(MoneyWatch) Whenbetter than the U.S. state department and headed off to North Korea, it looked like a bold move.
When Mondelez CEO Irene Rosenfeld decided that, over the opposition from employees and many of her company's board members, that she would acquire Cadbury, that looked bold, too.
When, after months of wrangling, the CEOs of Xstrata and Glencore finally agreed to merge their huge extraction companies, they looked big and tough and strong.
This is what we expect of leaders, isn't it? Tough decisions in the face of market turmoil, economic confusion and slow growth?.
But would you like to work for any of these people? In a fascinating study entitled "It's All About Me: Narcissistic CEOs and Their Effects on Company Strategy and Performance," academics Arjiit Chatterjee and Donald Hambrick assessed the fortunes of 111 CEOs in the computer and software industries.
Now, before we proceed let's be clear on the basic personality traits that define narcissim:
1. A sense of entitlement: I'm special and should get special attention.
2. Attention: I like, even need, to be the center of attention.
3. Superiority: I am better or smarter than others.
4. Self-absorption: I spend a lot of time contemplating my extraordinary qualities.
Sound like anyone you work for?
To select the CEOs they wanted to study, the researchers relied on six basic markers of narcissism, including how many times the CEOs photograph appeared in their companies' annual report and on websites; the CEO's prominence in press releases; the use of the first person pronoun in press releases (for example, "I," me," "us,"); the length of the "Who's Who" entry on the executive; and the level of both cash and non-cash compensation the person received.
Assessing the qualities and actions of the 111 chief executives, a pattern emerged. Because narcissists crave attention, they often work hard to achieve glory. That often gets them into positions of power and influence. Once they get there, however, they still need attention and applause. This, according to the researchers, means they are more likely to embark upon what are often considered bold strategic moves, with mergers and acquisitions a particular favorite. Never mind that M&A has a terrible track record -- it gets attention.
And because such execs are self-centred, it doesn't really occur to them to ask whether what is good for them is also good for the business. In fact, the separation between those two is pretty invisible to narcissists.
What the researchers found was that the higher the level of narcissism, the greater the number and size of acquisitions. Narcissists deliver outsize performance -- big wins or big losses. That, in turn, tends to generate more extreme performance and, as a consequence, to generate greater volatility.
In other words, if you work for a narcissist, you are likely to see plenty of office drama. Lots of big strategic moves, very little steady growth and no guarantees. If that isn't your idea of fun, find a real leader.