The psychopath in the corner office

"I always said that if I wasn't studying psychopaths in prison, I'd do so at the Vancouver Stock Exchange," he says, recalling the days when the VSE was still up and tumbling like the Wild West… Because psychopathy is to some extent influenced by external factors, he explains, the lack of stringent rules in some freewheeling corporations, or society in general, might be responsible for triggering psychopathic tendencies that would otherwise be held in check.

The Globe and Mail
May 27, 2006

The psychopath in the corner office
In a new book, psychologists offer a disturbing picture of who's getting ahead in business. As ALEXANDRA GILL reports, their theory would explain a lot of recent headlines
Alexander Gill

One of history's most scandalous cases of corporate skulduggery culminated in a righteous clap of thunder this week, after former Enron Corp. chiefs Kenneth Lay and Jeffrey Skilling were found guilty on multiple counts of conspiracy, securities and wire fraud.

"Justice has been served. The jury's verdicts help to close a notorious chapter in the history of America's publicly traded companies," Rep. Michael Oxley, the Ohio Republican who co-wrote the Sarbanes-Oxley corporate reforms, told reporters.

"This is a sign to any and all pending white-collar cases that corporate crime does not pay," said Anthony Sabino, a law professor at St. John's University in New York. "It is a huge memo to corporate officers and other chieftains. Stay within the law, and don't cheat your shareholders and don't lie to the market, or your next address is the federal penitentiary."

Among all the crowing, it was almost forgotten that some of the major players, including Enron's former chief financial officer, Andrew Fastow, made plea bargains with federal prosecutors in exchange for their testimony.

"It often is those with a heavy dose of psychopathic features who forget any pledges or notion of loyalty as soon as there is a chance to save their own skin," notes Robert Hare, co-author of a chilling new book called Snakes in Suits: When Psychopaths Go To Work.

Prof. Hare, emeritus professor of psychology at the University of British Columbia, is one of the world's leading experts on psychopathy. In 1980, he defined the mental disorder for modern scientists with an internationally recognized diagnostic tool called the Psychopathy Checklist.

Paul Babiak is a New York-based industrial and organizational psychologist who studies psychopathic behaviour in corporations.

Together, they have designed a new tool, the Business Scan 360 Test or B-Scan, which could help to determine if the arrogant, bullying SOB who occupies the corner office is just your average boss from hell or a malevolent psychopath, capable of causing untold damage.

The story of how these cunning creatures successfully slither into high-powered managerial roles is bracingly told in Snakes in Suits. Prof. Hare and Mr. Babiak include numerous case studies and tips for peeling back the charming façade worn by those completely untrustworthy colleagues in the next cubicle. The book may even prompt you to take a closer look at the narcissistic neighbour across the street.

In Prof. Hare's estimation, the average incidence of psychopathy in North America is 1 per cent of the population. That would mean there are about 300,000 psychopaths in Canada — and close to 3,000 reading this very newspaper today. Perhaps you know one. Or are one.

There's no need to run for your life. The corporate psychopath is not necessarily a shower-stalking killer. Nor is he (or she) a "psycho," the pejorative term for someone who is psychotic.

Psychosis is a serious mental illness defined by paranoid delusions and a disconnection with reality. Psychopathy, on the other hand, is a personality disorder, characterized by a deep lack of conscience, empathy and compassion.

(Then again, there's Patrick Bateman, the Wall Street banker on a sadistic murder streak in the Brett Easton Ellis novel American Psycho, who displayed elements of both. "That was good," Prof. Hare says of the character, with a shiver of repulsed awe.)

Corporate psychopaths are greedy, selfish, deceptive, unreliable and prone to fits of rage. They are also charming and confident, give perfect interviews and quickly become everybody's favourite employee. They are social predators and quite possibly capable of murder.

But if they're bright, and have been brought up with good social skills, they will probably shun violence and use their psychopathic tendencies to win power, prestige and money.

Where do they go? Increasingly, straight to the top of today's flexible, fast-paced, high-risk corporations, where callousness and egocentricity have become acceptable trade-offs for fearless leaders who can rattle cages and get things done quickly.

Dave's first day on the job created much excitement as he was shown around the department and introduced to the staff. There was a buzz about the new person who had been hired away from a larger player in the industry, and who would help them regain some of the lost ground resulting from the problematic new product introduction cycles. Everyone came out to greet Dave, and all who met him immediately liked him. He had personality and good looks, not to mention his strong technical background in the company's major research area, and he projected rock-solid confidence.

After introducing Dave around to most of the department, Frank took him to his new office.

"Oh," muttered Dave, a bit disappointed in what he saw. "I thought it would be a little closer to the action," he paused, "and a tad bigger."

"Well, we're growing very rapidly and office space is at a premium," offered Frank, wondering why he was feeling apologetic, "but you'll be moving around here soon enough, as we occasionally shuffle staff around. In fact, it's quite the joke here."

