There are more than 70,000 books with ‘leadership’ in their title, but almost none about a common phenomenon that few in business are prepared to talk about. There may be studies of wicked, evil leaders, often written by historians, but there is almost nothing on the taboo subject of the ordinary wunderkind who lost the plot. In other words, the charming, talented, high-flying CEOs who should have done brilliantly but instead fail or derail. It is not that there is a refusal to admit that it happens, but nobody is prepared to talk about this particular elephant in the boardroom.
The Bad Guys have different labels depending on the discipline and taste of the researchers
They have been called:
Aberrant. This emphasizes abnormality, atypicality and deviance from the right or normal type. It has two themes: both unusualness but also a departure from acceptable standards.
Anti-social. This echoes the immoral nature of leaders who can be anti-social in the way selfish people may be, but more likely the way delinquents are anti-social.
Dark Side (Triad). This is to contrast the bright and the dark; the outside, the obvious and the straightforward with the inside, the obscure and the devious. Dark implies evil, dismal and menacing. The triad suggests three separate constituents of evil.
Derailed. This emphasizes the idea of being thrown off course. Leaders set fair in a particular direction deviate from the path, unable to move forward. It is sometimes hyphenated with the next word in the dictionary, namely deranged, which implies not only a breakdown in performance but also insanity.
Despotic. This is taken from the historical literature emphasizing the misuse and abuse of power by oppressive absolutist leaders. It emphasizes the autocratic type or style of leadership.
Destructive. Used by historians in this context to look at the offset of a particular leadership style, it speaks to the ruining, spoiling or neutralizing of a group or force lead by a particular person.
Incompetent. This is used to suggest inadequate, ineffective or unqualified. It implies the absence of something required rather than, the presence of something not required. Incompetent leaders are ineffective because they are lacking in particular qualities.
Malignant. Those are leaders who spread malevolence, the antonym of benevolence. Malevolence is misconduct, doing harm such as maliciously causing pain or damage. Malignant leaders like cancer grow fast and are deadly.
Toxic. This refers to the poisonous effect leaders have on all they touch. Toxic substances kill rather than repel. Again this refers to the consequences of a particular leadership style.
Tyrannical. Tyrants show arbitrary, oppressive and unjust behavior. Tyrants tend to usurp power and then brutally oppress those they command
This would be understandable if derailment was rare. But the statistics say otherwise. There have been 12 papers published over the last 25 years that have made good estimates of management failure, the average of which is 47%. This kind of failure extends from imprisonment (for corruption, etc) and sacking, to premature resignation. Management failure occurs when the person appointed to the job fails to deliver the set objectives, often with dire consequences. In short, derailment and disappointment among leaders are as common as success.
There are observable and hidden costs to all this. Overtly, a share price can tumble or a long decline triggered, but it is the hidden costs that count for more. These include demoralized, disengaged, less productive staff; the loss of intellectual and social capital as turnover of good people increases; and missed business opportunities. The problem can’t simply be brushed under the boardroom carpet any more.
Yet, the paradox is that most of these failed leaders have had very successful careers. The derailed were once the high flyers, and the very qualities that helped them climb to the top also led to their demise. But for many (especially those who appointed them), their failures come as a great surprise, though the clues were always there, waiting to be discovered.
The way most leadership appointments are made is by looking for evidence of certain attributes or competencies from prospective CEOs. Usually more is better: you can’t be too creative or customer focused; it is impossible to be too analytic or have too much integrity – or even to be too ‘good with people’.
But the psychological evidence suggests the opposite. Called the ‘spectrum hypothesis,’ there is a theory that suggests that extremes of normality are abnormality. There is no clear dividing line between normality and pathology – it is a spectrum. Therefore, very high self-esteem may be seen as clinical narcissism.
So, it’s important that those involved in selecting CEOs look for evidence of characteristics that they do not want, as well as for those that they do.
CEO characteristics to spot and avoid
Arrogance: They are right and everybody else is wrong
Melodrama: They want to be the centre of attention
Volatility: Their mood swings create business swings
Excessive caution: They can’t make important decisions
Habitual distrust: They focus on the negatives all the time
Aloofness: They disengage and disconnect from staff
Eccentricity: They think it is fun to be different just for the sake of it
Passive resistance: Their silence is misinterpreted as agreement
Perfectionism: They seem to get the little things right even if the big things go wrong
Eagerness to please: They stress being popular matters most
Executive derailment is a function of three things: very particular personality traits, naïve followers, and particular situations that create poorly regulated and governed businesses. First, the particular personality traits. Researchers in this area now talk of the ‘dark triad’ of subclinical psychopathy. In general, these individuals score high on anti-social and narcissistic personality disorders, while having Machiavellian beliefs and behaviors.
The three interrelated traits of the ‘dark triad’ side are arrogance, duplicitousness and emotional coldness. Because they are narcissists, they are eager for power; as Machiavellians, they can be exploitative charmers; and as psychopaths, they have an exploitative nature. People of the so-called ‘dark triad’ have high levels of self-interest but low levels of empathy. They are therefore not interested in, well suited for, or good at long term relationships where a degree of reciprocity is needed. Because of this, they are often eventually found out as the toxic leaders that they are – so ‘hit-and-run’ is their preferred strategy.
