CHAPTER 2
THE NARCISSISTIC LEADER: MYTH AND REALITY
Glory is fleeting, but obscurity lasts forever.
—Napoleon Bonaparte
A narcissist is someone better looking than you are.
—Gore Vidal
I have come to warn God that I am taking his place. As he has not seen fit to avenge my enemies, I’ll take his place and do it myself.
—Alexandre Dumas, The Count of Monte Cristo.
It takes a wise man to learn from his mistakes, but an even wiser man to learn from others.
—Zen proverb
A Japanese Zen master during the Meiji era received a visitor who came to inquire about Zen. The Zen master served his guest tea. He poured his visitor’s cup full and then kept on pouring. The visitor watched the overflow with alarm until he could no longer control himself. “The cup is over-full. No more can go in it!” he cried out. “Like this cup,” the Zen master replied, “you are full of your own opinions, beliefs, and assumptions. How can I teach you anything unless you first empty your cup?” This enigmatic little tale suggests that people who are too full of themselves—that is, who are overly narcissistic—are bound to get into trouble.
It’s generally agreed that a certain degree of narcissistic behavior is essential for leadership success, a prerequisite for anyone who hopes to rise to the top 1,2,3,4-5. Thus if we’re to understand life in organizations, we have to understand narcissism. There’s no place where the vicissitudes of narcissism are acted out more dramatically than on the organizational stage, where narcissistic leaders can find themselves but followers must lose themselves.
This chapter looks at narcissism generally, as an aspect of human behavior, and examines how it operates for both good and ill in an organizational context. It also scrutinizes the psychopathology of relationships between narcissistic leaders and their followers as it’s manifested in the process known as transference. But first we should remind ourselves of the world’s best-known account of narcissism, told in a cautionary Greek myth.
Narcissus was a beautiful young man who rejected the advances of numerous men and women who fell in love with him. The goddess Nemesis overheard some of his thwarted lovers wishing the pain of unrequited love on him and granted them their wish. Narcissus fell in love with his own reflection when he stopped to drink from a spring. Although he realized his error, he couldn’t escape from his infatuation and pined to death. As his ghost was ferried across the river Styx, it leaned over the side of the boat for one last glimpse of itself in the water.
Like so many myths, the story of Narcissus draws on an element of human nature and dramatizes its excess. A certain degree of narcissism, in a spectrum that ranges from healthy self-esteem to destructive egotism, is perfectly natural and even healthy. A moderate measure of self-esteem contributes to positive behaviors such as assertiveness, confidence, and creativity, all desirable qualities for an individual in any walk of life, but particularly so for business leaders. At the other end of the spectrum, however, extreme narcissism is characterized by egotism, self-centeredness, grandiosity, lack of empathy, exploitation, exaggerated self-love, and failure to acknowledge boundaries. In this severe form, narcissism can do serious damage. This is especially true within an organization, where the combination of a leader’s overly narcissistic disposition and his or her position of power can have devastating consequences.
Whether we’re discussing more healthy or less healthy narcissism, we should be clearer about its source.

BACK TO THE FUTURE

A very graphic explanation of where it all begins can be found in Philip Larkin’s poem “This Be The Verse,” (1971)a:
They fuck you up, your mum and dad.
They may not mean to, but they do.
They fill you with the faults they had
And add some extra, just for you.
Picture the womb, where environmental conditions are perfect. Then picture the world, where from the second a baby makes its entry there’s need and helplessness and the frustration of being unable to communicate. The infant mind tries to recreate the perfect bliss of life in the womb, but it doesn’t have much to work with. All it can do is to create a grandiose, exhibitionistic image of itself and an all-powerful, idealized image of its parents 6. Over time, and with “good enough” care (a term used by psychologists to denote caretaking that meets or exceeds basic physical and emotional needs), these two idealized images are moderated by the forces of reality—especially responses from parents, siblings, caretakers, and teachers.
