Are All American CEO's Psychopaths?
Are all American CEO’s psychopaths? It is a very interesting question - one that I tackled in 2012 when I was finishing my capstone at Cardinal Stritch University.
Considering I write a lot about business in this blog - and a few years has passed now since I used this paper for credit - I thought I’d “open source” it for those who might have an extra few minutes in their day! Hah!
American CEO Psychopathic Tendencies
BSM 1-2018, MGT 499 Capstone: Strategic Organizational Leadership
Dr. Tom Lifvendahl, Cardinal Stritch University
December 10, 2012
When one imagines a Psychopath, generally the mind will quickly fill with images of crazy individuals bent on lunatic deeds. One of those words that all seem to have formed a connotation of; psychopathy is often mischaracterized and misidentified. The purpose of this paper is to properly identify the psychopathy condition and remove the misconceptions. Then, conclusions will be drawn between the behavior of American business leaders and the properties of the psychopathy condition. Analysis of literature will be used to provide definitions and demonstrate examples.
At the core of the condition, a simple set of traits defines the psychopath. Psychopathic behavior is identified by observing individuals with shallow emotions, reduced fear, cold-heartedness, a lack of empathy, impulsiveness, manipulative, charming, and egocentrism. Psychopaths with violent tendencies tend to be available for study due to high population in incarceration. Research suggests that both violent and nonviolent psychopathy exists; it becomes more difficult to study nonviolent psychopathic individuals due to their natural drive and charm which can easily avoid attention.
It becomes more difficult to identify nonviolent psychopaths because of their relative comfortable assimilation into society. This differs from the sociopath. Sociopaths tend to have similar characteristics as psychopaths, but are lacking in the social skills arena. Whereas a psychopath prevails using charm, a sociopath may prevail using force or fear.
The condition of psychosis may be diagnosed by the less informed when presented with psychopathic activities. It is important to note that psychosis differs from psychopathy and sociopathy by exhibiting symptoms of an alternate reality. Whereas the first two tend to empower the individual in the current reality, psychosis stretches the individuals reality to something that is untrue.
To draw proper conclusions, the term Chief Executive Officer (CEO) must be defined and the duties of the position explained. The CEO is the leadership position in a company. While it is difficult to pinpoint the exact job requirements of a CEO, one can vaguely summarize the duties as a vision setter, negotiator, overseer, decision maker, and inroads creator. When one focuses on the American CEO, the position responsibilities continue to be ambiguous. Certain personality traits and roles appear more prominently in American CEOs than European and Asian counterparts, however. American CEOs are more likely to be involved in community outreach events and activities that encourage a positive visage of a company. There also seems to be a prevalence of participant and charismatic leadership styles.
With the enormous pressure to be successful American businesses are under, CEOs carry a heavy burden to direct the business to be successful. Those in the CEO position generally tend to be exceedingly driven to be successful themselves. This paper suggests that the highly functioning corporate psychopath is a fixture in the American business world. The combination of charismatic leadership and psychopathic drive and charm make it more likely for these individuals to achieve great heights in the business, such as the position of CEO.
Research suggests that a small amount of American CEOs are true psychopaths. This is proven by analysis of business decisions and monetary transgressions. The research includes examples such as the theft of pension funds by Robert Maxwell, the financial pyramid scheme of Bernie Madoff, and the Enron scandal perpetrated by Kenneth Lay. The analysis concludes that these illegal actions are predictably psychopathic in nature. It is also suggested that all psychopaths will inevitably make decisions that are illegal in the American judicial system.
This paper ends with two recommendations. The first is to implement screening for both personality traits and family history of psychological disorders. The other suggests to deal with an identified psychopath in business by coaching, ethical reviews, and championship of new products. It is concluded that a corporate psychopath can be leveraged and does not need to lead to illegal behaviors.
Psychopathy could stand as one of the most mischaracterized psychological conditions in modern society. It seems that any unknown or misunderstood individual who acts strangely or violently gets labeled as a psychopath. The connotation of this term has strayed very far from the true clinical definition. This paper will define psychopathy and suggest correlations of these traits and the American business executive. This will lead to the obvious research question requiring analysis of these correlations.
Psychopathy refers to a psychological condition in which the subject has a set of traits which differs from those generally assumed of a caring, warm individual. Psychopaths are characterized as having shallow emotions, lack of empathy and love, and extremely selfish tendencies (Lilienfeld & Arkowitz, 2007). Other research suggests that psychopaths develop charm and manipulation techniques to get what they want (Munoz, Khan & Cordwell, 2011). The psychopath seems insanely driven to accomplish his or her own task and will do so by any means necessary. Consequences of actions are ignored and discarded. The very primitive level of human desire and greed, without restraint, shares space with psychopathic tendencies.
