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CEOs aren\u2019t known for being wallflowers. Rather, they\u2019re more likely to be caught having special feelings for their own reflection in the modern equivalent of Narcissus\u2019 pool of water (their Zoom<\/a> icon).\u00a0<\/p>\n By nature of their\u2014at times over-inflated\u2014confidence and powerful influence, CEOs are often able to bend situations in their favor. And a newly released study<\/a> as published by the Stress Management Journal <\/em>explains how narcissistic executives get their board of directors to engage in more risky behavior.\u00a0<\/p>\n Where better to understand said manipulation than going to the horse\u2019s mouth? Researchers looked at corporate board meeting transcripts from 88 public firms and 197 CEOs over the past two decades. Researchers measured a leader\u2019s level of narcissism based on the prominence of the CEO\u2019s name and photograph in press releases and annual reports, as well as how much they were paid in comparison to the next-highest paid member of leadership.\u00a0<\/p>\n \u201cNarcissistic CEOs are prone to drive board discussions about risk-taking to hold a positive tone- especially when they also serve as board chair- thereby enabling them to allocate increased resources to risk-taking strategies,\u201d noted the research team.<\/p>\n An executive having an inflated sense of self-importance has already been linked in past studies to their company taking more risks, according to the study\u2019s authors. To use a maritime metaphor: What\u2019s happening, in part, is if the ship\u2019s captain is cocky,they are more likely to steer into troubled waters.\u00a0<\/p>\n It\u2019s not just about confidence, though.Narcissism motivates CEOs to take riskier moves as a way of reinforcing their high viewpoint of themselves and overcoming obstacles that give them a chance for greater attention and opportunities for self-enhancement. By nature of being self-centered, they\u2019ll also focus more on potential gains than losses when making a decision, the authors added, referencing other studies.\u00a0<\/p>\n How these CEOs\u2019 instincts for risk-taking become approved and implemented is another matter. It\u2019s all about making boards of directors feel chipper. One strategy for these narcissistic executives is by stacking the deck with people that admire or agree with them, or at least are easy to influence. It\u2019s easier to create that positive outlook with a room of yes men, after all.\u00a0<\/p>\n Tone can influence the board, too, as CEOs might use \u201cheightened enthusiasm and confidence to garner support,\u201d perhaps bolstered by a narcissistic tendency to be charismatic. Narcissistic CEOs, being drawn to risk, might downplay the negative potential to their choices.\u00a0<\/p>\n Lastly, researchers suggest this type of leader might be able to turn on the charm if and when needed, using \u201csoft influence techniques to achieve their purposes,\u201d including flattery or forging bonds.<\/p>\n The narcissistic exec\u2019s ability to sway the board is all the more powerful when they also are the board chair, the authors explained. As chair, they can exert their influence by dictating the meeting agenda (therefore deciding how much they\u2019re walking about the risks), choosing what experts to defer to, and even selecting the location, researchers added.<\/p>\n \u201cBoards need to be careful of when and when they don\u2019t have duality; when they do and don\u2019t give CEOs the title of board chair,\u201d one of the researchers, Cameron J. Borgholthaus of the University of Wyoming, said in a press release<\/a> for the study. \u201cIt can be a good thing, but at the same time a lot of government reforms were done to put more responsibility on the board to ensure they wouldn\u2019t be manipulated.\u201d<\/p>\n<\/div>\n\nRecommended Newsletter:<\/strong>
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