A narcissist is someone who has an inflated perception of
oneself, and will give exaggerated accounts of own capabilities, past
accomplishments, and ability to predict and change future events. Narcissists have,
to put it colloquially, huge self-esteem. Clearly this suggests leadership as
an appealing career path for narcissists. After all, leaders are looked up to,
which confirms what the world should be like for narcissists, and leaders can
accomplish great deeds, which narcissists are confident they can. That does not
mean that CEOs of firms are narcissists in general. CEOs typically
are not given the firm by dad; they are career managers who get their position
based on a track record of success. Some degree of randomness is involved in
who wins, but it also helps to have a realistic view of oneself and the world,
and narcissists fall short on that dimension.
Still, there are enough CEO narcissists around that it is
possible to do research on them, and thanks to an article by Arijit Chatterjee and Donald Hambrick in Administrative Science Quarterly, we know how they lead. The key question to pose is how
CEOs learn from experience – do they become more cautious by low performance,
and bolder by high performance, as one might expect and want a firm to do? After
all, adjusting actions to feedback is an astute way to behave both for
individuals and firms.
Intuition suggests that narcissists don’t respond much to
feedback because they are already convinced of their own greatness, so they
will ignore evidence to the contrary. The research showed that this intuition
is only half right, and this is where things get interesting. It is true that
narcissists are unresponsive to indicators of their own performance – objective
indicators, the kind that one should learn from. A narcissist CEO will completely ignore
recent stock returns when calibrating the level of risky investments; a
non-narcissist CEO will pay close attention and make more risky investments
when they indicate success.
But that does not mean that narcissists ignore feedback. The reason
is that narcissists are not as confident as they seem. In fact, they can be
very insecure, and as a result they crave applause and lash out at criticism. This
means that social feedback – praise – has a big effect on the behavior of
narcissists. In fact, the opposite relation holds there. A non-narcissist CEO
will nearly ignore media praise when adjusting risky investment, while a
narcissist will make strong increases in risky strategic investment when praised a
lot.
So is it OK to be led by a narcissist? This research suggests
that it might be OK, provided that social praise exactly mirrors objective
indicators, or that the leader is not responsible for any decisions involving
risk. Those are strict conditions, so it seems that it will nearly always be
better not to be led by a narcissist.