A child’s sense of identity is acquired only gradually, through interaction with the environment 7,8,9-10. In order to achieve normal character development, a child has to push against constraining forces and encounter both success and frustration. Moderate frustration, sometimes called age-appropriate frustration, is essential to mental health. For example, it might be frustrating for a child to have to wait a few minutes for his or her mother to finish a task before putting lunch on the table, but the level of frustration would not be inappropriate. However, if the wait extended to hours and included a tirade about the nuisance of small children, the frustration would be unhealthy and possibly even traumatizing.
Whatever the level of frustration, children deal with it as best they can by imagining themselves able to overcome any obstacle. The early years are characterized by the tension between that grandiose self-image and the helplessness that is the true state of childhood. Inadequate resolution of that tension produces negative feelings (shame, humiliation, rage, envy, spitefulness, a desire for vengeance) and a hunger for personal power and status. In most children, however, as time goes by those grandiose fantasies are modified and form the basis for well-grounded ambition, directed activity, and a secure sense of self-esteem.
A similar evolution takes place with the idealized parent image. A child’s evaluation of other people becomes increasingly realistic as he or she grows. With “good enough” care, the toddler who clapped with delight when you pressed a switch and lit up a room will evolve steadily into the teenager who can accept the fact that it’s pointless asking you to help with his or her physics homework.
Over time most people develop relatively stable ways of representing their experience of themselves and others. These representations are known as internal objects and are composed of pleasurable and painful experiences, fantasies, ideals, thoughts, and images that create a cognitive and affective map of the world—the internal theater 11. The process of building this mental map involves the resolution of the relationship between real people and the idealized mental images of them retained by the developing child. The child’s interactions with other people then reflect that resolution: they’re in part a response to real others, and in part a response to idealized mental images.
The internal objects that an individual develops over time profoundly influence his or her affective and cognitive states, behavior, and actions. Good internal objects are generative and restorative: they keep you going when life gets tough and constitute the underpinnings of healthy functioning. Bad internal objects—or just the absence of good internal objects—can cause dysfunctions that contain the seeds of pathological narcissistic behavior.
The earliest objects of a developing child’s attention are the parents. Their care, along with their ability to gauge the amount and kind of frustration appropriate to their child’s level of maturity, has a major impact on the internal world that the child creates, and it determines whether that world is reassuring and affirming or confusing and turbulent. Parents who cannot or will not respond appropriately to their child’s demands corrupt the developing child’s internal world. Sometimes inappropriate care amounts to overt abuse. More often, though, it’s the result of neglect, indifference, or ignorance. Sometimes parents use a child as an extension of themselves in their own search for admiration and greatness. This gives the child the illusion of being loved while its true needs are ignored. This sort of failure of care occurs most often with a child who has notable qualities, perhaps great physical beauty or a special talent.
When parents use a child as a way of compensating for their own disappointments, that child’s pursuit of admiration can become a lifelong quest, an attempt to offset the feeling of being used rather than loved for one’s own sake. This self-love can actually be a cover for self-hatred. Children troubled in this way (and the adults they become) have failed to modify or truly integrate either the grandiose self or the idealized parent images. Both representations continue in their unaltered forms, pursuing their outdated aims and preventing a cohesive sense of self. This causes incoherent behavior, problems with self-esteem, narcissistic pathology, and an imbalance in psychic structure. When symptoms such as these occur, the first place to look for a cause (as with most mental and emotional suffering) is the person’s relational history.

TWO MODERN MYTHS: HEALTHY NEGLECT AND TOUGH LOVE

But they were fucked up in their turn
By fools in old-style hats and coats,
Who half the time were soppy-stern
And half at one another’s throats.
—Philip Larkin
With their need for power, status, prestige, and glamour, many narcissistic personalities eventually end up in leadership positions. The ability of narcissists to manipulate others and their capacity to establish rapid, if shallow, relationships serve them well as they move up the organizational ladder. They are often successful initially, despite their “handicap”—particularly in areas where they can fulfill their ambition for fame and glory. Unfortunately, power, prestige, and status are typically more important to these people than a serious commitment to organizational goals and performance. Because narcissists are motivated by selfishness, their successes are ephemeral.