But if they are articulate, bright and educated, as well as good looking, the behaviors associated with the ‘dark triad’ probably help them climb the greasy pole of business life. The bright ones do well in the City. The less talented are more likely to turn out to be confidence tricksters, petty criminals and imposters. People of the ‘dark triad’ gain a reputation for boldness and self-confidence, pushing through change, and cutting back dead wood. They are thought to be adventurous and often mischievous, sometimes bullies.
What about the second condition of CEO failure: the naïve followers? Some types of people allow derailing leaders to thrive – after all, we get the politicians and leaders we deserve. But there is a type of follower that can be termed ‘toxic.’ Many have attempted to categorize these into different groups such as bystanders, acolytes, true believers or more simply conformers and colluders. Conformers tend to be immature with negative self-concept, while colluders are more selfish, ambitious, destructive and openly supportive of toxic tyrants.
Toxic followers become particularly dangerous when they sit on the boards of companies with a derailing CEO. Most have low self-esteem that they hope the leader will be able to boost. They also tend to be helpless and fatalistic, expecting the CEO to give them power and influence. A toxic leader meanwhile will reinforce toxic followers’ sense of passivity while giving them hope of escape. Such followers also tend to be morally immature: their sense of right and wrong is weak, and conformity to immoral behavior dictated by the derailing leader occurs. Vulnerable, immature, impressionable adults make good followers of strong but destructive leaders. Under-socialized or morally undeveloped people are happy to endorse the violence of toxic leaders.
Toxic followers also yearn for rank and power: people ambitious for status and lebensraum make better followers. The more they see there is psychological and material profit to be had following, the quicker and happier they follow. If they also share the world views of the destructive leader, then they are naturally more likely to follow them.
The third component of executive derailment is the social, economic and legal climate. The toxic leader does best in situations of flux and instability. Political, economic and social instability are very frightening, and they are able to exploit fluidity, advocating radical means to restore peace, harmony and progress. They are also granted excessive authority and power that they are reluctant to relinquish. Next, the more people feel personally threatened, and the more internal and external enemies they see around, the happier they are to follow toxic leaders who promise them security.
‘Dark triad’ leaders do best in organizational cultures that are uncomfortable around ambiguity and uncertainty; those that have elaborate rules and rituals that offer easy solutions to complex problems are easier to control. Furthermore, the more disparity there is between rich and poor, educated and uneducated, high and low status, the more the toxic leader thrives.
But the most important factor is where corporate governance is weak, where power is centralized and those monitoring authority and responsibility are silenced. This is like removing the internal audit from an organization. It means the end of constraint and monitoring. The issue is always the appropriate balance between over-regulation and under-regulation. There is a cost to supplying the information required for good corporate governance. It can be that paying too much attention to internal auditing and the supply of accounting information taxes the organization too heavily.
Some leaders feel quite rightly that they are handicapped, even trapped, by the requirements of corporate governance. They feel they cannot act quickly or boldly enough to do what has to be done. They see governance not as a wise system of checks and balances but as a suffocating system of bureaucracy that leads to long term failure. Yet often business and political leaders have a significant decisional and behavioral latitude. But can this very discretion; this latitude, be a significant derailer?
Discretion is freedom, freedom is power, and power can corrupt. Some senior jobs involve a great deal of responsibility but not much discretion. Rules and regulations, ever-watchful shareholders and the media, in addition to financial and other constraints, simply reduce the opportunities of grown-ups to misbehave, make mistakes or simply lose the plot.
Good leaders are characterized by various phenomena. Often they tend to pro-actively seek feedback from trusted, honest observers throughout their career to monitor how they are doing. Next, they seek out opportunities to grow, develop, learn or upgrade important skills. They also seek a formal or informal coach or mentor to help them through times of acute change or transition. In short, they seek out sources of assessment, challenges and support.
Those prone to derailment don’t do this. Through hubris, anxiety or a lack of insight, they have to be given ‘developmental’ assignments and coerced to take them on. They might go on short, taught leadership programs but few cite those events later as crucial ingredients in their development. They need opportunities to examine their style, strengths and weaknesses with intensive and honest feedback. Paradoxically, perhaps an early career failure or mishap can be an excellent learning experience so that mistakes are not repeated.
Coaching for executives can help a great deal. Some organizations have prescribed mentoring where every manager at a certain level is mentored by a person above them, but not all derailment can be prevented. Paradoxically, those who need it the most also resist it the most and benefit from it least. It takes a highly skilled coach to confront a very senior manager or leader and help them to avoid derailment. However, much can be done to help the stressed leader who is crossing over the thin line between poor management and pathology.
The cost of derailment is high: for the individual manager and their family, peers and subordinates - and for the company as a whole. Often derailment is quite unexpected. Yet, nearly always a more careful and critical review of derailed leaders’ biographies contain all the cues that derailment might occur. But of course, by then it is too late. Organizations can reduce rather than prevent or eliminate the prospect of their senior leaders and managers derailing by ensuring good governance and strong management processes. Leaders need enough freedom to maneuver but not unlimited power.
All leaders work with top teams – usually the board. These groups can easily become highly dysfunctional and themselves be a cause of management derailment. So, it’s desirable to have someone monitor the health of boards from time to time. There are many stages where derailment may be addressed – the most obvious are recruitment and selection. There is now much more interest in this issue and excellent psychometrically validated tests to evaluate the dark side of personality, which can indicate possible areas of concern about leaders’ behavior when put under pressure.
The decision is: do you choose to recognize the elephant in the boardroom and do something about it? Or do you keep your head buried in the sand?