Study suggests corporations could be destroyed by psychopathic leadership

According to new research led by the Universities of Leicester and Coventry, investing in companies that have psychopaths in their higher echelons of power could be harmful to your wealth.

Identification of such companies, however, is not an easy task, as senior executives are unlikely to voluntarily participate in any psychological probing. For this reason, the researchers decided instead to focus on easily observable company characteristics that may correlate with the presence of psychopaths. 

Individuals affected by psychopathic personality disorder are pathological liars with inflated sense of self-worth and an inability to experience empathy. They also have the propensity to engage in thrill seeking and antisocial behaviour.

To capture these characteristics, Wisniewski, Omar and Yekini evaluated whether the language of corporate communications is loaded with psychopathic characteristics. Furthermore, they created measures for excessive risk taking, refusal to participate in charitable giving and lack of honesty. Their research reveals a negative relationship between future stock returns and the presence of psychopathic traits.

The prevalence of psychopathy in general population is estimated to be around 1%, although this percentage is significantly higher among prisoners and business leaders. Psychopaths tend to make spectacular careers in the business world. They interview well and have impressive albeit fictional CVs. Their cruelty is often mistaken for ability to make hard decisions and their fake charm can be erroneously perceived as charisma.  To accelerate their career progression, they take credit for the achievements of their junior colleagues and expend a lot of energy to ingratiate themselves with their superiors. The web of lies they skilfully weave allows them to manipulate their environment and cover their misdeeds.

The results of this study have important ramifications for companies. The researchers suggest that, in the process of hiring senior management, employers should perform psychological evaluation of the candidates. Criminal records checks should be incorporated into the recruitment process and information provided on the CVs verified carefully.