Like all of us, leaders occupy a position somewhere on the narcissistic spectrum that ranges from healthy self-esteem to pathological egotism. Within that spectrum, it’s helpful to distinguish between constructive and reactive narcissism. Constructive narcissism develops in response to “good enough” care. Parents who give their children a lot of support, age-appropriate frustration, and a proper “holding environment” for their emotional reactions produce well-balanced, positive children who possess a solid sense of self-esteem, a capacity for introspection, and an empathetic outlook. These individuals have a high degree of confidence in their own abilities and are highly task- and goal-oriented.
Constructive narcissists are no strangers to the pursuit of greatness, but because they’re not searching exclusively for personal power, their successes are genuine. They have a vision that extends beyond themselves, and they work with great zeal to fulfill it. They take advice and consult with others before moving forward, valuing cooperation over solo performance, although they always take ultimate responsibility and never blame others when things go wrong. Constructive narcissists have the capacity to become largerthan-life figures, in the best sense of that term, serving as transformational leaders and inspiring role models. Some may seem to be lacking in warmth and consideration, substituting “the good of the company” or “the welfare of all” for reciprocal relationships, but others are charismatic.
Reactive narcissism develops in people who have been damaged in some way. It takes root when phase-appropriate development is interrupted, frustrating experiences are poorly handled, and parents are either distant and cold or overindulgent and unrealistically admiring. In those circumstances, children develop a defective sense of identity and have difficulty maintaining a stable sense of self-esteem. As adults, they remain deeply troubled by inadequacy, bitterness, anger, depressive thoughts, and lingering feelings of emptiness and deprivation. They may develop a sense of entitlement, believing that they deserve special treatment and that rules and regulations apply only to others. As a way of mastering their feelings of inadequacy and insecurity, they may develop an exaggerated sense of self-importance and self-grandiosity and a concomitant need for admiration. They typically lack empathy and are unable to perceive and understand how others feel.
Individuals with this reactive orientation frequently distort external events in order to manage anxiety and stave off loss and disappointment. They create a self-image characterized by specialness. As adults, reactive narcissists continue to behave like babies who go unheard and lack attention. They have a strong need—sometimes conscious, sometimes not—to make up for the perceived wrongs done to them at earlier periods in their lives. Having been belittled, maltreated, or exploited as children, as adults they’re determined to prove they amount to something. If this determination stops at wanting and working to be valued, reactive narcissism can produce healthy fruit. If it turns into envy, spite, greed, grandiosity, and vindictiveness, the fruit is sour indeed.
Although it’s intuitively obvious that childhood neglect leads to reactive narcissism, it seems a bit ironic that pampering a child produces the same result. While the neglected child creates an image of specialness to compensate for an inner sense of worthlessness, the pampered child develops an inflated self-image that’s out of synch with the real world. Pampered children are led to believe that they’re completely lovable and perfect, whatever they do. But because perfection is impossible—a fact that all youngsters know, having learned it the hard way—these children become anxious and insecure, unable to live up to the standards set by their parents. Parental overvaluation creates a self-image that’s hard to sustain in the real world. The hard truth is this: indulgence on the part of the parents has exactly the opposite effect from what’s intended. Pampered children don’t feel loved as persons in their own right and develop a strong sense of inadequacy.
Excessive praise of a child produces feelings of superiority and a sense of being destined for greatness. When such early encouragement turns out to be right—that is, when there’s genuine talent—the child may be able to live up to the parents’ exaggerated expectations. He or she then uses the expectations imposed on him or her as a basis for excellence as the talent is honed. Perhaps this is what Freud meant when he noted: “If a man has been his mother’s undisputed darling, he retains throughout life the triumphant feeling, the confidence in success, which not seldom brings actual success along with it” 12, p. 15. In general, however, overpraised children become full of themselves and conflict-ridden. While outwardly they appear grandiose, seductive, competent, and articulate, covertly they’re full of self-doubt, envious of others, and extremely vulnerable to criticism. Reactive narcissists who attain a leadership position can have marked negative effects on their organizations.