Psychopaths can be divided into two subgroups: violent and nonviolent. Unsurprisingly, violent psychopaths have made easier study as they are more likely to be imprisoned (Hall & Benning, 2007). The lack of emotion coupled with intense drive to accomplish a task in violent psychopaths creates the stereotypical image of a crazed lunatic. This is often the only vision the term psychopath elicits. Potentially equally as dangerous, the nonviolent psychopath is much harder to identify. The nonviolent psychopath obsesses equally over accomplishing the goal, but said goal appears less nefarious on the surface.
If a psychopath is bent on consummating a primitive goal which lacks violence, the only other option is power. Coincidentally, the pursuit of success, power, and money in American culture is highly respected and reveled. This makes it even more difficult to identify a true psychopath among all of the other individuals with honest and healthy drive and aspirations. One could hypothesize that a tell of the corporate psychopath is the lack of ethical decision making. However, with ever increasing pressure and intensity coupled with a changing culture and value system, the American business executive may not be bathed in the traditional ethical light that would clearly differentiate him or her from the psychopath.
This gentle correlation brings a more direct question. Did the pressure of the American business place breed a perfect platform for the corporate psychopath? The dissection of this question leads to a far more troubling assumption and the basis of the research question of this paper: Do American CEO’s tend to exhibit dangerous psychopathic tendencies?
It can be particularly challenging to develop authoritative sources for the definition of psychopathy. There are two reasons for this difficulty. First, when describing and identifying psychopathy, the holistic condition needs to be analyzed. To avoid being misleading, both the violent and nonviolent subsets of this condition need to be researched. However, since non-criminal psychopaths possess traits that allow blending into society, it can be very difficult to study the condition (Hall & Benning, 2007). There exists considerable research on the “corporate psychopath” (Boddy, 2011; Gudmundsson & Southey, 2011), however, which leads to the ability to synthesize by comparison the base traits of the condition of psychopathy.
For this paper, literature is reviewed to provide the basis for most of the discussion. The terms psychopathy, sociopathy, and psychosis are defined and analyzed. The “corporate psychopath” is discovered and reviewed. Examples of psychopathic CEOs as well as normal CEOs are compared to the psychopath condition.
Definition of Psychopathy
The underlying condition of psychopathy is commonly studied by observing the traits of individuals who are considered to be psychopaths. A psychopath is generally thought to have shallow emotions, reduced fear, and lack of empathy (Bond, 2007). Other research suggests there are more characteristics besides the emotional. High stress tolerance and lack of guilt also seem to be prominent mental characteristics of a psychopath (Bond, 2007). Additional research suggests that egocentricity, superficial charm, impulsivity, and manipulative tendencies round out the description of the psychopath (Munoz, Khan & Cordwell, 2011). These predispositions act as a mask that can easily hide the nonviolent psychopath. These may also lead to the success of the “corporate psychopath,” described later.
Recent study has identified links to psychopathy in children. In a recent New York Times article, reporter Jennifer Kahn describes a chilling interview with the family of a child recently diagnosed as a psychopath. The child exhibited behaviors of a much older, more malevolent individual. One particular incident detailed a sibling accidentally causing a video game to be discontinued. The antagonist child was met with a quiet whisper from the psychopathic child: “I’m coming for you” (2012). Research suggests that younger children with psychopathic tendencies also lie for no reason (Kahn, 2012). Psychopathy in children is becoming increasingly identified and studied (Dolan & Rennie, 2006; Murrie et al., 2007) with an effort to curb these behaviors as the children develop into adults.
Definition of Sociopathy
Among researchers, it can be difficult to get a clear definition of the differences between psychopathy and sociopathy. For the purposes of this paper, it is important to attempt to define the differences between the two conditions due to the presumed inability for a sociopath to achieve high order in society, such as the position of a Chief Executive Officer. The sociopath shares a number of traits with the psychopath. These include the emotional and mental psychopathic attributes. Sociopaths differ, as the name suggests, in the social realm. Interacting with people can be particularly troublesome. The sociopath seems not to fit into society that well, has problems with the very basic rules and laws, and has difficulty keeping commitments and developing personal relationships. It is intriguing to note that the sociopath is apparently aware of these differences, but pays no mind (Mealey, 1997).
