Find it here: http://www.alternet.org/corporate-accountability-and-workplace/how-stop-psychopath-ceos-looting-and-destroying-their-own?paging=off
--Kim
Corporate Accountability and WorkPlace
The Tyee / By Mitchell Anderson
34 COMMENTS How to Stop Psychopath CEOs from Looting and Destroying Their Own Companies
There are ways to weed them out.November 26, 2012 |
Have bankers gone psycho? It seems hardly a week passes without another example of corporate fraud, rogue traders, rate fixing, and money laundering. Five years after the 2007 economic meltdown that wiped out $14 trillion of U.S. household wealth, the world's financiers seem to be behaving badly as ever and don't care who knows it. Perhaps expecting normal human behavior from many of these individuals is unrealistic because they are not normal -- they are psychopaths.
Corporate corruption linked to personal psychopathy presents both a problem and an opportunity. Rather than further futile efforts at regulation, solving the creditability crisis of global financial institutions may instead involve psychological screening to exclude certain individuals from occupying positions of trust they are medically unqualified for. And if so, cleansing of the capitalist Star Chamber will not be lead by government, but by the private insurance industry -- guided by the invisible hand of Adam Smith.
Let's start with the fascinating and frightening subject of psychopathy. This condition is neither insanity nor a treatable mental illness. It is instead linked to physical abnormalities in the amygdala region of the brain and is perhaps best described by experts as "emotional deafness." While psychopaths can often convincingly feign normal human reactions in order to manipulate others, inside they feel nothing but shark-like self-interest.
This ancient scourge has likely plagued humankind since the dawn of time, undermining our ability to trust each other and build cohesive societies. While sometimes glamourized by Hollywood as a super power, psychopathy shows little evidence of evolutionary advantage even though the condition has a strong genetic signature. After 100,000 years of human history, only one percent of the general population exhibits this affliction -- indicating that it is more parasitic than powerful.
A threat that can be screened
Only recently have scientists developed reliable screening methods to reveal people with this emotional disability, and such tests have been widely adopted in the criminal justice system. And while our jails are filled with people exhibiting this frightening trait, Dr. Robert Hare, a leading researcher in the field warns, "not all psychopaths are in prison. Some are in the boardroom."
Some researchers have directly linked the global financial crisis of 2007 to a growing prevalence of psychopaths in senior management of the financial sector. Dr. Clive Boddy believes that increasingly fluid corporate career paths have helped psychopaths conceal their disruptive workplace behavior and ascend to previously unattainable levels of authority. Boddy points out psychopaths are primarily attracted to money, status and power -- currently found in unparalleled abundance in the global banking sector. As if to prove the point, many of the world's money traders self identify as the "masters of the universe."
What little research has been done in field indicates that individuals with psychopathic traits are five times more common in senior management than the general population. And while psychopaths are tireless self-promoters, they are in fact poor performers and toxic managers. A study by Dr. Paul Babiak of 203 senior managers found those with psychopathic scores on screening tests scored lower on leadership, team building, performance and effective management. They are also 25 times more likely to engage in workplace bullying than normal humans.
How psychopaths get in
In spite of evidence to the contrary, employers often misjudge psychopaths as having strong characters that are "cool under fire." Babiak's study concluded, "our finding that some companies viewed psychopathic executives as having leadership potential, despite having negative performance reviews and low ratings on leadership and management by subordinates, is evidence of the ability of these individuals to manipulate decision makers. Their excellent communication and convincing lying skills, which together would have made them attractive hiring candidates in the first place, apparently continued to serve them well in furthering their careers."
Most importantly, besides being lousy leaders prone to risky or criminal behavior psychopaths fundamentally lack the ability to act in the interests of anyone but themselves. So how can they credibly act on behalf of their clients? Why do we tolerate a disproportionate number of people with this pathology being in charge of large aspects of global financial systems?
The banking sector has done little to address this issue, and may actively be making it worse. According to a first hand account by Brian Basham of The Independent, a banking colleague once confided to him, "At one major investment bank for which I worked, we used psychometric testing to recruit social psychopaths because their characteristics exactly suited them to senior corporate finance roles."
