One year on from the fall of Lehman Brothers, the face of Dick Fuld, former chief executive, has been back on our television screens. Some of his greatest hits have received another airing. “When I find a short seller, I want to tear his heart out and eat it before his eyes while he’s still alive,” he declares in one clip.
It is easy to criticise an outburst like that after what happened at his bank. But it is more interesting to ask whether, given Mr Fuld’s remarkable achievements at Lehman, it might have been possible to spot the danger inherent in his leadership style – and to do something about it to avert disaster. We need tough, strong, confident leaders. But how can we prevent them spiralling out of control?
Last week, PCL, the business psychology consultancy, published a report, “A decade of the dark side”, which contained a study of 18,000 psychometric tests completed by senior managers during the past 10 years. The test that was used, the Hogan Development Survey (HDS), differs from other tests in that it analyses why leaders fail, rather than just providing a neutral account of individuals’ strengths and weaknesses.
The key insight of the HDS approach is that leaders are rarely either confident or arrogant, enthusiastic or volatile, diligent or perfectionist. Most people tend to have a personality located somewhere along a spectrum of behaviour, with, for example, blameless and well-founded confidence at one end and destructive, over-riding arrogance at the other. The trick is to find out where people stand on that spectrum.
Presenting his findings in London, Geoff Trickey, managing director of PCL, explained that strong and distinctive personality characteristics can be positive or negative. At best, they help drive success. At worst, they actually derail leaders, and destroy the loyalty and commitment of colleagues.
Under stress, leaders may rely on the strengths that have served them well in the past. But you can have too much of a good thing. A useful strength can become a damagingly extreme form of behaviour. So a careful leader becomes too cautious, an imaginative leader turns eccentric and a charming leader becomes manipulative.
Success can be a bad teacher, too. “It is intoxicating,” Mr Trickey says. “It erodes self-awareness and self-restraint, and fosters self-indulgence.” To avoid being led into the “dark side” by our strengths, we need to retain some of that self-awareness and restraint.
Responding to the report, Adrian Furnham, professor of psychology at University College London, agreed that an excessive display of a virtuous quality could lead you astray. “HBOS named courage as a core competency that it wanted to see in its leaders,” Prof Furnham explained. Some of HBOS’s lending decisions were too brave by far.
When selecting people for promotion, we need to pay attention to weaknesses as well as pronounced strengths, Prof Furnham added. We should beware of fast-tracking corporate Wunderkinder. Drawing on leadership expert Morgan McCall’s work on high flyers, Prof Furnham argued that fast-trackers get promoted for excelling in certain ways, while their faults are deliberately overlooked. But their limitations soon become apparent when they land in jobs that are beyond them.
That is the bad news. So where will we find the leaders we need now and in the future? Surprisingly, perhaps, some argue that narcissistic leaders – who are often blamed for their excessive self-esteem and grandiosity – may have the right mix of qualities for these times, if they can be marshalled effectively.
Writing in the Washington Post a few weeks ago, the anthropologist and psychoanalyst Michael Maccoby stated that “productive narcissists can be charismatic and inspiring”. They are visionary and take risks, he said. They seize upon the uncertainty that characterises a period of unsettling change, and take action. He wrote approvingly of Barack Obama’s ambitious attempt to reform US healthcare: “Only a productive narcissist would attempt such profound change”.
The crucial qualifying adjective here, clearly, is “productive”. Narcissists who lack self-knowledge are unrealistic dreamers: emotionally isolated and highly distrustful. Narcissists need good colleagues, and especially a trusted sidekick or deputy – a “productive obsessive”, in Mr Maccoby’s words – to allow them to perform at their best. But productive narcissists have perspective, and are able to laugh at themselves.
Joe Gregory, Mr Fuld’s deputy, was criticised by some colleagues for reinforcing rather reining in his leader’s excesses.
It is a tantalising picture. Great strengths, unchecked, can do us down. But without strong and forceful leaders, businesses and organisations will fail. Get the balance wrong and you are in trouble.
“For companies whose narcissistic leaders recognise their limitations, these will be the best of times,” Mr Maccoby wrote in an earlier Harvard Business Review article in January 2000. “For others, these could turn out to be the worst.”
We had been warned.
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