NARCISSISTIC PERSONALITY DISORDERS

The Diagnostic and Statistical Manual of the Mental Disorders (DSM-IV-TR) , published by the American Psychiatric Association, contains this broad definition of the various narcissistic personality disorders:
A pervasive pattern of grandiosity (in fantasy or behavior), need for admiration, and lack of empathy, beginning by early adulthood and present in a variety of contexts, as indicated by five (or more) of the following:
• has a grandiose sense of self-importance (e.g. exaggerates achievements and talents, expects to be noticed as superior without commensurate achievements)
• is preoccupied with fantasies of unlimited success, power, brilliance, beauty, or ideal love
• believes that he or she is “special” and unique and can only be understood by, or should associate with, other special or highstatus people (or institutions)
• requires excessive admiration
• has a sense of entitlement, i.e. unreasonable expectations of especially favorable treatment or automatic compliance with his or her expectations
• is interpersonally exploitative, i.e. takes advantage of others to achieve his or her own ends
• lacks empathy: is unwilling to recognize or identify with the feelings and needs of others
• is often envious of others or believes that others are envious of him or her
• shows arrogant, haughty behaviors or attitudes 13, p. 717.
There are overtones of mental illness in this description. Certainly “ill” and “impaired” would describe the 1% of people that meet the American Psychiatric Association’s full criteria of narcissistic personality disorders. However, many of these criteria are also applicable, to a lesser degree and not in combination, to narcissistic individuals who function more or less normally but nonetheless cause serious distress to themselves and others.
In a position of leadership, people suffering from this kind of disorder become fixated on power, status, prestige, and superiority. They overvalue their personal worth, arguing that, as exceptional people, they deserve special privileges and prerogatives. They act in a grandiose, haughty way, expect special favors, flout conventional rules, and feel entitled; they’re unempathetic, inconsiderate to others, exploitative, and unconstrained by objective reality.
Despite the negativity of this description, narcissists are generally upbeat and optimistic. Unless their sense of superiority is challenged, they experience a pervasive feeling of well-being. When they’re challenged, however, they exhibit irritability and annoyance with others, feelings of dejection, and outbursts of rage. When faced with setbacks or failures, they’re masters of self-deception, inventing plausible reasons for their (temporary) misfortune. This fantasized rationalization helps them cope. If their rationalizations are not accepted by others, they find someone else to blame for their misfortune.
Some narcissists are motivated by the need to get even for real or perceived slights experienced in childhood. The Monte Cristo complex, named after the protagonist in Alexandre Dumas’ The Count of Monte Cristo, encompasses feelings of envy, spite, revenge, and/or vindictive triumph over those who wronged one. Reactive narcissistic leaders with the Monte Cristo complex aren’t prepared to share power with anyone, pooling everyone into the enemy category. Such leaders rarely even consult with colleagues, preferring to make all decisions on their own. When they do consult others, the gesture is little more than ritualistic.
Whether vindictive or just reactive, narcissistic leaders learn little from defeat. Their tendency to scapegoat others when things go wrong and to get angry when things don’t go their way are simply reenactments of childhood behavior—tantrums, if you will, that originate in earlier feelings of helplessness and humiliation. When people in positions of power act out in this way, the impact on their immediate environment can be devastating. Tantrums intimidate followers, who then themselves regress to more childlike behavior.

ANOTHER FINE MESSIER

Think back to the film Wall Street, in which the protagonist, Gordon Gekko, states:
The point is, ladies and gentlemen, greed—for the lack of a better word—is good. Greed is right; greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed in all its forms—greed for life, for money, for love, knowledge—has marked the upward surge of mankind, and greed—you mark my words—will not only save Teldar Paper, but that other malfunctioning corporation called the USA. (1987)
Unfortunately, Gordon Gekko’s manic, self-centred perspective isn’t just the nightmare vision of an over-the-top Hollywood scriptwriter. Real executives who have lost any sense of boundaries frequently act out similar scenarios. One person whose career mirrored Gekko’s rise and fall is Jean-Marie Messier, the ex-CEO of Vivendi Universal, who on 2 July 2002 experienced his own private Waterloo when ousted from the company in disgrace.