An accumulation of psychopaths in upper management would go a long way to explain the rash of reckless behavior and corporate fraud in the last decade. It also indicates that efforts by regulators to impose normal morality and lawfulness on the financial sector will continue to be futile.
Likewise, the legal tools available to shareholders or internal HR departments are also largely useless. Refusing to hire someone on the basis of psychopathic screening would be considered "prohibited discrimination" since it is unlawful to presume in advance that someone will commit a crime. Few companies would dare to internally screen senior managers for psychopathy, especially if there is no legal recourse to fire them.
A risk insurers can't afford
Which brings us to the insurance industry. Every company requires a variety of underwriting policies including, for directors and officers, liability insurance or fidelity coverage. Insurers are rightly fixated on risk management since they (and their shareholders) are on the hook when executives they underwrite go the way of Gordon Gekko.
Senior managers of financial companies have what is called "fiduciary duty" -- a legal obligation to act in the best interests of their clients and investors rather than themselves. Here's the rub: psychopaths simply cannot do that. They are medically impaired from acting in good faith on behalf of others.
Why isn't the insurance industry already insisting on psychopathic screening of senior managers for the companies they are covering? The rationale would be straightforward: psychopathy is a leading indicator of illegal or reckless behavior. Psychopaths should be excluded from positions that legally require fiduciary responsibility in the same way that blind people are not allowed to be airline pilots.
Insurance companies taking the lead on weeding out corporate psychopaths would also avoid a number of thorny legal issues that would face shareholders, employers or regulators seeking the same goal.
Any psychopaths identified through insurance pre-screening would not be denied employment, they would simply be deemed uninsurable. The result would be the same -- these dangerous individuals would need to find another, less influential line of work. But since insurance policies are simple legal contracts between two parties, there would be no recourse for psychopaths to launch costly legal challenges against employers based on wrongful dismissal.
Free capitalism to function rationally
This solution would also negate the need for government intervention -- a nightmarish scenario by anyone's yardstick. No right-thinking person would support regulation based on aberrant brain chemistry. That said, if psychopaths were weeded out of critically important roles in the global banking sector, governments and taxpayers would be a primary beneficiary. Public institutions the world-over have been mopping up the mess made by reckless bankers since 2007, and beyond. These massive bailouts have crippled the real economy and inflicted untold economic hardship on those that actually create wealth, not merely accumulate it.
Rather than regulation, insurance screening would be guided by free market capitalism. Insurers have a strong self-interest to limit risk, and a clear legal obligation to act in the interests of their investors. Shareholders of insurance companies should be demanding answers as to why the companies they are investing in are not using the most up-to-date science to limit exposure to costly risk.
A 2012 study by the Association of Certified Fraud Examiners found that companies lose fully five per cent of revenues to employee fraud each year, totaling $400 billion in the U.S. and $3.5 trillion worldwide. Scams perpetrated by executives or owners were three times more costly than those by managers, and nine times more than employees. Fraud in the banking and financial sector was more common than any other industry surveyed.
These rates are also rising. A survey of 500 Certified Fraud Examiners found that between 2008 and 2009, workplace fraud incidents increased by 55 per cent, and losses by 49 per cent. Almost 90 per cent of these experts felt that fraud levels would continue to rise in the future.
There will of course be inertia within the insurance industry to address this issue, especially amongst early adopters who do not want to be put at a competitive disadvantage. Yet until psychopathic screening becomes the industry standard we will continue to build our global financial house on sand -- an obvious risk to the world at large and insurers in particular.
They say there's no free lunch in this world. Yet a small number of abnormal individuals feigning free market ideals have racked up a towering tab that future generations will struggle to pay off for decades to come. This is both unacceptable and unsustainable. We have the tools to start excluding people incapable of behaving responsibly from some of the most powerful positions in the world.
We need to stop ignoring this problem and start solving it. The world will be a far better place for it.
