Each week, more black holes magically appear in corporate finances and once-championed, now ethically-challenged, CEOs step down. One survey shows that Americans now think more highly of Washington politicians than they do of business executives. Yes, it is that bad, said the business magazine Fortune.
The former Federal Reserve Board Chairmen Paul A. Volcker was even heard complaining about modern businesspeoples lack of values. We went from greed is good being said as a joke to people thinking that greed is good was a fundamental fact, he said. Another popular read with the execs, Business Week, argued that the very same personal attributes that propelled people to the top were those that led to abuse.
What are the attributes of those who climb to the top? Is it a desire for power? Recent research demonstrates how most corporate mergers dont make the company more money, with costs often outweighing synergies. So why have CEOs persisted in merger-mania? To be the biggest? To become their rivals boss, see them sweat and then give them the boot? Or because they get a quick-fire bonus, so they can live flash lifestyles that reinforce their sense of greatness? One Columbia University study suggested as much, finding that the greater the media profile of a CEO, the higher the premium he or she is willing to pay to seal a big deal. They need to be loved, and love to be feared.
As CEOs have fallen from grace and their power has evaporated, so publishers seem more confident about spilling the dirt on them. One reporter dug up a story of how WorldComs fallen hero, CEO Bernie Ebbers, once poured drink over an employee while criticising him for being fat and not taking exercise. Reportedly, Ebbers did this after asking whether the guy was on the companys health insurance.
(They) use superficial charm, manipulation, intimidation, and violence to control others and satisfy their own selfish needs They lack conscience and feelings for others, cold-bloodedly take what they want and do as they please, violating social norms and expectations without the slightest guilt or regret.
That was Professor Robert Hare. No, he was not trying to describe a typical CEO, but talking about psychopaths. From the University of Vancouver, Professor Hare is considered to be one of the worlds foremost experts in the study of psychopathy. Perhaps he could be an inadvertent expert on the modern CEO? When asked, he did say that if he could not have secured access to prisons for his research, he would have tried a stock exchange.
This is not to say that CEOs can be expected to rampage round the office with a meat cleaver while wearing their Y-fronts on their head, but that the same traits considered to be pathological in some situations have often been celebrated and rewarded in the corporate world.
We have been warned. Last year, Dr Paul Babiak, an organisational psychologist in New York, said he believed psychopaths were thriving in the modern business climate. The organisational chaos that typifies many of todays rapidly growing, downsizing and merging companies is the ideal environment for the psychopath to achieve success, he said.
At the time, Babiaks study reckoned that 15% of executives misrepresented their education. The example of Richard Li, chairman and CEO of Pacific Century Cyberworks, who was exposed as not having a Stanford degree as claimed, seems loose change today compared to the widespread fraud and self-enrichment of many CEOs.
In scientific circles, many argue that psychopaths are born this way and cannot be cured. Despite this, our business schools seem intent on proving you can actually train people to become psychos in suits. A recent survey from the Aspen Institute looked at the attitudes of MBA (Master of Business Administration) students to business and society, at three different stages: before they started their programme, halfway through, and finally on graduation.
The results have shown that students sense of social responsibility decreases as the MBA programme progresses. For example, as they begin their degree, more than 40% say that one of the primary responsibilities of a company is to produce useful, high-quality goods and services. But, by the end of the programme, just over 30% think this is valuable. MBA may as well stand for Moral Bankruptcy Assured. It is not so much that psycho CEOs should be in an institution, but that our institutions are creating them.
This could be a problem for the future of business. If Only CEO Meant Chief Ethical Officer was the lament in a recent edition of Business Week. They suggested that the type of people who have climbed to the position of CEO are ill-equipped to lead business out of its current confidence crisis. This years CEO scandals could even end up changing what companies look for in a CEO as they attempt to restore investor confidence, they said. For instance, stakeholders are likely to become increasingly sceptical of highly aggressive CEOs.
The magazine cited Michael Hoffman, executive director of the Bentley College Center for Business Ethics, as suggesting that a new type of servant leader will be required one who looks out more for employees, customers, and the company rather than for him or herself. I think boards of directors and search firms need to begin looking for people with a tremendous amount of integrity, Hoffman said. If you cant trust a business and you cant trust a person running it, youre probably not going to invest in it.
Where will these new leaders come from? Dr David Murphy of the New Academy of Business believes that business schools arent satisfying the needs of the business world, who increasingly need people adept at dealing with a complex business environment of rapidly changing expectations. This organisation was set up by Anita Roddick, after she became dismayed at the state of education in business schools.
The MSc in Responsibility and Business Practice at the New Academy has been oversubscribed in recent years and boasts alumni such as Lise Kingo, now Senior Vice President, Stakeholder Relations, Novo A/S, and Paul Dickinson, a co-founder of the Social Venture Network and of sustainability-oriented start-ups such as Eye Network. The New Academy encourages students to be explicit about their values and seek to make a meaningful difference to the world through their working life.
Other European business schools are also waking up to the apparent ethical vacuum at the heart of most MBA curricula. Last week saw the launch of the European Academy on Corporate Social Responsibility, with the aim of helping deans and professors at business schools and universities mainstream ethical issues in business education. Speaking at the event in Paris, management guru Henry Mintzberg talked about moving beyond selfishness and said the idea that business needs heroic rather than cooperative CEOs is a myth. Mintzberg is a staple in the diet of many MBAs, and his words may signal a sea change in business teaching.
In the coming months, it is inevitable that more CEOs will hit the fan. But as CEO-smacking becomes the hot storyline this summer, we shouldnt lose sight of the system we let them loose in. This isnt just a few bad apples were talking about here, said Fortune magazine. This, my friends, is a systemic breakdown.
True, they were talking about investors money rather than passing comment on whether capitalism is delivering the sustainable uplifting of humanity. Yet, in talking about the system they are in tune with a growing chorus of complaints about global capitalism.
When one billion people struggle to survive on less than a dollar a day while in the same period $1.5 trillion is moved around the world in currency speculation; when biologists estimate that half of all life on Earth is at threat from extinction, and anthropologists estimate that half of the worlds languages are dying out; when 19,000 children die every day because of Third World debt, while access to this news is controlled by multinational corporations, five of which are estimated to own 40% of all the worlds media it is hard not to think that global capitalism has become a psychopathic system. It is a patient urgently in need of treatment and rehabilitation. Otherwise calls will grow louder to use that option open to American juries when passing sentence on psychopathic killers we could call it capital punishment.
Some CEOs have already awoken to this malaise and are advocating and practising greater corporate responsibility. At the World Summit on Sustainable Development in Johannesburg next month, these CEOs will be showcasing their efforts to manage socially responsible and environmentally sustainable operations. Where true and effective, such efforts should be applauded.
However, is there a danger that this new breed of Saviour CEO will fall into the trap of the old Psycho CEO? By trying to show how beautiful and worthy they are, will they distract us from the need to tackle the psycho system of global capitalism head on, with new rules and regulations for multinational corporations? It seems there is still some work to be done to understand what a servant leader really might mean, in theory and in practice.