Another characteristic difference between the psychopath and sociopath leads nicely into the research topic of this paper. Mealey suggests that there may be a distinction between the economic classes of these two conditions. Generally, the sociopath is in a far lower economic class than the psychopath (Mealey, 1997). It is unclear if this is a result of choice or the inability to meld into society and achieve success on the part of the sociopath.
Definition of Psychosis
During informal communication this author had with colleagues, there was a general lack of knowledge regarding the difference of psychopath, sociopath, and psychosis. Colleagues tended to confuse the terms and use them interchangeably. For this reason, psychosis was also researched. It is essential to clearly rule out this condition from further analysis due to its extreme differences. Psychosis is a condition in which the subject’s reality has changed so drastically that it is no longer based on truth or nature. Individuals with psychosis are more prone to misjudging events that are happening around them. Hallucinations are also very prevalent with psychosis (Kapur, 2003). It is highly unlikely that a psychopath, or sociopath for that matter, would also suffer from psychosis (Animated Dissection of Anatomy for Medicine, 2012).
Role of the Chief Executive Officer
Researching the exact roles and responsibilities of the Chief Executive Officer (CEO) is equally as challenging as finding defining literature between psychopath and sociopath behavior. The CEO is a position that has a conceptual focus on leadership of the company but is vague in definition of responsibilities. Many researchers agree that the CEO functions as the leader of the company (Glick, 2011; Boatright, 2009; Buchholtz & Ribbens, 1994). After further analysis, literature suggests a multitude of different responsibilities. Some propose that a CEO is the visionary, director, disturbance handler, and protector of the company. Furthermore, the CEO may play the part of the resource allocator, and in some cases, the chief strategist of the company (Glick, 2011).
In his book, Nahavandi details multiple leadership styles including directive and charismatic (2012). In some companies, the CEO may apply some or all of these styles. Directive leadership involves the leader dictating to each subordinate what tasks are required, in detail. Charismatic leadership is demonstrated by those who use emotion and communication skills to acquire leaders, sometimes regardless of the technical knowledge or prowess of the leader. At Apple, deceased CEO Steve Jobs employed a charismatic style. While employees may have complained about the exacting detail required by Jobs or his seeming lack of empathy to the stresses when a product was not perfect, they still loved working for him. Others simply felt he was a genius and adored working for him (Burrows, 2011). This is clearly the application of the charismatic leadership style. Of these two potential leadership styles, charismatic leadership is most commonly applied by the psychopath leader.
American and European/Asian CEO Differences
The American CEO differs from the European or Asian CEO in many ways. The American CEO tends to be more publicly available and inclined to participate in charity events and socioeconomic booster activities. The American CEO role may encompass creating a better public perception of the leadership and company in general. European and Asian CEOs tend to be more focused on the mechanics of business and make fewer voyages into the public eye (Pollach & Kerbler, 2011).
The European CEO is more apt to be most focused on the basics of the business. The emphasis appears to be on the daily operations of the business and core competencies. Compared to the American Chief Operations Officer or Chief Strategy Officer, the European CEO would look quite similar. Bain & Co., a European MBA research and consultancy firm, helps organize and run a fair or tournament for recruitment of top talent. Mirroring the expectations of the European business world, Bain & Co. focuses on “smart individuals with mastery of back-to-basic core skills, who don’t try to be too clever” (Garrette, 2012). This is quite different from the American CEO position, often characterized as the ingenious savior of the company.
Japanese leadership styles affect the business as a whole, from CEO to individual worker. The Japanese business culture encourages bottom-up decision making, paternalism, and holistic employee management (Schein, 1993). This draws differences between Japanese CEO styles and American CEO styles. The American CEO tends to be more interested, and arguably more pressured to feel responsible, for company profit than comprehensive worker happiness and health (Glick, 2011).
The most common traits of Korean CEOs of successful companies also differ from characterizations of the American CEO. Whereas the American CEO focuses on direction, vision, protection, and acquisition, the Korean CEO focuses on labor and workforce development (Shine, 1999). In fact, the CEO of the Korean company LG was known to work on the floor of the company with the workers. In some instances, he worked to deliver products to trade partners personally (Shine, 1999). Research of the roles, responsibilities, and traits of American CEOs suggested a general compassion for the company’s workers, but did not detail cases where CEOs actually participating in daily work.
