The down-side of Executive success

It is undoubtedly the concern of every member of a Supervisory Board, when it emerges during the periodic consultation with the executives that things are not going smoothly within the organization. Disharmony in the management team, high organization-wide absenteeism and a large turnover of good employees.
Elevated scores on narcissism and Machiavellism can turn success into failure or derailment. How can failing governance be prevented

Examine the role and behavior of the executive

The causes of this situation may, of course, be temporary and may be due to external factors. An erratic market, a key restructuring or incompetent employees, are often used arguments may well be the causes of the problems. However, based on the (scientific) literature and recent examples of businesses collapsing, governors might also look closer to home, by critically looking at behavior in the board room.

Deficient governance and its costs

Several studies[1] show that almost 50% of executives and managers somehow fail or derail during their working life. These managers were usually found to be very successful in their careers, often over a longer period of time period, but ultimately did not meet the requirements of the organization and were forced to resign prematurely[2]. This failure entails high costs. Directly visible costs, such as falling share prices and lower profits, but also hidden costs such as dissatisfied and demotivated employees. The latter often leads to the departure of good employees and thus to an erosion of the intellectual and social capital of the organization.

The excutive’s personality

The behavior of successful and failing managers originates from the personality of the individual. The scientific literature makes a distinction a bright side and a dark side of personality. The bright side reflects character traits and subsequent behavior that people show in ‘normal’ life: extraversion, stability, conscientiousness, openness, altruism and modesty. The dark side depict less favorable character which be become apparent when people are put under (work) pressure.
In the case of managers, these traits are often labeled under the term Dark Triad: Psychopathy, Narcissism and Machiavellism[3]. Psychopathy is present when among other things there is a severe lack of empathy. People with narcissistic character traits are characterized by a high degree of arrogance, dominance and selfishness. Machiavellism concerns manipulative behavior, slyness and the idea that the end always justifies the mean. Recent research shows that psychopathy in particular[4] and narcissism are more common for managers than in the average population.
Ultimately, it is those elevated levels of narcissism and Machiavellism that lead to failing managers and executives. In particular, managers with an increased narcissistic tendency to use manipulation to achieve their own, often megalomaniac, goals. They lack empathy. Reprimands, if any are often dismissed as irrelevant or they are attributed to external factors. Self-reflection is often foreign to them.
The positive characteristics of Narcissism and Machiavellism (decisiveness, tenacity and charisma) mean that executives usually manage to get a lot done at first and easily charm others. When recruiting new managers and executive, this type of behavior often puts recruiters and governors on the wrong track.

How to avoid derailment?

Can derailment be avoided? Perhaps not fully, but by making use of some basic rules an effort can be made
• Prevention is better than the cure. Quite often the recruitment, selection and subsequent appointment of managers and executives is based solely on interviews and references. A large number of scientific studies have shown that interviews are too often a subjective process and a major source of all kinds of bias. By structuring interviews and using additional ‘selection tools’, much harm can be prevented.
• Remain critical Once appointed as a manager or executive it is board of governors task to be and to remain critical. Beware that due to their charm and manipulative behavior, the dark side is not always apparent at first.
• Involvement Governors should be more visible to the organization and to its employees. By keeping in touch with the staff – for example, by contact with the Workers Council – a more comprehensive picture of the sentiment within an organization can be to acquired.
• Countervailing power Challenge your executives and managers and introduce diversity within the management team. Ensure a strong supervisory role for the board of governors and be aware, narcissistic leaders tend to gather susceptible followers around them: people they can easily manipulate and win over.

 

Literature

[1] Hogan, R., & Kaiser, R.B. (2005). What we know about leadership. Review of
General Psychology, 9(2), 169-180. http://dx.doi.org/10.1037/1089-2680.9.2.169 (1)
[2] McCall, M. W., Jr., & Lombardo, M.M. (1983). Off the track: Why and how
successful executives get derailed. Technical Report No. 21. Greensboro, NC:
Center for Creative Leadership
[3] Paulhus, D.L., Williams, K.M. (2002) The Dark Triad of personality: Narcissism,
Machiavellianism, and psychopathy, Journal of Research in Personality,36 (6), pp
556-563
[4] Landay, K., Harms, P. D., & Credé, M. (2019). Shall we serve the dark lords? A
meta-analytic review of psychopathy and leadership. Journal of Applied
psychology, 104(1), 183.