Extreme managers and workplaces [Capitalism and corporate psychopaths]

Albert Dunlap, ex-Sunbeam CEO, fraudster

Albert Dunlap, ex-Sunbeam CEO, fraudster

With their conscience-free approach to life and willingness to lie to present themselves in the best possible light, corporate psychopaths are to some extent products of modern business.

Their characteristics of being ultra-rational, financially oriented managers with no emotional concern for or empathy with other employees, marks them as apparently useful to the style of capitalism that is merely profit oriented. This may be illustrated by a brief examination of one CEO who has been nominated as possessing some psychopathic traits, Albert Dunlap.

Albert Dunlap was mentioned as a possible psychopath as well as being discussed by Hare as a possible corporate psychopath. Dunlap was the CEO of Scott Paper and then Sunbeam Corporation in the United States. Dunlap was at first lauded by analysts on Wall Street and known as ‘Chainsaw Al Dunlap’ because of his ruthless and bullying approach to cutting costs and callous indifference to firing employees. Callousness is a key trait of psychopaths and Dunlap has been described as being outrageously callous. Furthermore, the more people he fired, the more the share price increased.

At Scott Paper, Dunlap started in 1994 and soon shed about US$2 billion of assets and laid-off a third of the global workforce. To many analysts, such a strategy suggested a move to make Scott Paper an attractive acquisition target, and indeed by the end of 1995, Dunlap had organized the sale of the corporation to its competitor, Kimberley Clark. This caused more layoffs at both companies, whereas Dunlap’s severance package was activated, and he left with a reported US$100m. Scott Paper’s headquarters was closed, and in total, about 11,000 people lost their jobs during Dunlap’s management.

The superficial charm of the corporate psychopath, together with their willingness to lie and ability to present a false persona of competence and commitment, makes them appear to be ideal leaders. This is particularly the case with those above the corporate psychopaths who do not interact with them on a day-to-day basis and so do not know them well. This implies that there is a need to understand the effects of the presence of corporate psychopaths in organizations. The current research helps in furthering this understanding. First, there is a brief introduction to corporate psychopaths.

Corporate psychopaths

Psychopaths are people with a constellation of behavioural traits that marks them as uniquely ruthless in their parasitic, care-free, predatory approach to life. Psychologists have not reached a conclusion as to the causes of psychopathy. However, patterns of similar brain dysfunction have been associated with the personality, with particular impairment in the orbital-frontal cortex being evident. Causality is implied but not established, and, for example, physical damage to this area of the brain can result in the onset of psychopathic behaviour.

Some psychopaths are prone to instrumental violence, which is violence with a further purpose, such as robbery, in order to get what they want, and these violent criminal psychopaths tend to end up in prison. More successful psychopaths have been less frequently studied. However, they may have better cognitive levels of executive functioning, for example, in the orbital-frontal cortex of the brain and may retain the ability to control their impulses, enabling them to seek corporate rather than criminal careers. Such psychopaths have been called ‘Industrial’, ‘Executive’, ‘Organizational’ or ‘Corporate’ psychopaths, to differentiate them from their more commonly known criminal peers. The term ‘corporate psychopath’ has been adopted as the usual term for such people.

Corporate psychopaths may cross the line into criminal activity, and fraud is theoretically considered to be common among corporate psychopaths. However, as yet, there remains little empirical evidence concerning corporate psychopaths as white-collar criminals. Perri (2013) makes a persuasive argument that psychopathy is a risk factor for fraud. Furthermore, Perri states that several frauds have involved CEOs and chief financial officers (CFOs) with psychopathic traits.

Research method

A series of 1-hour interviews was conducted with four human resources (HR) directors and three other managers in the United Kingdom from April to September 2013. Academic researchers conducted the interviews, which were voice-recorded (with permission) and transcribed.

Research participants were shown a 10-item psychopathy measure called the ‘Psychopathy Measure—Management Research Version 2’ (PM-MRV2) (see Appendix 1) and asked which items on the measure applied to the potentially psychopathic manager they were referring to. In this qualitative research, a score of at least 8 out of 10 was used to identify subjects as corporate psychopaths. This is an abbreviated and statistically untested measure of psychopathy. However, it corresponds with other measures of psychopathy in use.

Psychopaths share some characteristics with narcissists and Machiavellians, and psychologists often research them as the so-called dark triad of personalities. Some psychologists suggest that the ‘dark triad’ consists of three overlapping but distinct personality variables: narcissism, Machiavellianism and psychopathy. Others suggest that Machiavellians and psychopaths are so similar that they are essentially the same.

