Narcissistic behavior is more common in banks than other types of business. It's easier for narcissists to rise to the top when banks have a very short term focus - i.e., make money today.
I came across this argument while talking with psychologists about banker behavior contributing to the 2008 financial crisis for my documentary, The Banking Brain. So I was interested to see a recent article in the FT about narcissistic managers:
“Compelling, charismatic, colourful, such people can initially draw people under their spell until difficulties and discord arise, when their deeper, darker personality begins to emerge….. These people have an insatiable appetite for control, status and praise, which explains why many strive for and gain the top jobs.”
In the same article the FT refers to work by Mark Stein, professor of leadership and management at Leicester University who says Dick Fuld, head of Lehman Brothers at the time of its collapse, is an example of a narcissistic leader – someone whose character at first brought success but then allowed catastrophe to strike. According to Stein:
“One of the biggest problems with narcissistic managers is their extreme feelings of omnipotence and their deluded thinking they can shift the market and know the future. As a consequence, and in the face of clear and stark warnings from others, they take extreme and unnecessary risks that endanger the future of the organization.”
There's another reference to research by Donald Hambrick at Penn State University which suggests narcissistic CEOs generate more extreme performance - big wins and big losses.
Not the sort you want in charge of banks that are too big to fail.