Dave wasn't amused, but as he turned to face Frank, he threw on a smile and said, "That's great! So I better settle in and start being productive." — from Snakes in Suits

"Dave" is a real corporate executive, studied by Mr. Babiak, who triggered shockwaves of trouble at a highly profitable U.S. electronics company in the mid-1990s.

After Mr. Babiak was called in by the company to assess the problems, and had pinpointed the trouble maker, he contacted Prof. Hare. They didn't know each other at the time, but Mr. Babiak had read a lot of Prof. Hare's research on psychopathic behaviour — which, until then, had focused on the criminal justice system.

Prof. Hare, who is a member of the U.S. Federal Bureau of Investigation's research-advisory board on serial killers, was intrigued.

"I always said that if I wasn't studying psychopaths in prison, I'd do so at the Vancouver Stock Exchange," he says, recalling the days when the VSE was still up and tumbling like the Wild West.

Prof. Hare and Mr. Babiak became good friends. They shared materials. Prof. Hare included a short case study on Dave in his 1999 book Without Conscience. A much longer version of Dave's story is woven through this new, co-written book.

In the meantime, Dave is still running amok at the top of the business world, and Mr. Babiak is still tracking his illustrious career.

"Not everyone is so lucky," Prof. Hare says. "Some flame out or are caught or quietly move on to another organization. But in other cases, they become the boss — or marry the boss."

It is not difficult to imagine how Dave and others like him arrived at their opportunistic positions to deceive. The past two decades have been tumultuous times for large corporate organizations. With dot-coms booming and collapsing, older firms merging or shrinking, the accelerated pace of change has inadvertently increased the number of attractive opportunities for psychopathic personalities.

The thrill-seeking nature of these entrepreneurial pretenders draws them to situations where a lot is happening. Being consummate rule-breakers, they find the flexibility of these flatter companies and lack of formal rules to their liking.

"When dramatic organizational change is added to the normal levels of job insecurity, personality clashes and political batting, the resulting chaotic milieu provides both the necessary stimulation and sufficient cover for psychopathic behaviour," Prof. Hare and Mr. Babiak write.

While Nicole Kidman was preparing for her role as a psychopathic deviant in the 1993 thriller Malice, she requested a private meeting with Prof. Hare. She wanted to let the audience know, early in the film, that she was not the sweet, warm person she appeared to be. He gave her a spooky scenario to practise.

"You are walking down the street and come across an accident," he told her. "A young child has been struck by a car and is lying in a pool of blood.

"You walk up to the accident site, look briefly at the child, and then focus on the grief-stricken mother. After a few minutes of careful scrutiny, you walk back to your apartment, go into the bathroom, stand in front of the mirror and practise mimicking the facial expressions and body language of the mother."

The psychopath's understanding of emotion is purely intellectual. They can understand sadness, fear, guilt and regret on a cognitive level, but because of a genetic deficiency, often influenced by social environments, the feelings are missing.

This hollow core is the key element that differentiates the corporate psychopath from your typical Machiavellian. It is a systemic way of being, in all aspects of life.

"We're not talking about somebody like Jimmy Pattison, one of our very tough entrepreneurs," Prof. Hare says. "He takes a tough stand at work, but he's not psychopathic. There are a lot of Machiavellian people who can adopt a given persona in a business environment, but have a good family life and genuinely love their family and friends."

But because some organizations seek people who can make hard decisions, keep their emotions in check and remain cool under fire, it makes it that much easier for the real deal to con his way into an organization, cultivate the pawns and patrons that can assist his ascent, outflank those who could stop him and wrest control.

The difference between a genuinely strong leader and the corporate psychopath is that the latter has no conscience or concern for anyone but himself. He will use his influence to abuse the trust of colleagues, manipulate supervisors and cut a swath of destruction through the workplace.

Public-relations director John Lute, of Toronto's Lute & Company, is reluctant to label anyone a psychopath, but he says he has been bitten by these sorts of snakes before. "You certainly see a lot of guys who think that they're smarter than anybody else and it's a real problem," he says.

There was one incident about five years ago that still burns. "He was certainly clever," Mr. Lute says of the snake. "He believed that everybody was stupider than he was. The basic rules of human behaviour didn't really apply to him, especially when he was dealing with inferiors.

"He screwed up on one project and pinned it on me. It did permanent damage to my relationship with the CEO. I had to move on and write it off."

And the snake? Is he still with the company? "Oh, yeah," Mr. Lute chuckles ruefully.

Is the modern corporation psychopathic in its very nature? The Corporation, the award-winning Canadian documentary, has suggested that it is.

The film even uses an interview with Prof. Hare to bolster its position that the "institutional embodiment of laissez-faire capitalism fully meets the diagnostic criteria of a psychopath."