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Mitchell Anderson is a frequent contributor to The Tyee.
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Showing 1-30 of 35 comments
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Londoner99
The corporate toxicity of the psychopathic and their use of the corporate system as a hunting ground is not a new realization, I've been talking about this to whomever will listen for years. However, let's not make these individuals the Lee Harvey Oswald type-patsy in the crimes that continue to be committed. The so-called "free market" was a ploy to enable a certain group of oligarchs (psychopaths also, if you will) to diminish the ability of nation states to be self-supporting and self sufficient within their own borders and according to their own points of reference. A particular use of money flow in this "free market" structure has made life worse, not better for millions. The private ownership of industry for profit (definition of capitalism) has also been hijacked due to the fact that that same private ownership has not been shared but centralised in the hands of a very small group of global power-possessors. Individual psychopaths are very easily managed (i am a psychologist by trade) however what needs to be examined and exposed is the fact that the prevailing corporate culture is one of psychopathy. The 'elephant in the room' is the fact that non-psychopaths are expected to work for psychopathic institutions and pretend to themselves everything is "fine" - that awful word. We subsequently have a population possessed of increasing emotional and cognitive dissonance and no-one wants to talk about it. I will be happy to elaborate on this topic if anyone is interested.
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Don't elaborate here, but give us a link to your website like: http://lindahblog.blogspot.com...
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site is www.senseandaim.com - where an overview of a detailed new model for the workplace can be found
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There is a great article on "truthout "today supporting your opinion in very clear detail.
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Many studies have shown that perfectly normal executives develop psychopathic tendencies when installed in a position of great power and wealth. Bankers weren't born bad; they evolved.
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No, they didn't just "evolve," they went to biz & law schools.
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Correct, but remember this: the BANKERS fund the political campaigns and thus get away with stealing. This nation's #1 problem is political corruption. We MUST stop the flow of cash to politicians if we expect to stop the stealing (which incidentally, is your politician's favorite pastime too).
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Mitchell Anderson just might be convincing me of the need for standardized testing.
Only, as in the country of the world's best education system, Finland, where standardized testing isn't allowed at all to infect the schools, maybe "higher" ed in America ought to use psychopathic testing to guard against the types who posed with Mitt in that Bain Capital photo -- all of them raising high their gods, dollar bills -- one even sporting it in his grinning mouth.
I wonder why the editors didn't grace this Mitchell Anderson piece with that photo?
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You are proposing to used standardized testing/psychological screening to limit individuals' career choices?? Based on crimes you expect them to commit? That is not a solution to the problem of "successful" psychopaths. It is a violation of civil and human rights. It also won't tag successful psychopaths who get wind of it, and will tar some unlucky non-psychopaths.
In the banking world, regulations with enforcement would help. The Glass–Steagall Act was working till it was repealed.
The broader phenomenon of psychopaths getting ahead, is a sticky problem. I wonder if we are all about to lose any semblance of privacy, in this new world of infinite online information? Maybe we should just repeal all libel and slander laws, and crowd-source the tracking of psychopaths through society.
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libel and slander doesn't exist when it's the truth.
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" legal tools available to shareholders or internal HR departments are also largely useless. Refusing to hire someone on the basis of psychopathic screening would be considered "prohibited discrimination" since it is unlawful to presume in advance that someone will commit a crime"
The same laws that govern HR depts would also govern insurance testing. This is not the correct solution. Another solution would need to be found but in the interim, restoring Glass Steagall & anti-trust laws would go a long way.
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The reason they do what they do is the benefits far outweigh the risks. Especially in this 1890s redux of monopolies and Plutarchies. Remove the benefits, increase the risks and curb te behavior. So, yeah reinstating Glass-Steagall would be a start but much broader rules and limitations must be place on corporations and especially the financial corporations since the possible damage tey can wreak is so much greater than our ability to recover from it.
Edited addendum: If we can somehow make the risks and penalties for bad behavior greater than the perceived rewards there would be no need to screen for psychopathy--the very nature if the psychopath would prevent the damaging behavior as the personal risk would preclude (in the psychopath's mind) that behavior. Therefore, no abridged rights or added costs for screening. Simple and proven solution.