Messier was France’s most colorful and controversial business leader—not French enough for his own compatriots, yet too French for his US business partners. In his glory days he went by the nickname J6M (pronounced jeeseezem), “Jean-Marie Messier—moi-même maître du monde,” which, roughly translated, means “Jean-Marie Messier, master of the world.” That his nickname didn’t displease him—in fact, far from it—is demonstrated by the fact that Messier used it as the title of his autobiography, J6M. COM.
Messier’s early career was stellar. Born in Grenoble, France, in 1956, he studied at two of the most prestigious French universities, the Ecole Polytechnique and the Ecole National d’Administration (ENA), which still today turn out most of France’s business and political élite. Like all good ENA graduates, Messier held a variety of senior roles in the public sector—specifically, in the French economy ministry during the 1980s—before going into investment banking. After five years at the investment bank Lazard Frères, the government called again, and in 1994 Messier agreed to take over as head of the utility group Compagnie Générale des Eaux.
Messier immediately set about transforming the 150-year-old utility group, whose core activities were collecting refuse and running sewage plants. Throwing every sound strategic consideration about the rules of diversification into the air, he decided to turn CGE into a glamorous global media and telecommunications giant. Within six years, the business had been renamed Vivendi Universal and had become the world’s second largest media company (after AOL-Time Warner), with newly acquired holdings such as Universal Studios in Hollywood, the record label Universal Music, and the French TV station Canal Plus. Further acquisitions in Europe provided Vivendi with mobile telecom services, theme parks, and educational publishing businesses. The company was now a long way from the unglamorous world of the original French utility firm.
The scale of the transformation and the unabashed global ambitions that Messier revealed while still in his early 40s made him unpopular in France, where business leaders rarely display such flamboyance and brashness. His increasingly public style evoked more and more resentment among the members of the French business community and its commentators. That resentment spilled over when Messier decided to move to New York, where he lived in a €20 million apartment that was paid for by Vivendi. He then made things even worse by remarking that “the French cultural exception is dead”—a reference to the French government’s practice (in his view, outdated) of subsidizing French art and culture. As a Frenchman, he should have known better than to condemn one of France’s sacred cows: these subsidies were widely regarded as a barrier against the dominance of the US entertainment industry. On the business side, things were equally bad. With the decline in the economy and the onset of recession in the late 1990s, it became obvious that Vivendi’s expansion had been built largely on acquisitions, many of which had been dramatically overpriced. Under Messier, Vivendi spent close to $100 billion acquiring interests in film, music, publishing, and the Internet, racking up close to $19 billion debt. Unfortunately, culture integration—the logical (and difficult) step after any buyout—was neither a priority nor a strength for Messier.
In March 2002, Vivendi Universal presented a €13.6 billion loss for 2001, resulting in a large downward revision in the value of its assets. Company shares plummeted as investors became nervous. With this development, Messier lost the confidence of the firm’s important North American shareholders, including the Bronfman family, former owners of Seagram (the drinks and entertainment giant), which had merged with Vivendi two years earlier and whose family fortune had been significantly reduced by Vivendi’s escapades. The company that had once been worth about $ 100 billion was suddenly worth less than a fifth of that amount, with some investment analysts saying that it would be more valuable if sold in pieces 14.
The situation was so grim that the board called for Messier’s resignation which he finally tendered with the remark, “I am quitting so that Vivendi Universal may remain.” Time magazine’s Paris correspondent wrote:
In France, Messier’s name is now close to dirt—which also approximates Vivendi Universal’s stock price. Shares have dropped around 70% since the start of the year and nearly 40% in the week of Messier’s eviction. “Vivendi Universal has always been about, by and for Messier—which worked as long as markets believed in the man,” says economist Elie Cohen. “When the stock declined and Messier proved incapable of reversing it, that’s when market perceptions, Messier’s reputation and Vivendi itself crumbled” (Time Europe, 15 July 2002, p. 20).
