Bosses with big egos are worse for companies as they are more likely to get sued, research has found.
Narcissistic chief executives are also more likely to trigger legal action and engage in protracted lawsuits, a study suggests.
Bigheaded bosses are more likely to disregard expert advice and act irrationally – which can prove financially costly to a company’s fortunes.
Bosses with big egos are worse for companies as they are more likely to get sued, research has found (stock image)
The character traits of ‘grandiosity and overconfidence’ make cocky CEOs indifferent to losing lawsuits, and less likely to settle legal action.
An example of a boss keen to engage in legal action was the late Robert Maxwell – who used the threat of lawsuits to stifle journalists reporting on his crooked business dealings.
The findings could help new bosses more accurately weigh up the pluses and minuses of hiring an arrogant leader for the top job.
Researchers at Stanford University carried out a survey of 32 high technology firms – 97 per cent of which were on the Fortune 1000 list.
They asked employees to rate their bosses on a scale of narcissism.
The 250 employees were asked for instance to rate on a scale of 1-7 how ‘arrogant, assertive, boastful, conceited, egotistical, self-centred, show-off, and temperamental’ the bosses were.
An example of a boss keen to engage in legal action was the late Robert Maxwell (pictured) – who used the threat of lawsuits to stifle journalists reporting on his crooked business dealings
They also examined company reports for information on how many lawsuits the company was involved in.
They also collected information that has previously been found to be linked to narcissim – how often the CEO uses the word ‘I’ in letters to investors, and how big the CEO’s signature was.
Overall the authors found ‘firms with more narcissistic CEOs have more lawsuits filed against them and the lawsuits endure for longer periods of time.’
In two further studies, the authors recruited subjects for an online experiments. These volunteers were presented with scenarios where the subject had to imagine they were a CEO launching a new product, but were being advised that there was a chance they might be sued.
Narcissists were more likely to launch and ignore expert advice, the study found.
The researchers said that the highly narcissistic were ‘overconfident in their abilities, less sensitive to the costs of failure, less trusting of experts and more confident of their ability to win.’
The authors say in their conclusions that ‘the results suggest that the narcissistic traits that help propel a person to power – such as overconfidence – may come at a significant cost.’
The researchers led by Harvard professor Charles O’Reilly in Leadership Quarterly said that their findings add to a growing body of evidence that organisations led by narcissistic CEOs ‘experience considerable downsides, including evidence of increased risk taking, overpaying for acquisitions, manipulating accounting data, and even fraud’.
Robert Maxwell has widely been cited in studies of leadership as exhibiting classic signs of narcissism.
One book, Narcissistic and Psychopathic leaders by Sam Vaknin cites Maxwell as an example of a ‘perniciously exploitative’ narcissist who ‘uses, abuses devalues and discards even his nearest and dearest in the most chilling manner…’ who needs to secure a ‘a constant supply of his drug – attention’ and who went on to raid his employees’ pension funds.