Narcissistic CEOs don’t just lead - they steer entire organisations into bold, and sometimes perilous, territory.
A recent study published in the Strategic Management Journal sheds light on a compelling dynamic in corporate leadership: how narcissistic CEOs wield their influence over boardroom discussions to steer companies toward riskier paths.
By carefully directing conversations and amplifying a pro-risk tone, these CEOs shape the strategic trajectory in ways that reflect their own ambition and desire for grand achievement.
This influence is particularly pronounced when narcissistic CEOs also hold the chair’s role on the board. Through an in-depth analysis of board meeting transcripts from 88 public companies over two decades, researchers uncovered a pattern — narcissistic CEOs not only dominate discussions but frame risky moves as visionary while sidelining cautionary perspectives.
The findings bring to light a crucial yet often underexplored aspect of corporate governance: the significant impact of CEO personality traits on firm risk management.
As these leaders cultivate a culture that favours ambitious, high-stakes strategies, they can drive impressive gains, but with heightened volatility. This insight underscores a growing need for companies to assess executive traits when shaping risk strategies.
For boards and risk managers, recognising and navigating the nuances of a narcissistic CEO’s approach becomes essential in balancing the company’s long-term stability with bold, potentially disruptive strategies.
For risk managers, overseeing the C-suite is a core responsibility that requires balancing the complex tasks of reporting and explaining risk in a manner that aligns with leadership’s strategy.
However, with a narcissistic CEO in place - a personality defined by self-centeredness, a strong need for admiration, and a tendency to disregard others’ input - these responsibilities can become notably more challenging. As narcissistic leaders tend to pursue bolder, higher-stakes moves and resist alternative views, risk managers may face intensified challenges in creating a balanced approach to organisational risk.
“Chasing aggressive growth or stretching resources thin in pursuit of personal validation can place undue strain on an organisation.”
“Research has consistently shown that narcissistic CEOs can drive short-term success by taking bigger risks, which sometimes lead to impressive results,” says Memory Nguwi, managing consultant for Industrial Psychology Consultants.
“But in the long term, this narcissistic approach can damage overall performance. Studies on narcissistic CEOs reveal complex outcomes - success is often mixed, with significant highs and lows.”
This dichotomy reflects the broader dilemma these leaders pose: while their bold strategies can sometimes yield gains, they also tend to create a pattern of volatility that can jeopardise stable, long-term performance.
Parth Makhija, a business author of Narcissism: The Hidden Path to the CEO’s Chair, explains that narcissistic CEOs are formidable forces in the boardroom, especially when they hold the chair’s position. “Their need to dominate discussions and foster a positive tone around high-risk strategies can steer an organisation into precarious territory,” he says.
“It’s common to see them reframing bold risks as visionary, while minimising the potential pitfalls. This manipulation not only affects the board’s decision-making but can also filter down to impact broader company culture.”
This influence is not simply abstract - it has tangible repercussions. “I’ve observed firsthand how this leadership style can put organisations at risk,” says Makhija.
“Chasing aggressive growth or stretching resources thin in pursuit of personal validation can place undue strain on an organisation. Facing such a leader requires a steady and principled approach to keep the organisation on track without undermining morale.”
How does a narcissistic CEO act?
Understanding the behaviours of narcissistic CEOs is essential for navigating corporate leadership dynamics. These leaders often exhibit distinct traits, such as a grandiose self-image and a relentless pursuit of admiration, which significantly influence their decision-making and the overall corporate culture.
Nguwi notes that narcissistic CEOs often lean towards bold, high-stakes strategies that can result in extreme performance outcomes, often leading to notable successes or substantial failures. Their companies experience marked swings in performance, reflecting their preference for ambitious strategies.
“Narcissistic CEOs often draw on aggressive strategies they see from other prominent firms”
These tendencies create high visibility but are not necessarily indicators of long-term success. He cited a meta-analysis of narcissistic CEOs showing that their leadership style drives organisations to adopt high-risk, high-reward strategies but does not always translate into sustained positive outcomes. This pattern results in what’s sometimes referred to as “boom and bust” cycles, where companies soar one quarter and slump the next.
“Narcissistic CEOs often draw on aggressive strategies they see from other prominent firms, seeing themselves as visionaries on a similar scale,” Nguwi says.
“However, they tend to resist others’ input, which stifles diversity in strategic thinking and can limit the board’s ability to counterbalance extreme proposals.” This resistance to diverse perspectives creates an echo chamber where only favourable viewpoints are considered, further narrowing the organisation’s strategic adaptability.