Messier was replaced at Vivendi Universal by Jean Fourtou, a man thought to be the polar opposite of Messier. Fourtou quickly set out to salvage what was salvageable of the shattered company. In the meantime, Messier decided to fight for his golden parachute, provided for in a termination clause that had been written into the American part of his contract with Vivendi. This was not an easy task. A French court immediately froze the €20.6 million severance payment, noting that the board hadn’t approved it and was waiting for a vote from the shareholders. The New York tribunal to which Messier took his case ordered Vivendi to go ahead with the payment, but Vivendi and the shareholders refused, pointing out how nonsensical the payment would be when Messier was responsible for destroying the value of the company. A class action lawsuit was started in the US by Vivendi shareholders, claiming that Messier had lied to them about the company’s financial health in the last months of his tenure.
Messier’s own point of view remained very clear: nothing that had happened to the company was his fault. Blame lay with various people who had not left him enough time and space to take the steps needed to turn Vivendi around. Furthermore, he claimed, he was entitled to the golden parachute, since it was part of the severance package and had been agreed to at a time when the board knew to what extent he had run down Vivendi. Messier reasoned that if board members had signed the agreement despite this knowledge, it was their problem. While admitting that the size of the severance package might shock the French business community, he demanded that the promise be honoured. However, he was not his own best advocate, conveniently forgetting many previous comments he had made—comments freely accessible to anyone who read his autobiography. For example, in response to the earlier exit of one of his French colleagues, Philippe Jaffré, ex-CEO of Elf, he wrote: “If I had been on the board of Elf, I would never have agreed to the golden parachute Philippe Jaffré was given.”1 Most damaging to his own case was his condemnation of golden parachutes generally:
The possibility of being fired by the shareholders . . . is one of the usual risks of being a business leader. . . . You are paid for that. And well paid, too. I don’t think that these special compensations—the so-called golden parachutes that are so much talked about—are justified for people in this position. My contract does not include any of these. And I give my word to the Board of Directors never to negotiate one. You can’t have your cake and eat it, too. . . . I am for giving leaders the possibility to become rich, but they have to accept the risks, too.2
1 Messier 2002, p. 190: ‘J’aurais été administrateur d’Elf, je n’aurais pas voté le golden parachute qui a été accordé à Philippe Jaffré.’
2 Messier op cit. ‘L’éventualité d’être viré par ses actionnaires, lors d’une OPA ou pour toute autre raison fait partie des risques normaux du métier de patron. Quand on est nommé à la tête d’une entreprise, petite ou grande, on sait que l’on est révocable ad nutum, c’est à dire à tout moment sur simple décision du conseil d’administration. On est payé pour ça. Et bien payé. Les indemnités spéciales—ces golden parachutes qui défraient la chronique—ne se justifient donc pas selon moi pour les mandataires sociaux. Mon contrat ne prévoit aucune clause de ce genre. Et je m’engage vis-à-vis de mon conseil d’administration à ne jamais en négocier. On ne peut pas avoir le beurre et l’argent du beurre: des stock-options pour se constituer un patrimoine et un parachute au cas ou cela tournerait mal. Dieu sait si je suis partisan de donner aux dirigeants la possibilité de s’enrichir mais qu’ils en assument les risques.’
Greed, hubris, and vanity drove Messier to build the sort of business empire no Frenchman (and few Americans) had ever achieved before. Water utilities weren’t glamorous enough for this twenty-first century Napoleon, so he moved to greener pastures; but Hollywood became his Moscow. His audacity and pomposity masked incompetence and ignorance of the media business—indeed, of business in general. Worse, once he had destroyed most of the value of a number of formerly successful, independent companies with his reckless ambition and his lack of operational aptitude, he found other people to blame. And even after so much value-destruction, his greed didn’t dissipate: Messier claimed an exorbitant sum of money as his right! Seldom in business history have we seen such a case of vanity and greed. And yet Messier apparently never recognized how many lives were damaged because of his antics; how many people lost their jobs.
