Here’s something that’ll make you rethink everything you thought you knew about leadership: those confident, slightly self-absorbed CEOs? They might be onto something. But only up to a point.
In his dissertation, “An Examination of Optimal Level of CEO Narcissism: Why, How, and When Narcissism Impacts Firm Performance,” my friend, Dr. Scott Boswell, conducted some fascinating research that tracked 180 CEOs (blinded anonymous data) and their companies’ stock performance. Scott followed his dissertation with a paper coauthored with Dr. Ekin Pellegrini and Dr. Tom Eyssell, “CEO narcissism and firm performance: Exploring moderated and curvilinear relationships,” that won the Southern Management Association 2021 Conference Organizational Behavior Division Best Paper Award. The findings are pretty wild. Turns out, the research supports that there is an optimal level of narcissism for leadership success—kind of like a Goldilocks zone where you’re confident enough to make bold moves but not so ego-driven that you hurt the company.
The researchers found that CEOs who scored around the 56th percentile for narcissistic traits delivered the best returns for shareholders. Think about it: these leaders have enough self-assurance to make tough decisions when everyone else is paralyzed by doubt, the charisma to rally teams around ambitious goals, and the thick skin to push through criticism. But they haven’t crossed the line into full-blown ego territory where everything becomes about them instead of the business.
What’s interesting is how this plays out differently depending on context. Smaller companies are susceptible to their CEO’s narcissism levels, as the sweet spot drops to around the 55.5th percentile. It makes sense when you think about it: In a smaller organization, everyone feels the direct impact of the leader’s personality. Too much ego and you’re micromanaging talented people right out the door.
Industry matters too. The study found that communications services companies exhibited unique patterns, likely because this sector demands a different kind of leadership approach than, say, manufacturing or utilities.
But here’s the kicker that surprised me: For companies in decline, the data didn’t support the benefit of more narcissistic leaders. I would have guessed that turnaround situations require someone willing to make tough decisions and disregard the naysayers. Scott’s feeling is that we should not jump to conclusions since there is not enough data to support the possibility of a similar curvilinear relationship.
The most eye-opening finding? The companies in the study hired CEOs who scored higher than optimal on the narcissism scale. The average CEO in the study scored 58.2, compared to the optimal score of 56. The study suggests that leaders are being selected who may have personality traits that hinder performance, and we are not even aware of it.
So what can we do with this information? Here are three things worth thinking about:
- Pay attention to context when you’re dialing up or down your confidence. If you’re in a high-growth phase or an innovative industry, a little more swagger might help. However, if you’re dealing with a mature organization, perhaps consider reining in the “my way or the highway” approach. Ask yourself: Does this situation need a bold assertion, or would collaborative problem-solving work better?
- If you’re involved in hiring leaders, start using well-respected assessment tools instead of just going with your gut. Look for people who can make tough calls and inspire others, but who also seem genuinely interested in the company’s success rather than building their legend. Red flags? Anyone who appears allergic to feedback or talks more about their vision than the team’s capabilities.
- Establish guardrails for your confident leaders. Set up diverse advisory groups, do regular 360 reviews, and tie performance metrics to organizational outcomes, not just the leader’s wins. Watch out for warning signs, such as leaders who increasingly isolate themselves from feedback, spend excessive time on their brand, or make decisions that appear designed to make them look good rather than help the business.
The bottom line? A little narcissism might be precisely what your organization needs. Just make sure it doesn’t get out of hand.
With appreciation to Scott Boswell for giving us all an extra dose of confidence to bolster our companies, Happy Networking!