Narcissists can be exploitative and destructive leaders. However, research is arguably moving towards a consensus that narcissism is the ‘lightest’ of the triad and that while Machiavellianism and psychopathy are very similar, psychopaths are the ‘darkest’ of the three personalities. For a view of the characteristics of the three personalities, see the following articles for a description of the ‘dark triad’, ‘dirty dozen’ measure (Jonason and Webster, 2010) and of an abbreviated measure of the original ‘dark triad’ measure (Jones and Paulhus, 2013).

Findings

The corporate psychopaths investigated in the current research reportedly created a variety of extreme and dysfunctional workplaces. For example, the HR director involved in managing the psychopathic manager identified in interview 2 described the workplace as being extreme; First, in terms of staff withdrawal behaviour. Departmental staff turnover at about 40% per year was twice the average for the industry sector involved, and the reasons given for leaving were marked by fear. One employee, in tears, reported,

‘it’s horrible, I cannot say how, but it’s all horrible’

when giving in her resignation. In this case, the departmental head (the corporate psychopath) handled most resignations personally, without involving HR, and reported that a high turnover was because of the stress of working in such a highly efficient department:

He (the corporate psychopath) …, would say, ‘oh they’ve lost their drive … (He’d say) I don’t  think ‘x’ is performing very well; I am going to persuade them to go’. Then of course his superiors would think; gosh he’s being proactive. He is really on top of his team. (HR director, interview 2)

This was an explanation that was accepted by the highly educated and professionally qualified principals of the professional services company involved.

Second, in the department headed by the corporate psychopath, the department’s level of cooperation with other departments, notably with finance and HR, was extremely low. Post- crisis examination (the presence of the corporate psychopath precipitated an organizational crisis) revealed that staff in the corporate psychopath’s department had been warned not to deal with HR and finance other than through their departmental head (the psychopathic manager). This was to minimize the possibility of his fraudulent scheme coming to light. However, this lack of communication was what first alerted the suspicions of the HR director:

I had suspicions about the Head, from when I first joined, because of the way that he interacted with people – because of the way that he preferred to do things quietly on a one-to-one. How lots of people at a senior level in the firm sang his praises, but there seemed to be a slight atmosphere where people in his department were clearly quite intimidated and had been specifically told not to communicate with people in other departments. (HR director, interview 2)

fear flickr ikrichter

Third, the department was managed via a culture of fear, involving the bullying and intimidation of junior staff and the coerced resignations of those unwilling to unquestioningly obey the psychopathic manager.

Another key manager was coerced, threatened with murder, and then, blackmailed by the psychopath into cooperation with his fraud – and because of this had a nervous breakdown. Perri and Brody warn that psychopathy is a risk factor for fraud and further, that if a psychopath’s fraud is thwarted, then violence and murder may result from this. Such links between psychopathy and white-collar criminal behaviour have been noted, and in the current research, a link between fraud and the threat of murder was evident:

The man was vile but very clever, extremely good at managing upwards, so got promoted because everybody thought he was doing such a fantastic job and saving everybody so much money – and he was crooked to the core and ruthless. (HR director, interview 2)

The manager embroiled by the corporate psychopath into the fraud believed that the lives of her family and herself were in danger if she disobeyed the psychopath. He had threatened to kill members of her family if she did not cooperate. That manager finally became a witness in the eventual prosecution and imprisonment of the psychopath. Other departmental members also reported that they had been in fear of their lives.

Fourth, prior to exposure, the workplace was marked by high levels of top management support for the corporate psychopath who perpetrated the fraud. The top managers of the business regarded him as being an extremely able manager who was highly efficient at running his department and at saving money for the firm. This expertise at cost cutting was actually from another manager—the manager who had been coerced into the fraud. Such claiming of the good work of others is thought to be typical of corporate psychopaths:

He managed the relationship in a charming fashion entirely, and pretty much everyone thought he was a star – until you hit that middle management layer… and they hated him. (HR director, interview 2)

This good reputation among superiors was so positive that when the HR director first made the allegations, they were met with disbelief and denial by the main board members, and [also raised] accusations that the HR director was acting out of jealousy. Only when presented with specific evidence did the directors bring in fraud accountants.

This latter experience is in line with the expectations raised in the literature on toxic leadership and corporate psychopaths. Corporate psychopaths are described as being people who flatter those above them – while manipulating their peers and abusing those under them.

Staff withdrawal and turnover

The HR director in interview 3 also mentioned that the presence of a psychopathic manager jeopardized the discretionary extra effort that employees can put into a business. Therefore, it is not just physical withdrawal that is influenced by the presence of corporate psychopaths but also emotional withdrawal:

His selfish nature, his negativity around things that didn’t suit his own particular agenda, his whimsical way in which he made decisions and people had to live with the consequences, the uncertainties of it all. All of that militated against a constructive business. (HR director, interview 3)

The research participant in interview 6 reported on the influence of a newly appointed  corporate psychopath CEO in a not-for-profit organization. With less than 50 employees, absenteeism was reported to have gone from a monthly occurrence to a daily one. Senior staff were reported to be absent for weeks due to stress, and junior employees were reported to take regular days off sick. In terms of turnover, 86% of the staff employed at the time of the CEO’s appointment had left, with the remaining staff planning to leave.

