How much does my leadership impact the bottom-line?

In a series of narcissism studies by Professor Alex Frino, the Dean of the Macquarie School of Management, he concluded that “there was a clear correlation between the level of CEO narcissism and the company’s use of ‘earnings management’ – a technique which takes advantage of the flexibility in accounting rules to inflate profit figures.”[i]

There was also evidence that the more narcissistic a CEO, the more likely it was that the company’s share price would fail to keep up with the market.  In contrast to this, the companies with the ten least narcissistic CEOs in Australia’s top 100 companies, more than doubled the performance of the most narcissistic CEOs.

In a previous blog, The Failure of Success, we looked at what happens when there is an unhealthy over-emphasis on competency at the expense of character in leading organizations.  While this is may be indicative of a major shift in our culture, we can either choose to maintain the status quo or be a catalyst for change and stronger results.

While we may need to elevate the importance of character in achieving results, we also need to evaluate how we define competency.  Competency is not only skills or knowledge based, it is character based.  Alexandre Havard believes character is the driving force behind leaders identifying what the organization needs, not the other way around.  For example, when leaders are ‘secure’ in themselves they are not threatened by the need to hire staff who are more competent in certain areas than they are.[ii]

A leader’s character engages and empowers people.  It gives leaders the capacity and strength to act. It doesn’t take the place of professional competency, but helps to drive and develop competencies that are needed, recruiting the best people with the right skills and character to get the job done.  Leadership behavior should be characterized by trust, respect, and humility, and the desire to enable and empower the skills, gifts and talents of others to create an environment where people flourish – with the goal of increasing organizational performance.

Stephen M. R. Covey addresses ‘trust’ as another critical dimension of character and its relationship to performance.  In an attempt to overcome the perception that dealing with character in our respective businesses is ‘soft’ or ambiguous, he wrote the book, “The Speed of Trust.”  He sought to qualify how trust makes a difference to the bottom-line that is measurable.  He came up with the formula that said, ‘when trust is high, speed is up, cost is down.’  The inverse is also true, ‘when trust is low, speed is low, cost is high.’[iii]

 While at times it may seem difficult to quantify exactly how character increases organizational performance, what we do know is when it is absent organizations rapidly deteriorate and perform below what is expected.

What’s the bottom-line?

I’m not suggesting all CEOs are narcissistic, but there is a link between narcissistic CEOs and poorer organizational results. Below are some questions to help steer you away from becoming one and achieving better results:

  • Am I approachable? Do I welcome input from others? Am I building the environment where others flourish?
  • Do I engage and empower my colleagues? Do I micromanage? (Am I a control freak!) Do I take credit for other people’s ideas and work?
  • What would others identify as being my values? Am I consistent? Do I compromise my values when it is convenient to do so?

[i]http://www.afr.com/p/narcissistic_ceos_should_reflect_dUGaGgVgbDwfS67U6ccjDN, 17 December 2014.

[ii] Alexandré Havard, Virtuous Leadership: An Agenda for Personal Excellence (New York: Scepter Publications, 2007).

[iii] Stephen M. R. Covey, The Speed of Trust: The One Thing That Changes Everything (New York: Free Press, 2006), 13.

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