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Corporations are people - or so they say.
So what do we think of a person who buys another person, takes away everything that other person has and just allows that other person to die? It seems like serious criminal behavior to me.
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As the bumper sticker says--I'll believe corporations are people when Texas executes one.
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How to stop them is remarkably easy...Ladies and gentlemen!...I present to you the new Chairman of the SEC!....
http://www.cbc.ca/news/canada/...
...We will, of course, remove the petty restriction regarding duct tape...
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Max Keiser predicts Jamie Dimon will be given that post. Now there is the psychopaths poster boy.
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Pass legislation immediately to force these companies to fund the Pension Funds for 75 years, like they did to the Postal System. Don't allow them to file bankruptcy as long as they have millions to pay their CEOs. If they can afford all those millions to CEOs, they are not bankrupt.
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John F. Kennedy was wrong. The greatest threat to America is not "mental illness." Mental illness is the consequence of American and (post)modern capitalism in general.
No avalanche of warm and fuzzy CEO's is going to make for a just and humane society.
Psychopathy is not an aberration afflicting some government, business and social "leaders"; it is a precondition for the desire for leadership.
Lord Acton said "power corrupts." That, I think, is nonsense. The fact is that only the inherently corrupt, the psychopaths, yearn for power.
Narcissism, monomania, an absence of conscience, etc., are part of every CEO's job description. It may be that, on rare occasions, mentally healthy, decent and caring people stumble into positions of power ... but they are few and most fail. It is the system, not the people entrusted with running it that is ultimately at fault.
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"How to Stop Psychopath CEOs from Looting and Destroying Their Own Companies"...is this a trick question? The answer is fairly simple, kill them...kill them all and their political lackeys. Judging from history, the inherently insane and evil Those Who Would Be Kings need this sort of occasional reminder that they're human just like the rest of us. Otherwise, they tend to do things like enslaving people, causing famine and other environmental devastation on unprecedented levels, and instigating genocide. Based on what's going on in the world today, I'd say we've reached that point. It's time to clean house.
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This piece has two large flaws, though at least it does usefully broadcast the problem. First, it assumes that a simple test will reliably identify psychopaths. Presumably the author is talking about Hare's checklist--but asking an intelligent psychopath twenty questions and assigning points on the answers is of little use considering one of the universal traits among psychopaths is a propensity for, and skill with, lying. The Babiak/Hare study with the 203 managers got around this by interviewing the bosses, colleagues, and underlings of all these managers, not relying solely on their own word The other possible test is a brain scan--it's been shown that psychopaths lack the normal response to emotionally disturbing pictures. But here too I wonder if this test is entirely reliable, if some psychopaths might not be able to fake the reactions with practice. Secondly, the piece talks about banksters as a serious problem, along with the obvious imprisoned criminals, and averts its eyes from noticing the OTHER major place psychopaths tend to end up--that is, the intelligent ones born into upper middle or upper class families: Congressional seats and the Oval Office. The actions of the sociopaths in these realms is just as destructive, and fully intertwined, with the actions of the ones leading financial and other corporations. The author states that no right-thinking person would endorse a policy response, presumably because right-thinking people understand that only the holy Free Market can solve problems. I, however, am a left-thinking person and IF there were a reliable test for sociopathy I would be in favor of a law mandating that all candidates for public office must undergo the screening--very publicly--as a condition of candiodacy.
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NO test can test the underlying cause and that includes brain scans which only detect structural changes ASSOCIATED with "psychopaths" (which is an arbitrary categorization with no established physiological basis).
If you want to know how much that is worth look at the history of "lie detectors": always throughout their whole long history grossly exaggerating any supposed benefit: at the best only very slightly better than pure chance, competely worthless for any system that places any value at all on avoiding harming the innocent (which at present certainly does not include the USA).
