How to deal with narcissistic, toxic leaders

Every organization has them: toxic leaders who sacrifice others for their selfish needs. At the very least, these managers can make our jobs difficult or derail our investigations and, at worst, commit fraud. Here’s how to deal with them.

As fraud examiners, it’s inevitable that we’ll encounter many types of difficult people over the course of our careers — not only those whom we’re investigating but also our co-workers and bosses. This can be especially challenging when we’re dealing with toxic individuals who demonstrate undesirable personality traits such as narcissism and even psychopathy. Many of these people become leaders. To be successful, we need to be able to deal with those who have these unusual inclinations.

Tomas Chamorro-Premuzic writes in his 2019 book, “Why Do So Many Incompetent Men Become Leaders (And How to Fix It),” that people who are “… self-centered, entitled, and narcissistic … tend to emerge as leaders and take control of resources and power in a group. …” These traits occur more in men than in women (hence his book’s provocative title).

Such toxic leaders are “… overconfident … and very much in awe of themselves, particularly in light of their actual talents. … Yet these flaws seldom hamper their career prospects,” Chamorro-Premuzic writes.

Toxic leaders portray a high degree of overconfidence and self-belief that others favorably perceive as competence. As a result, these leaders likely have risen to senior positions. As Chamorro-Premuzic writes, “Competence is how good you are at something. Confidence is how good you think you are at something. Competence is an ability; confidence is the belief in that ability. … Another reason for the pervasiveness and persistence of overconfidence is that it is an effective mechanism for deceiving others.”

Although these traits can have self-fulfilling effects (i.e., fake it until you make it), they can also cause significant damage to organizations. As Chamorro-Premuzic writes, “When confident people lack competence, their best bet is to hide it from others.” Paraphrasing Chamorro-Premuzic, because of this, toxic leaders actively manage their reputations to ensure they’re perceived as being exceptional when they’re actually less competent than they’d have you believe.

It’s often harder for us to objectively judge competence at the higher echelons of organizations because goals and targets are broader, less defined and take time to measure. Chamorro-Premuzic writes, “… Organizations often assume that a leader’s career success reflects his or her performance — the more senior a leader, the more talented the person must be. … Often, we can only see the data clearly after the leaders have left their … footprint on their teams and organizations."

Despite their demonstrated confidence (or overconfidence), toxic leaders may be incompetent and place organizations at significant risk through their decisions, actions and behaviors. Although most leaders in business do not demonstrate these behaviors and are in positions of authority because they’re good leaders, toxic leaders may actually be more prevalent in organizations than we previously thought. And people with these traits may be more likely to occupy positions at higher rungs on corporate ladders. Toxic leaders can demonstrate both narcissistic and psychopathic tendencies, which according to Chamorro-Premuzic, are “dark-side” traits that together with Machiavellianism are collectively referred to as the “dark triad” and can “present problems for society in general and for the corporate world in particular.”

In the October 2004 Harvard Business Review article, “Executive Psychopaths,” author Gardiner Morse writes that, according to Robert D. Hare, Ph.D., “… Psychopaths are increasingly common in business because they’re attracted to the pace and volatility of today’s hypercompetitive workplaces.”

According to Hare and Paul Babiak, Ph.D., in their 2006 book, “Snakes in Suits,” about 1% of the population can be identified as psychopaths, with another 10% falling into the gray area where they have enough characteristics to be of concern to others. In the corporate world, however, they estimate that psychopathic individuals make up even more than 1% of managers and executives. Based on a study they conducted, they found that about 3.5% of high potential executives fit the profile of a psychopath.

Babiak and Hare also write in “Snakes in Suits” that companies can mistakenly attribute a psychopath’s behavior to desirable leadership skills such as “… the ability to make hard decisions, to keep their emotions in check, and to remain cool under fire.” Often, such persons are also charismatic. Babiak and Hare write, “… it is easy for someone — anyone — to confuse behavior that is psychopathically motivated with expressions of genuine leadership talent.” While toxic leaders can possess a degree of competence and talent, at least some of them aren’t opposed to cheating to amplify their abilities to a higher level, which was arguably the case with cyclist Lance Armstrong, for example. (See “Lance Armstrong: Narcissism and What Lies Behind It,” by Joseph Burgo, Ph.D., Psychology Today, Jan. 18, 2013.)