16 May 2017 by Lord Owen
Hubristic individuals are a threat to governance in all organisations
For all the money and time business spends on risk management, building complex models and using quantitative statistical methods, it needs to devote at least as much money and effort to biological, chemical and human resources research on personality and behaviour.
In 2011, I helped to establish the Daedalus Trust charity to raise public awareness of the dangers of personality change associated with the exercise of power, whether individual hubris or collective hubris, in all walks of life and the problems it presents in terms of its effect on decision-making.
The Trust’s work focuses on sponsoring research, holding conferences, publishing books and providing a high-quality academic website resource. Over the past few years we have collaborated with the Royal Society of Medicine, the British Psychological Society, the Cambridge Judge Business School, Ashridge Business School and The Royal College of Psychiatrists.
Hubris is an occupational hazard for leaders in all fields, such as politics, the military and business, for it feeds on the isolation that often builds up around such leaders. The very experience of holding office and acquiring power seems to develop into something that causes such holders to behave in ways which, on the face of it at least, seem symptomatic of a change in personality.
The phenomenon of something happening to a person’s mental stability when in power has been observed for centuries. The causal link between holding power and aberrant behaviour was captured by Bertrand Russell in his reference to ‘the intoxication of power’ and in what Keynes called ‘animal spirits’.
“Hubris is not always an easy diagnosis to recognise, for the individual affected can appear completely normal in their social life”
I have explored the hypothesis that there is a pattern of hubristic behaviour manifest in some leaders that could legitimately be deemed to constitute a syndrome, where signs and symptoms are more often seen together than separately. I have called this Hubris Syndrome.
Hubris is not always an easy diagnosis to recognise, for the individual affected can appear completely normal in their social life. Even those in close contact with their decision-making may not pick up, in the early stages, a change of behaviour.
Some psychiatrists believe that hubristic behaviour is systemic, a product of the environment in which the leader operates. On the other hand, this hubristic build-up gives the impression that it has become self-generating, that an individual is gripped by something which is no longer driven by outside factors, but comes from within that individual. It is this element that comprises hubris syndrome.
In an article in Brain in 2009, ‘Hubris Syndrome: An Acquired Personality Disorder?’ Jonathan Davidson, a professor of psychiatry at Duke University, and I drew attention to the neurobiology of Hubris Syndrome.
In making the diagnosis of Hubris Syndrome we suggested that three of the fourteen defining symptoms should be present, of which at least one must be among the five components identified as unique (see the table below).
I now see Hubris Syndrome as an acquired personality trait rather than as an acquired personality disorder, a classification that is being increasingly dispensed with.
It is acquired in leaders when in power – and usually only after they have wielded power for some time – and which may well abate once power is lost. The key external factors would seem to be these: holding substantial power, minimal constraint on the leader exercising such personal authority, and the length of time in power.
In the business world, the ‘hubris hypothesis’ was first put forward by Richard Roll in 1986 in a study of corporate mergers and acquisitions and managerial takeover behaviours. It is the most cited theory in business and management hubris research, in relation to hubris-infected bidders paying too much for acquisitions.
As Manfred Kets de Vries observes in his chapter ‘The Hubris Factor in Leadership’, in the book The Intoxication of Power: Interdisciplinary Insights, citing Dominique Strauss-Kahn, the former IMF head as an example: ‘Hubris – and with it, a false sense of invulnerability – also leads to a kind of self-imprisonment, as the truly hubristic person ignores every opportunity for moral counsel and shared judgement. They become the authors of their own doom.’
“All the broad categories of ‘underlying risk’ emanate from failings at board level and from board leadership”
All too frequently, hubris – this dangerous mix of pride, ego, delusion, resistance to criticism, and, in the case of a company or institution, groupthink – can create a culture capable of just about any mistake in the name of ‘we know best’. Given the impact that people in the throes of hubris have on other people’s lives, it is important to understand what hubris is all about.