Indian CEOs share the most traits with the American CEO by far. However, as American CEOs have to work to develop favorable public perception, the Indian CEO tends to invest that time in information gathering. For the Indian CEO, more emphasis is put on foresight and vision, similar to the American CEO, and less on developing high regard for the company itself (American Society for Training & Development, 2005).
Data Analysis and Method
Due to the time constraints of this paper, an expanded literature review was used as the method of research. The method will also include organization of facts and traits among the various psychological conditions examined. This will be compared and contrasted with traits of the American CEO. With the baseline from the literature review, additional pieces detailing closer ties to the research question were discovered and are cited.
The literature review and research demonstrated similarities and differences among psychopathy, sociopathy, and psychosis. The following table lists the similarities and differences, and draws focus to the psychopathic traits as the focus of the remaining portion of this paper. Similarities among the conditions are noted by aligned horizontal rows with matching traits. A blank field or cell means this trait is not shared by this condition.
|Shallow emotions||Shallow emotions|
|Reduced fear||Reduced fear|
|Lack of empathy||Lack of empathy|
|Difficulty keeping personal commitments|
|Trouble fitting in with society|
|Altered state of reality|
Table 1_: Similarities and Differences of Psychopathy, Sociopathy, and Psychosis_
While gathering research about the CEO position, this author noted that studies and literature detailing roles and personality traits of a CEO written by American scholars tended to define the traits as uni-cultural (Glick, 2011), (Boatright, 2009), (Buchholtz & Ribbens, 1994). After further analysis comparing American and European or Asian CEO traits, this author determined that there was a significant tendency of American scholarly articles to state the traits as generalities, when such traits tend to be more biased to American business participants. Because of this tendency, further research was needed to detect the difference between the American CEO and European/Asian CEOs. American articles that ignored cultural background or the country the business operates in primarily were used to weigh in on American CEO behavior more heavily.
The following table details traits that are common in American CEOs.
|Traits Common in American CEOs|
|Varied leadership styles including charismatic.|
|Self-aggrandizing / company promotion|
Table 2_: Traits common of the American CEO_
To build the case for the psychopathic tendencies in the American CEO, the following table draws comparisons between traits of both. The left cells define a characteristic of the American CEO. The right cell on the row draws the correlation to the psychopathic trait.
|Varied leadership styles including charismatic.||Charming|
|Self-aggrandizing / company promotion||Egocentricity|
Table 3_: Similarities between the American CEO and Psychopathy_
The similarities between the American CEO and a psychopath are very startling. This continues to build the case for the possibility of the psychopathic American CEO. Particularly, when comparing the business climate of the American enterprise to other cultural business spheres, one can see where pressures may influence those generally of utopian nature to transform into something that resembles the psychopath. These comparisons present the framework for the case of a corporate psychopath in American business. Further research has presented additional literature to support this connection.
The term “corporate psychopath” refers to an individual immersed in the business world whom also possesses psychopathic tendencies. One article suggests that 1 in 25 business leaders may be a psychopath (Morris, 2011). Other publications lower the estimation to about 1% (Boddy, 2005). Objectively, the thought of having a corporate psychopath in a leadership position could sound intriguing. When looking at the specific emotional traits of the psychopath, one could argue that they may be perfectly suited to emotionlessly create success in a company. However, other research suggests that the corporate psychopath is dangerous to the company’s success and profitability. Instead of focusing on the company’s vision, the corporate psychopath focuses on his or her self first, and primarily (Boddy, 2005). The same study suggests that the higher one goes up in the leadership chain, the more likely the chance of encountering a psychopath (Boddy, 2005). This claim helps build the case further towards the prevalence of psychopathic American CEOs as the Chief Executive Officer position is usually the pinnacle of upward career development in a company.
Implementing the concepts in transformational leadership can create success in a company. The three core building blocks of this style are charisma and inspiration, intellectual stimulation, and individual consideration (Nahavandi, 2012). For this paper, the concept of focus is charisma and inspiration. Nahavandi states that transformational leaders, when employing charismatic influence, can engender a strong desire to follow and accomplish the leader’s goals and reduce resistance to ideas from the leader (2012). If individual consideration is discarded, or at least the focus is removed from it, a business fostering transformational leadership can play host to a psychopath. The acceptance of charismatic leadership plays directly into the psychopath’s traits and strengths.
The direction of the literature review directly leads to a few distinct findings. When comparing the American CEO and the psychopath, the overlapping characteristics were found to be less common than this author originally hypothesized. However, the similarities are explicit enough to continue with exploring a positive answer for the research question.