Morale in this organization was described as being at an all-time low. The research participant was reportedly planning to leave as soon as his final attempt to warn the board of governors [about] the CEO was complete. Success in this endeavour was not anticipated by the interviewee as the psychopathic CEO had reportedly ingratiated himself with the head of the board of governors who had come to regard the psychopath as a friend.

Reports of extreme work environments

Regressive work practices such as whimsical decision making and abusive management were
also reported when there was a corporate psychopath present. There was reportedly an emphasis in these environments on increasing short-term profits by cost cutting rather than by increasing longer
term profits through investment in new production techniques and training.

Single bad leaders can have a disproportionately negative effect on the whole organization. In this research, it was found that the extent of the bad influence of the corporate psychopath depended on his position. At main board director or CEO level, the malignant influence was organizational, whereas at departmental level, the influence was more specifically located but with wider repercussions.

Welcome to the company

The sense from the participants in this research was that the experience of working with a psychopath was a harrowing one, remembered long after the event and considered unique. One participant reported dreaming about it for 10 years afterward, and that his resignation from that company was the only fond memory of working there. Another participant found that they could not continue to talk about the experience at all because it was too painful:

Actually I will be honest, for quite a few years afterwards … I would dream about being back there … which that would have been for a good ten years or more afterwards I think … It was really unpleasant working there … I’ve worked in quite a lot of different sectors. I’ve worked in construction which is a really hard-nosed industry … I never saw anybody like him (the corporate psychopath) before or after. (HR director, interview 4)

Corporate psychopaths are reported to be excellent manipulators of people, good at organizational politics, and skilled at causing divisions in order to make people disunited and easier to control.

Corporate psychopaths fail to provide training and information needs for employees working under them. The current research extended this finding to uncover that research participants thought that they were being undermined in their jobs, as part of, for example, organizational power plays by the psychopath involved.

A characteristic of psychopaths is their ability to lie convincingly because they do not get emotionally flustered. This was evident in interview 1 where the psychopathic board director denied (to the other members of the UK board) that he had been advised of a business plan that was about to be implemented. This resulted in the plan being abandoned, after months of careful planning, on the day it was supposed to start, and this engendered organizational confusion and personal upset. This can best be understood in the words of the participant concerned in the incident:

An awful amount of work went into this (business plan) involving lots of people. We … briefed this (psychopathic) guy on what was going to happen … He went through it in detail with us and he said, ‘yes, I am very happy’. … He was very supportive of it … So anyway (the day of implementation) came around and the Board sat down for a final meeting … He said ‘I know nothing about what you are talking about’
… Other people … were saying, ‘… you talked to us about it’. He was just adamant that … he knew nothing about it and he said you have to stop the whole thing. … So huge trauma in the Board room … people in tears and all sorts … it really got very angry and feisty in this conversation with people saying ‘but you know!’. He was adamant he didn’t know anything. So they had to stop the whole thing …

Straightaway you could see he … would just lie blatantly. (Advertising manager, interview 1)

This interviewee also commented that the corporate psychopath was untrustworthy – in that he
would undermine other people’s work, lie about his involvement or knowledge, and sit through
presentations and criticize them, but then later represent the same presentations and ideas as his
own work.

Organizational destruction

In the literature on corporate psychopaths, it has been theorized that their presence and influence will ultimately lead to organizational destruction and that an ethically bankrupt organization will become financially bankrupt. However, this theorized link between psychopathy and performance has not been established empirically.

The research participant in interview 1 was an advertising manager in the company he was talking about, [referring] to a corporate psychopath who occupied a main board position. This psychopath reportedly had a devastating effect on the advertising department and advertising practices of the company, because with no real experience he took over advertising within the company.

(Corporate psychopaths are theorized to be promoted beyond their true abilities because of their capacity to present themselves well, manipulate others, lie about their abilities, and claim the good work of other people as their own.)

The work ethic, involvement, and commitment of the employees were reported to have been largely destroyed – with staff taking days off, undertaking large amounts of non-organizational related activities in the workplace, and lacking drive and purpose.

Discussion

Individual managers can influence the work environment around them towards an extreme environment – marked by poor practices and conflict. A stance is adopted here of being critical of how these unethical psychopathic leaders have been allowed to prosper.

From the body of research into psychopaths at work, theories have arisen which attempt to
explain how modern business has facilitated the emergence of the psychopathic manager – who has, in
turn, influenced capitalism in an extreme direction.

