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Does Your CEO’s Personality Determine Your Company’s Culture?

Posted by: Megan Troster
04/05/2016

CEOs lead the company from the front, inspire employees and embed the culture, whilst ensuring the financial and commercial success of a company. A CEO’s personality and social-economic background can be the defining characteristics of a company’s culture.

There has been much research linking organisational performance with the characteristics of its workforce. Research conducted by Charles A. O’Reilly et al in 2012, concluded that CEOs who are perceived as outgoing, assertive and active tended to have cultures that are much more results orientated. This probably rings true for anybody who has had their Sales Director promoted to CEO, or anyone who works in a sales led company. Further, CEO’s who were less domineering and gregarious tended to be associated with cultures that were less results orientated. Although, you could argue that a specific type of organisation and/or industry attracts specific types of CEOs so the correlation does not imply causation.

Recently, there has been a lot of interest in CEO’s personality traits, with research suggesting that some CEO’s actually posses psychopathic tendencies such as an absence of empathy, enjoyment in manipulating people, a lack of remorse and a lack of guilt.

The most common psychopathic tendency displayed by CEOs is narcissism.

Narcissism can be described as having an excessive interest in oneself, an inflated perception of self-importance or an extreme admiration of oneself. Narcissists are much more likely to emerge as leaders because of their self-confidence, charisma and sense of self-entitlement (a “me first” attitude). O’Reilly’s research focused on narcissism as the most fundamental personality trait in CEOs, claiming that narcissist CEOs are “impulsive and manipulative,” with self-serving agendas which makes them so successful in achieving excessive compensation for the job that they do. His research also showed that highly narcissistic bosses do not necessarily out perform peers who are less narcissistic, even though they are paid more. Other psychopathic tendencies of CEOs found include Intermittent Explosive Disorder which is a recurrent sudden outburst of anger or aggressive behaviour that the situation does not warrant; Anti-social Personality Disorder which is developed through manipulating and exploiting others at the top end of the scale; and even Paranoid Schizophrenia where they have lost complete touch with the reality of situations.

The more narcissistic a CEO is, the more likely they are to takes risks. With an insatiable need for glorification and demonstrating their competence, O’Reilly explains that they are likely to have “eliminated those who might challenge them or fail to acknowledge their brilliance”. However, other studies have looked at linking risk taking with the social-economic class of the CEO rather than just their personality traits. One study that looked at this in depth is “You don’t forget your roots: the influence of CEO social class background on strategic risk taking.” This study considered risk taking in light of the social-economic background of CEO’s during childhood, thought to be key to risk taking characteristics because this early development can leave an imprint which results in a strong influence throughout working life. The findings from the study showed that CEOs from upper class backgrounds and lower class backgrounds were more likely to take risks than those from a middle class background. It could be suggested that those from a middle class background experienced a good standard of living in childhood but this was reliant on a constant paid income, whereas those from an upper class background would typically grow up knowing that their parents could bail them out if circumstances took a downward turn and therefore they tended to be more receptive to risk-taking. For CEOs from lower class backgrounds, their risk-taking tendencies can be said to have stemmed from having less to lose and knowing that the odds have always been stacked against them when it comes to being successful and therefore their self-confidence in their hard work and the decisions they made to get to where they are now, means that they are more comfortable taking risks.

It is safe to assume that social background and personality traits go hand in hand because experiences help form the person and the decisions they go on to make. The degree of impact in which a CEO’s personality has on a company is evident because culture stems from the top and people tend to imitate those in charge. Companies can help to eliminate or at least minimise the impact of a CEO’s personality and their decisions by having a more balanced board from differing backgrounds. Companies can also employ coaches and mentors that help CEOs understand how their personality and background can impact their approach and behaviour and in turn, how that creates culture and affects the attitude and behaviours of the staff around them. Ultimately, it is important not to have too much power in the hands of one person because decisions can become unbalanced and follow the agenda of one (possibly) narcissistic individual.

 

 

 

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