Comparing the American CEO and business place to other nationalities has provided more material to solidify the findings. It is clear that the American business and culture encourages more success at any cost and public prestige than other nationalities.
These two findings compile to create a positive conclusion for the research question. American CEOs can share enough traits with the psychopath to be labeled as such. Even the weakest psychopathic tendencies are nurtured by the American culture of discarding empathetic business practices and achieving success.
Additional findings suggest that psychopathic leadership was more concentrated towards the upper echelon of American business. However, even though the traits may seem perfect for the requirements of American business success, often the psychopath uses the advantage for his or her own personal gain and does not direct the success towards the company.
Since the American CEO shares marked similarities with the psychopath, generally it can be assumed that some CEOs could likely be psychopaths. The American business culture is built in such a way that encourages the faculties of the psychopath. However, the psychopath tends to forsake the needs of the company, potentially harming it, to focus on personal gain. With these findings, one can conclude that some American CEOs do exhibit dangerous psychopathic tendencies.
Using literature, the hypothesis has been potentially proven. However, to test this theoretical concept, at least some American CEOs exhibiting this behavior should be able to be found and examined. For this paper, the American CEO is being identified as one which either runs and maintains an American business, is American in nationality, or trades with and creates business in America. Three CEOs that have acted in a manner consistent with the dangerous psychopathic tendencies attributed above are Robert Maxwell, Bernie Madoff, and Kenneth Lay.
For the next three examples, each CEO will be presented with a brief biography and company history. This will lead to the event or events that made each a choice for a CEO as a corporate psychopath. It is interesting to note that while the goals of the psychopath are selfish, the end result is actually quite self-destructive. In each example, the decisions made lead to an inevitable destruction of the company or individual.
Each of the following CEO examples show the danger of this condition. The danger exists both for the company and for the individual. The company relies on the CEO for vision and public perception, but these examples showcase how both individual and company reputation quickly deteriorates. Another danger lurks for the individual in the form of self-destruction. These CEO examples either end with suicide or incarceration. These endings are obviously defiant of the selfish goals of the psychopath.
After the biography and company history, key choices that each CEO made will be analyzed. These will be compared to the traits exhibited by psychopaths. The goal is to show that there is an overwhelming amount of signs along the way to the culmination of each CEO’s tenure.
Robert Maxwell, originally named Jan Ludvik Hoch, was born in Czechoslovakia in 1923. Maxwell grew up in extreme poverty. His orthodox Jewish parents were killed by the Nazis; he narrowly escaped concentration camps (“Robert Maxwell: A Profile,” 2011). Maxwell described himself as “self-educated.” He had tremendous drive and ambition. Throughout his career, he enjoyed much success and eluded the consequences of his many mistakes and setbacks.
One of Maxwell’s most notable discretions emerged after his death. The Maxwell Communications Corporation had nearly £2bn of debt in 1991. Maxwell took the company public to build capital. American trading and aspirations to build success in America qualify Maxwell for the CEO group discussed in this paper. Later audits showed that he had been stealing from company pension funds to finance the daily operations and boost stock prices of his company (Greenslade, 2011).
The decisions Maxwell made to avoid failure at any cost seemed to be more aimed at his personal desire to be successful. He had shown he was a remarkable businessman, survived even the most scathing of audits, so a bankruptcy would present little problem for his businesses (“Robert Maxwell: A Profile,” 2011). However, his own ego would not allow him to have a failed company on his list of accomplishments. He callously stole from the retirement of his workers to protect his own image.
Robert Maxwell made a number of decisions that aligned with the traits of a psychopath. The following table details these decisions. On the left is a list of decisions Maxwell made. The corresponding entry on the right details the psychopath trait that best aligns with this decision and indicates that Maxwell was a psychopath.
|Maxwell decision||Psychopathy trait exhibited|
|Maxwell bid takes over Pergamon. Pergamon profit depend on Maxwell family private companies.||Illegal choices showcased lack of guilt. Manipulative tendencies to make a failing business successful, no matter what the cost.|
|Purchasing Macmillan publishing drives company further into debt.||Reduced fear response correlated to setting up a large failing business.|
|Mirror Group Newspaper made public to acquire capital: it was failing under huge debt.||High stress tolerance to take a company public with such debt. Reduced fear and lack of guilt because the offering was deceiving stockholders and purchasers. Deception also highlights manipulative tendency.|
|Maxwell steals from company pension funds to fund earnings||Lack of empathy for workers that would rely on those funds for retirement. Manipulation of results.|
|When book surfaces about his failings, Maxwell offers editorship position to author.||The book cast a hard light on Maxwell and hurt his ego. To limit the distribution of this piece, Maxwell manipulates the situation and tries to befriend the author.|
Table 4_: Actions of Robert Maxwell and the corresponding psychopathy traits_
Bernard Lawrence “Bernie” Madoff was born in New York in 1938. Madoff got his start by creating his own investment firm using money he earned from working as a lifeguard and sprinkler installer (“The Madoff Files: Bernie’s Billions,” 2009). He continued to run this investment firm until 2008, when he was arrested.