The only way to go in anything remotely resembling a democracy is to focus on behavior and not test results. Almost every test includes a subcategory of "unintended targets" for those with positive results. One example is the MMPI (Minnesota Multiphasic Personality Inventory). Once subject got a result 3 standard deviations (SDs) above the norm in psychopathology which turned out to be very much of a false alarm - because he also got 3 SDs BELOW the norm for lying (I forget what the term was) which is supposed to be very closely associated with psychopathology. The explantion turned out to be that he grew up an a very pathological culture and was highly intellegent (top percentile in ALL categories) and for him thinking something that disagreed with the accepted ideas of his group was entirely normal (and, in the situation, remarkably healthy) yet that led to answers that created high scores in "psychopathology" (which in that test pretty much equated with being comfortable with disagreeing with the overwhelming majority).
Tests are useful only if you have no concern whatsoever about the severe damage that may result to innocent people who are inappropriately included in the "wrong" category. That is something that is absolutely inevitable with any test that is not based on entirely objective and direct verification of the direct underlying cause (i.e.: no association need apply!) of the thing you are testing for. Anyone who maintains that the test he/she is promoting has no such problem is flat out lying. (and I include in "lying" those who really don't know nor care. If you don't know and claim to, that is lying whether or not what you say may be coincidentally true or not.)
We absolutely do need to keep this kind of behavior out of positions of power. But testing for underlying qualities is not the way to do it. That's going back to the ear of "trial by fire" superstition: just grab the stone from the bottom of the pot of boiling water and if you are not harmed, then you are innocent. Same thing with ALL such tests: what they really do is to obscure the fact that what's really happening is that you are giving the tester the power to have their OPINION considered to be truth with no question alllowed but you are obscuring that ugly reality with the facade of a "test. Trial by fire, polygraphs, psychological testing ... all just ways of misrepresenting opinion to be proven fact. All extremely damaging because they make defense of the innocent far more difficult or impossible.
We should not trade one abomination for another.
OFTEN the "exceptions" are the most valuable people of all (as in those willing to responsibly challenge even the overwhelming majority when what they are doing is morally wrong.)
DUE PROCESS is the answer (that is so notably absent in the USA today).
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Stop rewarding psychopaths. Hierarchical management with an unorganized, powerless labor force always leads to abuse. The great experiment of America was that of using government as a shield against corporate rapine, including those wearing crowns. Remember, early American colonies were corporate entities with charters and production goals.
The Founding Fathers feared corporations, and tried to limit their influence.
The Civil War was about the right of the individual citizen to be free of economic models that debased human rights. Including slaves.
The economic model of labor unable to capitalize on their assets leads right back to tyranny of economics. Think Wal-Mart.
The New Deal, SS, medicare and food stamps are designed to give citizens a means of resisting corporate pressure to undervalue labor to survive and Obamacare removes the threat of death as a consequence of defying employers.
The younger generation gets it.
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Perhaps why the German model of corporations is gaining strength and proving effective--run along a more cooperative and horizontal model utiizing input from ALL STAKEholders and not just upper management and STOCKholders.
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Good comments except. Not true that people develop these traits on the job. Second, employment screening is widespread already so those who argue its a violation of rights & I agree your rights are already totally being violated in this regard. Third, tests can catch psychopaths. How come? Psychologists can detect faking good & bad & no sociopaths can't figure out how they do that. Still, the way to screen them out is through the behavior in childhood and in the workplace. Screening CEOs is what is lacking because they tend to surround themselves with like-minded individuals so you end with organizations filled with them.
Also, you need treatment for people who are fooled by these people. It's a world rocking experience. Most people have no idea, although there victims do. Therefore, listening to victims is the easiest way to catch them.
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Perry Logan
Would it be blasphemy to say that both Barack Obama and Mitt Romney fill the bill for psychopathic personality? His admirers are forever talking about "no-drama Obama." That's his psychopathic cool.
Alex Jones and the Secret Code
(Edited by author 1 hour ago)
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Add Clinton to that list and I would agree. Bush juniors low IQ excludes him from this list, as would Reagans senility. Johnson, Nixon, and Bush senior cetainly qualify also. Off point I guess the Susan Rice corruption scandal that is being studiously ignored by this site has added some great fuel to your pyre of dislike for the Obama regime.