Do narcissistic CEOs always want more risk?
“It’s inaccurate to assume narcissistic CEOs always push for more risk,” says Alex Sidorenko, chief risk officer and founder of RISK-ACADEMY. “They may indeed pursue risks for bold gains, but they can be equally risk-averse if they believe a decision could harm their personal brand.”
This tendency towards image control underscores a nuanced trait of narcissistic leadership: while these CEOs may take big risks to boost their profiles, they may also avoid risks that could backfire and tarnish their reputation.
“A narcissistic CEO might resist essential risks to protect their image, opting for short-term wins that enhance their public perception,” Sidorenko adds. “Conversely, they could swing towards recklessness if they believe it would bolster their profile as a bold leader, creating a pendulum between conservatism and risky behaviour.”
This variable tolerance for risk suggests that narcissistic CEOs’ choices are driven as much by personal gain as by organisational objectives, making it essential for boards and risk managers to stay vigilant to the CEO’s current priorities.
How can risk managers handle narcissistic CEOs?
Sidorenko highlights the importance of objectively evaluating a narcissistic CEO’s risk profile rather than assuming they are consistently pro-risk. “Some practical steps include measuring how risk-taking aligns with the organisation’s goals,” he says.
Metrics like risk-adjusted returns on capital, as well as cash flow and risk exposure metrics, can be instrumental for risk managers to gauge whether the CEO’s strategies are balanced or skewed too heavily towards ambition or conservatism.
Sidorenko also suggests analysing how a CEO’s choices impact core business metrics, such as growth, market share, and innovation. “If a narcissistic CEO is avoiding necessary risks, like stalling an expansion, you can show how this decision negatively impacts metrics over time,” he says.
“Framing issues in terms of quantifiable goals rather than personal viewpoints can steer the board towards strategic facts and away from personality-driven decisions.”
Establishing predefined risk thresholds can also help ensure a more balanced risk approach. “For instance, if the company is not taking enough risk to meet growth targets, this should be flagged to the board as a concern,” Sidorenko says.
“If you present data that supports your recommendations, they may be more receptive as it aligns with their need to succeed.”
“Risk managers can redirect conversations to focus on organisational goals, helping to curb the CEO’s influence if it becomes overly cautious or excessively ambitious.”
Eamonn Cunningham, former CRO of Westfield/ Scentre Group says you need checks and balances in an environment where you have to moderate the behavior of a narcissistic CEO for the good of the enterprise.
“In a boardroom setting this starts with the processes in place whereby the board is selected,” says Cunningham. “Do you call up a couple of ‘friendlies’ and sound them out to fill a board vacancy, or are there formal or informal board processes in place to fill vacancies, such as using a search firm? Is there a nominations committee that handles such matters?”
Nguwi also recommended tailoring communication to suit the narcissistic CEO’s need for validation. “Frame suggestions as enhancements to their vision,” he advises.
“For instance, if you present data that supports your recommendations, they may be more receptive as it aligns with their need to succeed.” Presenting data-backed arguments also strengthens a risk manager’s position, as narcissistic CEOs often respond more to evidence-based information than to opinions or dissenting perspectives.
“If you cannot directly counter their influence, building alliances within the boardroom can provide a buffer”
For Makhija, a collaborative approach can be invaluable in balancing the influence of a narcissistic CEO. “If you cannot directly counter their influence, building alliances within the boardroom can provide a buffer,” he says. “A coalition of like-minded voices can act as a check against any impulsive or ego-driven choices.”
Transparency and accountability in decision-making are also key. “Encouraging regular assessments and grounding each decision in data, facts, and logical arguments can mitigate some of the risks posed by ego-driven leadership,” Makhija says. “This transparency ensures that strategic decisions reflect the organisation’s best interests rather than the CEO’s personal ambition.”
Overall, narcissistic CEOs, while sometimes bold and visionary, can also drive volatility and imbalance in strategy. Their need for control and admiration may prompt them to favour risky decisions to showcase their leadership, but it can also create scenarios where organisational stability is compromised.
For risk managers, handling such leaders requires a careful approach - balancing validation with accountability and constantly steering the organisation back to its core goals.
In the high-stakes environment of corporate leadership, narcissistic CEOs represent a unique challenge, embodying both visionary potential and inherent risks. For boards and risk managers, recognising and managing these traits can be the key to ensuring that the CEO’s vision is harnessed responsibly, guiding the company towards sustainable growth without veering into unstable territory.
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