that considers stocks of executive shareholdings with longer

time horizons or other holding conditions linked to performance

Finally boards and HR Executives should beware of the personal risks associated with dealing with narcissist leaders. Narcissism is linked to revenge, increasing the risk of retaliation (Brown, 2004) and in some instances, by resorting to brutal forms of violence against those they perceive as interfering with their schemes (Reidy et al, 2008). We may believe that ‘willful blindness’ keeps us safe but the reality is - the courage, and insight, to see what may be going on below the surface, is what will ensure behavioural risks are adequately managed with narcissistic leaders.

44

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APPENDIX 1

Interview Positioning

- Thank you for agreeing to participate in this interview.

- The research will form part of an Executive Masters in Consulting, Coaching and

Change through INSEAD Business School in France.

- Anonymity: All input from this interview will be anonymous and the research report

will be written in a non- attributable way such that it will not be possible to identify

any interviewees.

- The research question aims to discover how organisations deal with narcissistic

leaders and the role of HR.

- Confidentiality: The final thesis document will be in the public domain including

INSEAD CCC internal website.

- A copy of the interview transcript will be available to you if you wish a copy after the

interview.

- I am happy to forward a copy of the final thesis and my findings if you wish to have a

copy.

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APPENDIX 2

Semi-structured Interview Checklist

Interviewee profile information

1. What are the interviewee’s gender, age & nationality?

2. What is the interviewee’s work experience – how many years of experience?

3. What is the interviewee’s current role?

General questions

4. What is your understanding of narcissism?

5. How would you describe a narcissistic leader?

Common definition: Often can be described as having two sides, e.g.

- charismatic - visionary - possessing driving ambition - deliver business results - serial achievers who often take risks (Hambrick & Finkelstein, 1987)

While also described as possessing five or more of the following characteristics as per DSM- IV-TR definition:

- Grandiose sense of importance (exaggerates achievements and talents, expects to be recognized as superior without commensurate achievements). - Is preoccupied with fantasies of unlimited success, power, brilliance, beauty or ideal love. - Believes that he or she is “special” and unique and can only be understood by, or should associate with, other special or high status people (or institutions). - Requires excessive admiration. - Has a sense of entitlement, i.e. unreasonable expectations of especially favourable treatment or automatic compliance with his or her expectations. - Is interpersonally exploitative i.e. takes advantage of others to achieve his or her own ends. - Lacks empathy: is unwilling to recognize or identify with the feelings and needs of others. - Is often envious of others or believes that others are envious of him or her. - Shows arrogant, haughty behaviour or attitudes.

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Cases and specific experiences

6. Based on the above description can you think of a leader or critical incident/experience

with a leader you believe may have had narcissist personality traits?

7. How did you or the organisation spot the narcissistic leader?

8. What function were the cast of characters in at the time?

9. What was the impact on:-

a. you,

b. others, and

c. the organisation?

10. What were some of the dilemmas? For example, from a business, ethical, talented

people or other perspective?

11. How did the organisation deal with the narcissistic leader?

The role of HR

12. What was HR’s role?

a. in identifying the narcissistic leader,

b. calling it and dealing with it within the business, and

c. managing tricky situations?

13. What do you think HR’s role should be in future?

14. Anything else you wish to add?

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APPENDIX 3

Interview Data Gathering Table

Data capture table

Exploratory Visible Under the Initial observations observations (body surface - What am I learning? language) (what am I - What is different about this feeling) interviewee or their organisation? - What am I not hearing?

How easy was it to identify narcissistic leaders How similar or different are the critical incidents described? What impact did they have on:- interviewee, others & organisation? Do organisations know how to spot, and deal with, narcissistic leaders? If so how? What was HR’s role? What should HR’s role be in the future? Any other new insights or perspectives?

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