Corporate Psychopaths, The Global Financial Crisis
When large financial corporations are destroyed by the actions of their senior directors, employees lose their jobs and sometimes their livelihoods, shareholders lose their investments and sometimes their life savings and societies lose key parts of their economic infrastructure. Capitalism also loses some of its credibility.
These corporate collapses have gathered pace in recent years, especially in the western world, and have culminated in the Global Financial Crisis that we are now in. In watching these events unfold it often appears that the senior directors involved walk away with a clean conscience and huge amounts of money. Further, they seem to be unaffected by the corporate collapses they have created. They present themselves as glibly unbothered by the chaos around them, unconcerned about those who have lost their jobs, savings, and investments, and as lacking any regrets about what they have done. They cheerfully lie about their involvement in events are very persuasive in blaming others for what has happened and have no doubts about their own continued worth and value. They are happy to walk away from the economic disaster that they have managed to bring about, with huge payoffs and with new roles advising governments how to prevent such economic disasters.
Many of these people display several of the characteristics of psychopaths and some of them are undoubtedly true psychopaths. Psychopaths are the 1% of people who have no conscience or empathy and who do not care for anyone other than themselves. Some psychopaths are violent and end up in jail, others forge careers in corporations. The latter group who forge successful corporate careers is called Corporate Psychopaths. Who psychopaths are and who Corporate Psychopaths are, is discussed further below.
Psychopaths are people who, perhaps due to physical factors to do with abnormal brain connectivity and chemistry, especially in the areas of the amygdala and orbital/ventrolateral frontal cortex (Blair et al., 2005, 2006; Kiehl et al., 2001, 2004, 2006) lack a conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people. The area of the brain known as the amygdala has been described as the seat of emotion and fear and is reported to be important in processing socially relevant information and it is therefore theorized that disruption of its functions could lead to cold and socially inappropriate behaviour (Wernke and Huss, 2008). This abnormal brain connectivity and chemistry of psychopaths makes them extraordinarily cold, much more calculating and ruthless towards others than most people are and therefore a menace to the companies they work for and to society (Brinkley et al., 2004; Viding, 2004).
These people have also been called Executive Psychopaths, Industrial Psychopaths, Organisational Psychopaths, and Organisational Sociopaths by other researchers in this emerging area of research (Pech and Slade, 2007). They ruthlessly manipulate others, without conscience, to further their own aims and objectives (Babiak and Hare, 2006).
Although they may look smooth, charming, sophisticated, and successful, Corporate Psychopaths should theoretically be almost wholly destructive to the organizations that they work for. The probable mal-effects of the presence of psychopaths in the workplace have been hypothesized about in recent times by a number of leading experts and commentators on psychopathy (Babiak, 1995; Babiak and Hare, 2006; Boddy, 2005, 2006; Clarke, 2005; Hare, 1994, 1999).
Researchers report that such malevolent leaders are callously disregarding of the needs and wishes of others, prepared to lie, bully and cheat and to disregard or cause harm to the welfare of others (Perkel, 2005). Corporate Psychopaths are also poorly organized managers who adversely affect productivity and have a negative impact on many different areas of organizational effectiveness (Boddy, 2010b).
Psychologists have argued that Corporate Psychopaths within organizations may be singled out for rapid promotion because of their polish, charm, and cool decisiveness. Expert commentators on the rise of Corporate Psychopaths within modern corporations have also hypothesized that they are more likely to be found at the top of current organisations than at the bottom. Further, that if this is the case, then this phenomenon will have dire consequences for the organisations concerned and for the societies in which those organisations are based. Since this prediction of dire consequences was made the Global Financial Crisis has come about.
The knowledge that Corporate Psychopaths are to be found at the top of organisations and seem to favour working with other people’s money in large financial organisations has in turn, led to the development of the Corporate Psychopaths Theory of the Global Financial Crisis. The Corporate Psychopaths Theory of the Global Financial Crisis is that Corporate Psychopaths, rising to key senior positions within modern financial corporations, where they are able to influence the moral climate of the whole organisation and yield considerable power, have largely caused the crisis. In these
senior corporate positions, the Corporate Psychopath’s single-minded pursuit of their own self-enrichment and self-aggrandizement to the exclusion of all other considerations has led to an abandonment of the old-fashioned concept of noblesse oblige, equality, fairness, or of any real notion of
corporate social responsibility.
The Corporate Psychopaths Theory of the Global Financial Crisis is that changes in the way people are employed have facilitated the rise of Corporate Psychopaths to senior positions and their personal greed in those positions has created the crisis. Prior to the last third of the twentieth century large corporations were relatively stable, slow to change and the idea of a job for life was evident, with employees gradually rising through the corporate ranks until a position was reached beyond which they were not qualified by education, intellect or ability to go. In such a stable, slowly changing environment employees would get to know each other very well and Corporate Psychopaths would be noticeable and identifiable as undesirable managers because of their selfish egotistical personalities and other ethical defects.
Changing companies’ mid-career was seen as being questionable and inadvisable and their rise would therefore be blocked both within their original employer and among external employers who would question their reasons for wanting to change jobs.
However, once corporate takeovers and mergers started to become commonplace and the resultant corporate changes started to accelerate, exacerbated by both globalisation and a rapidly changing technological environment, then corporate stability began to disintegrate. Jobs for life disappeared and not surprisingly employees’ commitment to their employers also lessened accordingly. Job switching first became acceptable and then even became common and employees increasingly found themselves working for unfamiliar organisations and with other people that they did not really know very well. Rapid movements in key personnel between corporations compared to the relatively slower movements in organisational productivity and success made it increasingly difficult to identify corporate success with any particular manager. Failures were not noticed until too late and the offending managers had already moved on to better positions elsewhere. Successes could equally be claimed by those who had nothing to do with them. Success could thus be claimed by those with the loudest voice, the most influence and the best political skills. Corporate Psychopaths have these skills in abundance and use them with ruthless and calculated efficiency.
In this way, the whole corporate and employment environment changed from one that would hold the Corporate Psychopath in check to one where they could flourish and advance relatively unopposed.
As evidence of this, senior level remuneration and reward started to increase more and more rapidly and beyond all proportion to shop floor incomes and a culture of greed unfettered by conscience developed. Corporate Psychopaths are ideally situated to prey on such an environment and corporate fraud, financial misrepresentation, greed and misbehaviour went through the roof, bringing down huge companies and culminating in the Global Financial Crisis that we are now in.
Perhaps more than ever before, the world needs corporate leaders with a conscience. It does not need Corporate Psychopaths. Measures exist to identify Corporate Psychopaths. Perhaps it is time to use them.
Excerpts from “The Corporate Psychopaths Theory of the Global Financial Crisis“, by Clive R. Boddy, 2011