Counter to current findings, some psychology researchers claim psychopathic traits such as the ability to remain calm and unemotional in pressured circumstances may be factors of success in business. However, psychology researchers usually define success in individual terms (e.g. Do traits help the individual get promoted?). Broader measures of success could include whether psychopathic managers are good for other employees, society or corporate social responsibility, or, are likely to indulge in the illegal dumping of toxic waste.

Conclusion

This research makes a contribution to the literature on extreme workplaces by demonstrating that ruthless managers (corporate psychopaths) have an influence in generating such workplaces. The research makes a contribution to corporate psychopathy theory because it shows that corresponding with expectations, employees seek to leave, or, emotionally withdraw from the organizations that are managed by corporate psychopaths. Turnover is higher in such organizations.

As would be expected of the behaviour of corporate psychopaths: Employees are mistreated, loyal employees are fired or resign, resources are misallocated or stolen, business plans are capriciously rejected, management consultants are hired needlessly and internal intellectual resources are abused or unused. Employee well-being decreases, organizational confusion replaces a sense of direction, organizational ethics decline and corporate reputation suffers. Corporate psychopaths rely on the good work of others (claiming their ideas, presentations and plans as their own) or else rely on management consultants to do their work. Employees report that they hate to work in these environments and withdraw from these extreme workplaces via claiming high levels of sick leave and leave [the job] due to stress.

Corresponding with theoretical expectations, the current research found that corporate psychopaths will engage in fraud and are unconcerned with the organizational destruction that they create.

The commonalities in these reports concerning the behaviour of corporate psychopaths were notable, and they appear to have a modus operandi involving bullying, fear, control and manipulation. The current research supports earlier findings from quantitative studies because yelling, shouting and the undermining of employees via public humiliations were all evident. Insights gained go beyond what has been established quantitatively because reports of employees living in fear of their lives were recorded.

The current research also supports the view that corporate psychopaths over-state their qualifications and abilities, claiming degrees from prestigious universities and management competencies that they do not possess. Furthermore, corporate psychopaths use divide-and-conquer tactics to maintain control of employees, unions and boards, while jeopardizing client service quality and organizational outcomes through their erratic and fickle management plans.

The PM-MRV2

(Excerpt of Psychopathy Measure—Management Research Version 2) Copyright: The Corporate Psychopaths Research Centre / Clive Boddy
  1. Superficial charm and apparent intelligence. The subject appears to be friendly and easy to talk to, agreeable, makes a positive first impression, and is apparently a genuine person who is socially at ease.
  2. Untruthful and insincere. The subject lies and is a convincing liar because of their apparent sincerity and honesty.

  3. A cheating personality. The subject cheats, fails to live up to promises, cons, seduces and deserts others. They are good at organizational politics, claim the good work of others as their own and would probably steal, forge, commit adultery or fraud if they could get away with it.

  4. Is totally egocentric. The subject is egocentric and self-centred, cannot love or care for others and can only discuss love in intellectual terms. They are totally indifferent to the emotions or fate of their colleagues.

  5. Has no remorse about how their actions harm other employees. The subject denies responsibility for their own poor behaviour and accuses others of responsibility for failures that they themselves cause. If they admit any fault, then they do so without any regret or humiliation. They put their career advancement above their colleagues.

  6. Emotionally shallow. The subject can readily demonstrate a show or display of emotion but without any true feeling. They cannot experience true sadness, woe, anger, grief, joy or despair and are indifferent to the troubles of others.

  7. Unresponsive to personal interactions. The subject does not respond to kindness or trust in the ordinary manner. They can display superficial reactions but do not have a consistent appreciation for what others have done for them. They are indifferent to the feelings of others and can openly make fun of other people.

  8. Refuse to take responsibility for their own actions. The subject initially appears to be reliable and dependable but can then act unreliably and with no sense of responsibility or regard for any obligations to others.

  9. Calm, poised and apparently rational. The subject does not display neurotic or irrational characteristics. They are always poised and not anxious or worried even in troubling or upsetting circumstances which would disturb or upset most other people.

  10. Lack of self-blame and self-insight about own behaviour. The subject blames their troubles on other people with elaborate and subtle rationalisations. They do not think of blaming themselves, even when discovered in bizarre, dishonest or immoral situations that would promote despair or shame in other employees.

 

Excerpted; in-line accreditation has been removed, and paraphrasing done for ease of reading. Please see the original document for references: “Extreme managers, extreme workplaces: Capitalism, organizations and corporate psychopaths” by Clive Boddy, Derek Miles, Chandana Sanyal and Mary Hartog, Middlesex University, UK  2015

Photos courtesy BusinessInsider.com, Ingrid Richter, someecards

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