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Again, the obvious answer is licensure. Healthcare professionals, accountants, lawyers, teachers, some engineers and even hair dressers require licensure. A licenced executive is easy to get rid of. They burn too much money and they find something else to do. Also, a specialty exam becomes part of licensure. This means you must know something about the business you want to manage. Physicians and pharmacists have specialty tickets. Won't stop them all, but it'll stop a lot in their tracks.
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OldUncleDave
Psychopathy is advantageous in a capitalist system. Corporations are the perfect psychopaths and the perfect capitalists. They cannot feel, and they are immortal.
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Psychopathy is NOT advantageous in ANY system of government, unless you want psychopaths to dominate the world.
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So, you are saying the system is evil? (I agree with that. We need to complete the democratic revolution we started in 1776 and make business democratic rather than hierarchical. Worker-owned, democratically-run cooperatives is the way of the future.)
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owing 31-36 of 35 comments
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Good article an interesting take on the problems we face today. I'm surprized it got published by a neo-liberal site like the Tyee that is run by former neo-con Socred government pols, many of whom have all the qualities the writer of this article describes, and certainly helped put us into the current depression. Note that the author is careful in not naming any of these psychopaths.
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Another area that's important to examine for the same psychopath mentality is in politics and on our newly militarized police forces across the country.
Over 30 years, we've seen the extreme authoritarian right exhibit very similar characteristics, all of which have impacted societal attitudes, government functioning and our political system in very destructive ways. As a result, our country's center and policies have shifted so far to the right that we engage in false wars (Iraq), drone strikes, unwarranted citizen surveillance, denying citizens free speech and protest rights, authorizing unending detention and arrest of any citizen "suspected" of terrorist activities or affiliations--all without due process. Gains for women and blacks are attacked by the same politicians, while all-white-male-authoritarian rule is enforced.
These changes in the US are not accidental. They were planned and implemented by right wing think tanks and their funding organizations, starting in the late 70's. For more in-depth information, read Republican, John Dean's book, "Conservatives without Compassion".
This article offers the opportunity for open discussion and further study. Corporate structure and ideology are based on a military hierarchical mentality, which in and of itself, is a problem in corporations, politics and society. We need to incorporate more evolved ways of structuring and managing the workplace government, etc.
(Edited by author 22 minutes ago)
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Kay Allen
A 2012 study by the Association of Certified Fraud Examiners found that companies lose fully five per cent of revenues to employee fraud each year, totaling $400 billion in the U.S. and $3.5 trillion worldwide. Scams perpetrated by executives or owners were three times more costly than those by managers, and nine times more than employees. Fraud in the banking and financial sector was more common than any other industry surveyed. "
I'd like a look at religious organizations' books. Remember all of those pederast priests?
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I have been thinking about this very problem and have sketched a framework for how we deal with it in How Can the 99% Deal with 70 Million Psychopaths? Would love to discuss this with you.
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willymack, A seventy three year old retired sailor and professional driver.
It's gratifying to see an author share my opinion that Assholes-in-Charge of corporations are psychotic, since this has been my opinion for years. I can't lay claim to a degree from a university or a PHD in psychology, just some brief but intense training in the subject at Navy schools and at a hospital in Honolulu. I guess I can claim my knowledge of the subject is a bit better than the average Joe's. It's interesting to note that the psychopaths got to where they are because they were regarded by those who hired them as "decisive" and "leaders" as opposed to the twisted, manipulative scoundrels they actually are. If any of these screeners were educated as I was (and that's not that much), they'd be able to see the pathology in their prospective employees, and would reject them out of hand. As with so many of our problems, education is not only the key, but the answer as well, and our people seem to be allergic to education, despite their university degrees and fancy titles.
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Here is a fascinating (and fairly short) article on what would happen if psychopaths did dominate the world. The article is by Brad Hicks. http://bradhicks.livejournal.c...
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