Dysfunctional as some corporations might be, however, Prof. Hare has trouble with the metaphor. "To refer to the corporation as psychopathic because of the behaviours of a carefully selected group of companies is like using the traits and behaviours of the most serious high-risk criminals to conclude that [every] criminal is a psychopath," he writes in the book.

Instead, there are routine procedures that can help detect the psychopathic saboteurs before they do too much damage — including exhaustive background checks, rigorous auditing of expenses. But as Prof. Hare and Mr. Babiak have discovered, these checks aren't enforced nearly often enough.

In 2003, PricewaterhouseCoopers (PWC) reported that 37 per cent of 3,600 companies in 50 countries had suffered from fraudulent acts, with an average company loss of more than $2-million. (The actual average loss, Prof. Hare says, was likely much higher, because most frauds are never reported, or are written off as commercial losses.) One-quarter of the frauds recorded were committed by senior managers and executives.

Despite public outrage over the recent spate of high-profile scandals, the incidence of corporate fraud is getting worse. For the same PWC global survey last year, the percentage of fraudulent acts increased to 45 per cent.

Prof. Hare and Mr. Babiak have designed a test that may some day decrease the incidence of fraud. Their Business Scan 360, or B-Scan, is a 111-point questionnaire that can help companies detect the corporate psychopaths in their midst. It is filled out by colleagues who work not just above or alongside the suspect, but also below.

"At Enron and WorldCom, there were certainly people at the top of both cases who were aware of a lot of things that were happening," says Prof. Hare, who also advocates a more aggressive role for stockholders. "But below them, there were people who knew precisely what was going on."

Last September, federal Ethics Commissioner Bernard Shapiro shocked the country when he declared that the Liberal sponsorship scandal could be viewed as either "a triumph of entrepreneurship" (in the wake of federalism's near-defeat in the 1995 Quebec referendum) or a "triumph of theft."

The line separating virtue and vice is a thin one, not just in the corporate world, but in politics and society at large.

Prof. Hare argues that an emphasis on style over substance is moving society in a direction that makes it easier for a psychopath to express himself without incurring the wrath of the law.

Does he think things are so bad that it's becoming advantageous for people who are not psychopathic to adopt a psychopathic attitude? "Yes, I would say, definitely."

Because psychopathy is to some extent influenced by external factors, he explains, the lack of stringent rules in some freewheeling corporations, or society in general, might be responsible for triggering psychopathic tendencies that would otherwise be held in check.

Picture an on-the-brink member of a street-crime gang: He might not mess with other members of the gang because he knows the boss would whack him. "But once that guy at the top is gone … ," Prof. Hare says with a shrug — then, all bets are off.

Not everyone is so pessimistic. "No matter what the rules are, there are always going to be bad apples," says Stan Magidson, head of Osler, Hoskin & Harcourt's business law practice in Western Canada and the former director of takeover/issuer bids, mergers and acquisitions at the Ontario Securities Commission. "But new rules go a long way to attempt to ensure the integrity of financial reporting by public corporations.

"I'm not seeing a bunch of psychopaths running Canadian companies and running amok," he says. "Quite the contrary — I'm seeing a real focus in boardrooms and senior management to ensure that systems are in place to prevent malfeasance."

So far, though, those fraud statistics don't seem to be improving. In Prof. Hare's view, the prognosis is grim.

"I think things are going to get worse and worse," he says. "The way things are going now, I'm not optimistic that there is suddenly going to be a turnaround."

Somewhere in a large corner office, a corporate psychopath is stretching his legs out on a desk and quietly chuckling.

Alexandra Gill is a feature writer for The Globe and Mail in Vancouver.

Danger signs
If the corporate psychopath sounds like someone you know, grab and pen and try this quick quiz, including the kinds of questions used in Paul Babiak and Robert Hare's Business Scan 360.

Answer Yes or No to the following questions:
1. Does the boss or workmate in question come across as smooth, polished and charming?
2. Do they turn most conversations around to a discussion about them?
3. Do they discredit or put others down in order to build up their own image and reputation?
4. Can they lie with a straight face to their co-workers, customers, or business associates?
5. Do they consider people they've outsmarted or manipulated to be stupid?
6. Are they opportunistic, ruthless, hating to lose and playing to win?
7. Do they come across as cold and calculating?
8. Do they sometimes act in an unethical or dishonest manner?
9. Have they created a power network in the organization, then used it for personal gain?
10. Do they show no regret for making decisions that negatively affect the company, shareholders or employees?

If you scored at least 6 out of 10, there's a good chance you've already met what is known as an industrial or "corporate psychopath."

Source: Paul Babiak, PhD, and Robert D. Hare, PhD. Copyright 2005 Multi-Health Systems, Inc. All Rights Reserved.

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