In a study of major risk events, ‘Roads to Ruin’, a Cass Business School report concluded that all the broad categories of ‘underlying risk’ emanate from failings at board level and from board leadership. Better governance and an enhanced role for risk professionals were recommended.
One of the contributing authors to this report, Anthony Fitzsimmons, recently published a book Rethinking Reputational Risk: How to Manage the Risks that Could Ruin your Business [incidentally, you can read an article by Anthony Fitzsimmons about United Airlines, 'Predictably vulnerable', in this issue]. He traces many of the root causes to individual and collective human behaviour. This is most certainly an area that must be given greater attention. As recently as May 2016, Andrew Bailey, before becoming head of the Financial Conduct Authority, spoke of the need for improving the culture of City firms and that ‘hubris’ should be added to the list of risks firms face.
An article in the New York Times in May 2009 by David Brooks claimed that wise non-executives are well aware of research showing that the ‘CEOs that are most likely to succeed are humble, diffident, relentless and a bit unidimensional. They are often not the most exciting people to be around.’ Yet the market seems to want a CEO ‘to be resolute, even at the cost of some flexibility’ with a relentless commitment to incremental efficiency gains.
Quoting a study by Steven Kaplan and others, ‘Which CEO Characteristics and Abilities Matter?’ Brooks identified the traits that correlated most powerfully with success as being attention to detail, persistence, efficiency, analytic thoroughness and the ability to work long hours. In his article, Brooks warns against fame, recognition and awards.
The US pattern of the CEO also being the chairman of the board works in their system of governance. The UK system of splitting the roles can work and a good case is that of Peter Sutherland arguing against extending the term of office of the CEO of BP, John Browne.
A survey of 375 company chairmen and non-executive directors in the UK, conducted by remuneration consultants MM&K and headhunters Hanson Green, revealed that a quarter of non-executives said they were unsure they could control chairmen and CEOs and a further 10% said they knew they could not. Shareholders and the wider public cannot, therefore, rely on non-executives unless there are significant changes in the balance of power within the company.
“The best mechanism is that after five years any public company board should automatically have to consider the record of the chief executive”
For 20 years I was a businessman, sitting on four boards of international public companies. The best mechanism is that after five years any public company board should automatically have to consider, as part of company law, the record of the chief executive. That assessment must be a process which is not entirely internal and guidance must stipulate that a measure of external assessment be introduced.
If all companies comply, it ensures that this does not become a criticism of the chief executive, who may be doing very well for shareholders and by other standards of corporate governance.
If you make no exceptions, then it does not raise much ‘angst’ or trigger unrest within the company. If the CEO is found wanting in important particulars that is the moment when the board decides whether they are going to go out to look for a new CEO and not renew the present CEO’s contract.
We need to be far better at putting up boundaries against runaway leadership, improving selection, education, and evaluation by board members, and offering coaching and counselling to executives showing signs of hubris.
“Identifying hubristic leaders and hubristic cultures and containing them presents an immense challenge”
There is also, in my view, an important role to be played by a mentor, trusted advisor or ‘toe-holder’, different from a coach. Someone of independence outside the company or institution, who can help by holding up a metaphorical mirror and encourage leaders to examine their reflections with more objectivity.
Identifying hubristic leaders and hubristic cultures and containing them presents, therefore, an immense challenge. It is in all our interests that we develop informal systems of peer review if we are to prevent the making of damaging decisions.
Two of the Daedalus Trust’s advisory group members, Professor Eugene Sadler-Smith and Graham Robinson, based at the Surrey Business School are actively working on ‘The Hubris Project’ in collaboration with a wider network of senior practitioners producing proposals for three ‘tools’ for the management and mitigation of hubris in business organisations.
They are the first tentative steps in developing an ‘Anti-Hubris Toolkit’. They comprise the tools of ‘empowering the board’, ‘listening to faint signals’ and ‘de-isolating and grounding the CEO’. More information about this can be found on the Daedalus Trust’s website.
ICSA Annual Conference
Lord Owen is speaking at this year’s annual conference. For more information or to book your place, visit the ICSA website.