When Bad People Rise to the Top

A number of business writers publish their annual choices for the worst corporate chief executive officers. Executives achieving this dubious distinction often presided over major declines in company financial performance, incompatible mergers, misdirected marketing strategies, failed product lines or major acts of corruption. Some of these CEOs were victims of economic and market forces beyond their control. Others worked diligently but were not capable of handling the demands of being a corporate CEO.

Observers are often amazed when executives with impressive track records are mysteriously transformed into corrupt and tyrannical monsters once they become CEOs. In truth, some rising executives had serious character flaws that were either hidden or ignored for years. Once at the corporate helm, an unmasking occurred as their greed, ambition or inability to deal effectively with people became painfully obvious. In his book,The Myth of the Out of Character Crime, forensic psychologist Stanton Samenow examined the criminal behaviors of seemingly respectable citizens. He discovered that these individuals had often managed to conceal their personality flaws and aberrant ways from public view. The same hidden-character phenomenon may apply to bad CEOs.

Corporate boards and search committees are not likely to detect personality problems of promising CEO candidates simply by examining their résumés or by conducting standard job interviews. My research in the area of white-collar crime and my examination of the careers of executives such as Enron’s Kenneth Lay, WorldCom’s Bernard Ebbers, or Tyco’s Dennis Kozlowski provided no clues of the devastating legal and economic troubles they would later cause. There are also less notorious executives who maneuvered their way into the upper echelons of organizations and created havoc by derailing strategic plans, eroding competitive advantages, creating public relations nightmares and destroying professional relationships.

This paradox of success raises the question of how corporate boards or CEO search committees can penetrate the facade of an upwardly mobile executive who is, in reality, a wolf in sheep’s clothing. What danger signals do these individuals exhibit, and what measures can be taken to reduce the likelihood of hiring a dysfunctional CEO?

What Constitutes a Bad CEO?

There are two chief characteristics of bad CEOs. First, they place their economic and psychological needs ahead of their professional obligations. Second, they compound their self-centeredness with deplorable interpersonal skills. Some CEOs manage their corporations with an iron hand and run roughshod over anyone who gets in their way.