A new study shows that CEOS with one particular personality trait make more money than others. Can you guess what it is?
Yes, you there in the back with your hand eagerly raised. Did you say “narcissism?”
In the study, titled “Narcissistic CEOs and executive compensation,” led by Charles O’Reilly of Stanford University, the authors wrote, “There is growing evidence that individuals with these characteristics often emerge as leaders, and that narcissistic CEOs may make more impulsive and risky decisions. We suggest that these tendencies may also affect how compensation is allocated among top management teams.”
To test this out, they used employee ratings of the personalities of 32 CEOs of prominent technology firms. Narcissism was “characterized by traits such as dominance, self-confidence, a sense of entitlement, grandiosity, and low empathy.” In addition researchers scanned CEOs’ shareholder letters and call transcripts for self-referential pronouns, as narcissists are have been shown in other research to use these more than non-narcissists.
They found that the more narcissistic execs receive more total compensation, have more money in their total shareholdings, and have larger discrepancies between their own compensation and the other members of their team. The longer the narcissists had held the positions, the bigger the differential, according to the study.
We already know that narcissists do better in the job interview, a fact highlighted by a recent UBC study.
Psychology Professor Del Paulhus, the study’s lead author, said “Narcissists tended to talk about themselves, make eye contact, joke around and ask the interviewers more questions.”
The new paper states that they also emerge naturally as leaders because they embody the traits associated with the prototypical leader, which include “strength, masculinity, charisma, and attractiveness.”
O’Reilly is quoted on the Stanford Business School website as saying, “They don’t really care what other people think, and depending on the nature of the narcissist, they are impulsive and manipulative.
“From the board member’s perspective, you’ve got this person who is quite charming, charismatic, self-confident, visionary, action-oriented, able to make hard decisions (which means the person doesn’t have a lot of empathy) and the board says, ‘This is a great leader.’”
In the long run, though, it looks like smoke and mirrors. Working with a narcissist can be a drain on everyone and the study found that, despite the high earnings of their self-centered CEOS, the companies with highly narcissistic bosses don’t necessarily perform better than those led by less narcissistic bosses, and might even perform worse.