Madoff created returns for his clients that were higher than average. At one point, financial analysts started to allege that it was impossible to generate the returns he was achieving. In 2008, Madoff confessed to an employee and to his son that his business was struggling. He revealed that he was not obtaining the large returns he claimed. Instead, he was using new investor’s money to fund the returns he claimed for the old investors. The returns never hit the mark he claimed and he was forced to keep obtaining new clients to generate new capital for returns (“The Madoff Files: Bernie’s Billions,” 2009). Madoff was later arrested and charged for securities fraud (Honan & Wilchins, 2008).
Madoff had made a name for himself at a very young age. His ego would not allow him to fail. Instead, he ruthlessly stole investments and wasted the best intentions of his clients. He caused billions of loss just to keep up his personal facade.
Madoff clearly exhibited the traits of a psychopath. The business decisions he made echoed his psychological condition. The following table details these decisions. On the left is a list of actions originated by Madoff. The corresponding entry on the right details the psychopathy trait that best aligns with each decision to indicate Madoff was a psychopath.
|Madoff decision||Psychopathy trait exhibited|
|Madoff made a name for himself early in his life in the investment world. He created a system that would return consistent returns unrelated to the global financial market.||Madoff’s egocentricity was responsible for creating these promises for his investors. Lack of guilt in wasting investors’ money also played a part.|
|Madoff Investment Securities stole clients from the rest of the New York Stock Exchange brokers using aggressive marketing.||Superficial charm was employed to befriend and solidify business relationships.|
|While many described Madoff as aloof, he was friendly with Security and Exchange commissioners.||Madoff exhibited more superficial charm to befriend and leverage the right people to avoid scrutiny.|
|Madoff was described as having compulsive disorders. Once, he ripped out a carpet square because it had a pear juice stain. He demanded that chipped paint be filled with marker. He remodeled offices to remove angles.||Madoff seemed to exhibit a lot of impulsive behaviors.|
|Madoff executed a complex ponzi-scheme to create commissions to fund his lifestyle, all the while losing money. Returns were simply numbers and not backed by actual value or currency.||Madoff lacked empathy. He destroyed many people’s futures without any guilt. He even kept a smile on his face while he was being promenaded in front of the public for the first time, ever trying to keep face and charm onlookers.|
Table 5_: Actions of Bernie Madoff and the corresponding psychopathy traits_
Kenneth Lay, CEO of the now defunct American energy conglomerate Enron, is another example of an American CEO psychopath. Kenneth Lay was born in 1942 in Missouri. Kenneth Lay’s father, Omer Lay, was a salesman and part-time baptist minister. Omer Lay moved the family from place to place while Kenneth grew, always in search of the next best sales opportunity. Unfortunately, financial stability was never achieved for Omer Lay and his family (Texas State Historical Association, 2012).
Kenneth Lay studied economics at the University of Missouri. He achieved a Ph.D. in economics from the University of Houston in 1970 (Texas State Historical Association, 2012). Kenneth Lay worked through his career in various energy regulation positions, both in private companies and government, until he eventually became the CEO of the Houston Natural Gas company. After merging with another company, the company renamed itself Enron Corporation (Texas State Historical Association, 2012). Kenneth Lay worked with his COO Jeff Skilling to transform the company from a natural gas pipeline company to one that traded in futures, derivatives, and commodities.
The magnitude of Enron’s growth was difficult to maintain. Enron debt had secretly grown to historic levels. Kenneth Lay would not allow this to take down his company, however. He, along with some of his top board members, developed shell companies to hide and absorb Enron debt. Accounting irregularities were also used to hide Enron’s financial problems (Suddath, 2010). Kenneth Lay, Jeffrey Skillings, and four other top level executives resign amid further stock decline. Finally, Enron went bankrupt (Suddath, 2010).
