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CEO Bashing

27th August
2006
written by Dr. Leslie Gaines-Ross


I have to say that sometimes it just gets plain funny. There are so many forms of CEO-bashing today that it has become a legitimate sport. I recall one study concluding that most CEOs are sociopaths at heart. Another found that CEOs tend to have thicker waist lines and unusually strong maternal figures in their lives.

A common refrain, however, is that CEOs are extraordinarily narcissistic. A recent column in the Financial Times by Francesco Guerrera reported on new research linking CEO egos and failed strategic choices. The survey by Arijit Chatterjee and Donald C. Hambrick of Penn State examined the size of annual report photos, number of “I”s in shareholder letters, the length of Who’s Who CEO bios and CEO compensation to strategic corporate disasters. According to the research, bigger-sized CEO egotists take bigger risks (such as losing acquisitions, outsized product launches and aggressive expansions). “Would General Electric have launched a blockbuster bid for its rival Honeywell and fought an acrimonious and ultimately doomed battle without Jack Welch at the helm?” writes the reporter. Although I respect the work of Donald Hambrick (I quoted him frequently in my book) and have not personally read the new research (trying to locate it), its title gives away its underlying CEO cynicism: “It’s All About Me: Narcissistic CEOs and Their Effects on Company Strategy and Performance.”

Guerrera does call on boards to rein in ego-laden CEOs but sometimes we have to ask ourselves whether economies would have grown so fast if every company decision was up to a vote and safe as could be. Would the Google guys have jumpstarted their search engine business waiting for every “t” to be crossed? Same with Apple, Microsoft, e-bay and Amazon? Sometimes business succeeds based on an oversized hunch by a would-be CEO.

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2 Comments

  1. Eric Jackson
    04/09/2006

    A distinction should be made between pushing a strategic vision forward (for its own merits) and having an over-sized sense of self-importance. You can do the former without the latter. Don would be the first to say that CEOs need to take risks and push their ideas. What he and others have observed is that enlarged corporate egos actually do predict lower corporate performance and outright corporate failure. CEOs would do well do heed this advice and emulate Mark Hurd more than Carly.

  2. LGR
    05/09/2006

    Thanks for your comment. I agree that having an over-sized sense of self-importance a la Al Dunlap results in poor corporate performance each and every time. Although I agree that Mark Hurd has done an outstanding job at HP, let’s not ignore that some of the strategies put into place by Carly Fiorina have now taken root and sprouted under Mr. Hurd. The Compaq acquisition does not look all that bad now that it is September 2006. Time will tell.

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