Kenneth Lay was a perfect example of a psychopath in power. He made decisions to hide mistakes, encouraged investors and employees to keep investing in the company facade he had developed, and was so charismatic that he was able to sway the best senses of his other executives to participate in his game. Even after he had resigned as CEO, he continued to exert influence, both in his company and in the government (Suddath, 2010).
There is much evidence that Kenneth Lay was a psychopath. The way he chose to conduct his business certainly demonstrated his psychological condition. The following table delineates these decisions. On the left is a list of actions or decisions that came from Kenneth Lay. The corresponding entry on the right details the psychopathy trait that best aligns with each decision to indicate Kenneth Lay was a psychopath.
|Kenneth Lay decision||Psychopathy trait exhibited|
|Lay was valuable to the multiple companies that he worked at due to his many connections in Washington, D.C.||Lay maintained a charming attitude to keep regulators and lobbyist near him.|
|Under leadership of Lay, Enron acquired more and more companies. The company grew from a $13b a year company to over $100b a year.||Lay lacked fear and had a high stress tolerance. This rapid growth was not necessarily the most prudent growth path for the company.|
|Accounting irregularities lead to a bankruptcy at Enron.||Lay was manipulative with accounting and measurement.|
|After his arrest, Lay still maintains his innocence, even though he was convicted of six charges.||Clearly, Lay lacked guilt for his transgressions.|
|Lay and other executives encouraged employees and 3rd parties to invest in the company in the form of stock while divesting themselves.||There was no empathy from Lay for the many employees his coercion affected. He had no guilt when he was selling his own stock due to insider knowledge of its low value.|
Table 6_: Actions of Kenneth Lay and the corresponding psychopathy traits_
American CEO Psychopath Example Summary
Literature suggested that the rate of psychopaths is between 1 and 4% in the business place. Maxwell, Madoff, and Lay are three examples of this group. With further research, a number of other CEOs can be found with similar stories. However, the amount is not overwhelmingly large. It is not clear if this proves the maximum of 4% psychopathic leaders, or that the highly functioning psychopath is just exceedingly versed in escaping public justice.
The American CEO psychopath has been proven to exhibit dangerous tendencies. These actions, especially in cases of Maxwell, Madoff, and Lay, harm those who have put faith and trust in the leadership of the company and its investments. Furthermore, these actions are not only dangerous, they are also illegal.
Will American CEO Psychopaths Break the Law?
The American CEO psychopath leads a life which is patterned in dangerous, selfish, and harmful choices. Does that mean that all American CEO psychopaths will break the law and make illegal choices? In cases where there is no oversight or mentoring, which is discussed later, this author hypothesizes that the psychopath will absolutely progress to illegal actions.
American business laws are created in such a way to enforce the American notion of ethics on capitalistic business. The hallmarks of successful businesses are hard work, ethical choices, and fairness. Unfortunately, the psychopath shares very few traits with the laws enacted to protect businesses and consumers. The psychopath has no concept of fairness and equality. Instead, a deep greed, selfishness, and desire drives the psychopath. Since the psychopath either does not comprehend the concepts or believes they do not apply to him or her, the concepts get ignored. As more decisions get made that ignore the basics of the law system, the results of such decisions will continue to approach illegal business practices. That is to say, the psychopath didn’t specifically begin working to purposely break laws, the psychopath just found it easier to accomplish tasks sometimes outside of the confines of the law. If left unfettered, the decisions will continue to drift towards the single goal of putting the psychopath ahead, and farther from the ethics required by American laws. The American CEO psychopath left to work on their own will always end up breaking the law.
Is Every American CEO A Psychopath?
The ramifications of a company being led by a psychopath are quite concerning and grave. However, the landscape of corporate leadership in America should not be hastily branded as a wasteland of selfishness and corruption. Not every American CEO is a psychopath. If this were the case, no American CEOs exhibiting self-sacrifice, compassion, and ethics could be found.
Andrea Jung is the CEO of Avon. At the end of 2011, the success of Avon made Jung eligible for a bonus of $5,362,500. Jung elected to pay the tax on this income, and then deposit the remaining balance into the Avon Foundation for Women (Casserly, 2011). The Avon Foundation for Women is a fundraising organization that focuses its efforts on grants for non-profit organizations surrounding breast cancer, domestic violence, and emergency disaster relief (Avon Foundation for Women, 2012).
Larry Ellison is the CEO of Oracle Corporation. As of November 2, 2012, Ellison is the 8th richest person in the world (Bloomberg L.P.). While Ellison still actively manages Oracle, he also participates in many charitable organizations. Ellison has said he put all most of his assets into a trust. He states that he has the “intent of giving away at least 95 percent of my wealth to charitable causes.” He is now a member of the “Giving Pledge,” an organization for the super-rich to publicly pledge to donate their wealth to charity (Fried, 2010).
Bill Gates, co-founder and former CEO of Microsoft Corporation, is another great example of a non-psychopath American CEO. In 1994, Gates formed the Bill and Melinda Gates Foundation to consolidate his charitable donations and build a more efficient vehicle to address charity needs (Bill & Melinda Gates Foundation, 2012). In 2000, Gates stepped down as CEO of Microsoft to focus more on software strategy (Einstein, 2000). In 2008, Gates left Microsoft to work full-time at the Bill and Melinda Gates Foundation (Bright, 2008). Gates now spends his personal fortune traveling and supporting the foundation.
The tales of CEO villainy have been grossly over exaggerated in the last few decades. The previous three examples are just a demonstration of the wealth of non-psychopathic American CEOs. By quickly reviewing Fortune 500 companies, one would be able to find many additional quality examples. There is hope that a company can be ran by a successful visionary without the influence of a self-destructive psychopath. To mitigate the risks of the American CEO psychopath and end up with an exemplary one like Jung, Ellison, or Gates, see the recommendations portion of this paper.
The picture of the psychopathic American CEO has been painted quite bleak. There are two recommendations to deal with this phenomenon that can offer some hope. First, individuals applying for the position can be screened for psychopathic tendencies, traits, and genetics. If the CEO is already in power, the other recommendation suggests a positive outcome with coaching and mentoring.
Testing for competencies, skills, and personality traits is not uncommon for some fields. In fact, more careers than one may expect employ some sort of pre-screening mechanism. These tests can be either covert or overt. One example of a covert integrity test metric is the Employee Reliability Index (Iliescu, Ilie & Ispas, 2011). It is interesting to note that employee testing is much more common in America than overseas (Iliescu, Ilie & Ispas, 2011). This paves the way for testing and screening to be used for all levels of the company.
With the CEO being in charge of the entire company and potentially millions of dollars and thousands of jobs, a certain level of screening may have enough merit to overshadow the brassiness of requesting the highest leader of the company to submit to testing. One possible screening method would encompass personality traits and testing used by the Hare Psychopathy Checklist. This may require some investment, however, as this particular test suggests that clinicians should have an advanced degree in social, medical, or behavioral sciences (Hare, 1998).
Research shows that individuals genetics can indicate psychopathic tendencies (“It’s all in the genes for psychopaths,” 2005). Studies have shown that external situations, even those as taxing as caring for a child with Autism, are not likely to cause cases of psychopathy. The diagnosis was attributed to genetics (Hodge, Hoffman & Sweeney, 2011). However, this author could not find conclusive evidence that there is a specific gene or marker that points to the condition of psychopathy. Instead, it seems to be more of a trail derived from family history. In addition to the aforementioned personality trait tests, family history of the CEO should also be analyzed.
While there is ample proof that the psychopath can wreak havoc on the business world, it does not have to be devastatingly negative. Instead, this author hypothesizes that the psychopath can be incredibly useful in a company.
Psychopathic tendencies should not be ignored, nor should they be encouraged. They should be identified and owned, not discouraged. It is important to note that this psychological condition exists, and use it for the best purposes possible. In cases where it is ignored or discouraged, the condition will not just go away. The condition is strong and cannot be stifled for long. It is best to be aware of it and then manage it accordingly.
There are a number of traits of the psychopath that are very useful for business. The lack of fear, insane drive, and egocentricity are all ones that could be leveraged for success. Instead of relying on the psychopath to use these traits responsibly - which is impossible - couple this individual with an ethical mentor. This mentor can help the psychopath channel those natural abilities towards the universal betterment of the entire company. For example, this mentor can use this person’s natural resistance to fear by positioning them as a trial or test subject. The psychopath can be the spearhead of new initiatives that involve considerable danger. Another example revolves around framing scenarios to feed the ego of the psychopath. The mentor can contrive situations where the ego is pandered to in such a way that also furthers the company’s missions and goals.
The American CEO psychopath has a bad reputation, rightfully so. With proper planning and screening, businesses can avoid hiring psychopaths to this position. After a psychopath has been employed, there are still ways to thrive. Instead of ignoring and discouraging these traits, proper mentoring and coaching should be applied. This way, the psychopath can continue to be a functioning member of society and the business can enjoy success.
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