Among the French press, the nickname J6M now stands for “Jean-Marie Messier: moi-même mis en examen” (being investigated), in honour of Messier’s pursuit by the French courts for manipulation de cours, diffusion de fausses informations, and abus de biens sociaux (manipulation of the stock market, spreading of false information, and abuse of social goods). If cynicism were a crime, Messier could also be indicted for shameless lying: in his book, he declared himself a new kind of leader, one who would never, never claim a golden parachute; behaving like a spoiled child: at the general management meeting that preceded his fall, Messier, furious at having his proposal to redirect share options blocked by share holders, started procedures to cancel the meeting, arguing that the votes had been rigged.3
3 ‘Si le cynisme était un délit, J6m aurait aussi pu être poursuivi pour mensonge éhonté: dans son livre, il jurait être un manager de type nouveau qui ne réclamerait jamais, ô grand jamai de “golden parachute”;—caprice d’enfant trop gâté: lors de l’assemblée générale houleuse qui a précédé sa chute, Jean-Marie Messier, furieux d’avoir vu son projet d’accorder des stocks-options aux dirigeants du groupe retoqué par une fronde d’actionnaire, avait entamé des procédures d’annulation de l’AG, arguant que les votes étaient sûrement truqués.’ Peter Covel, Le Cordelier, 25 June 2004.
Messier’s flight into grandiosity, vanity, and greed isn’t exceptional in the world of business, except in degree. He’s in very bad company. His more outrageous peers include Global Crossing Chairman Gary Winnick, whom Fortune called “the emperor of greed.” Winnick cashed in $ 735 million in stock over four years while leading his company into bankruptcy. Kenneth Lay, chairman of Enron, succeeded in bringing his company crashing to the ground (with the help of his CEO, Jeffrey Skilling, and his financial wizard, Andrew Fastow), leaving thousands of employees jobless. Dennis Kozlowski, the toppled titan of Tyco, was found guilty in June 2005 by a New York jury of fraud, conspiracy, and grand larceny for looting his own company to the tune of $600 million. Bernard Ebbers, the former CEO of WorldCom, turned a small Mississippi long-distance operator into one of the world’s biggest telecom providers before engaging in questionable accounting practices that precipitated the biggest bankruptcy in US corporate history. In March 2005 a federal jury in New York convicted Ebbers on all nine counts of the charge that he helped mastermind an $11 billion accounting fraud at WorldCom; they sentenced him to 25 years in prison. All these leading executives ignored the rules of civilized organizational behavior.
Narcissistic leadership isn’t limited to the business sphere, of course. In fact, one of the best examples of reactive narcissism available is in the political arena. The infamous nineteenth-century African warrior King Shaka Zulu, who achieved considerable advances in his effort to create a great nation, illuminates the dark side of leadership.
When we examine the early life of this terrifying Zulu—a man who’s still held in awe in his home country—we find ample explanation for his narcissism. An unwanted child, he was expelled from his parents’ tribe. Terrorized by other children, he became lonely and bitter and quickly learned to defend himself fiercely. His fighting skills brought him to the attention of a local king, who became the young man’s mentor. Under this king’s guidance, Shaka Zulu became the successful leader of a small Zulu tribe at the edge of the kingdom. When his mentor was killed, Shaka Zulu stepped in as his successor.
During his years as king, Shaka transformed his people’s ritualistic fighting technique, introducing a deadly new stabbing spear (the assegai), an improved shield, and a devastating new form of attack. He hardened his warriors for combat, improving their endurance and success rate. In a long campaign, Shaka conquered tribe after tribe and established a large kingdom in what’s now Kwazulu-Natal in South Africa. He terrorized not only those tribes not under his rule, but also his own subjects, who lived under the permanent threat of impalement (or whatever other cruel form of execution their king might choose). During Shaka Zulu’s brutal reign, around 2 million people lost their lives. By virtue of military strength, persuasive religious ritual, and an effective secret service, Shaka ruled until 1828. His family members finally led a conspiracy against him, which ended in the despot’s murder at the age of 41 15.
The psychological consequences of a conflict-ridden childhood and youth go a long way toward explaining Shaka’s excessive reactive narcissistic behavior, complete with vindictiveness and vengefulness, paranoia, delusions of persecution, excessive pride, feelings of rage, and an inability to develop intimate relationships. Furthermore, we can draw clear parallels between Shaka’s behavior and that of other, more contemporary despotic leaders, including Hitler, Stalin, Pol Pot, Kim Jong Il, and Saddam Hussein.
As these leadership examples illustrate—Messier on a lesser scale and Shaka on a more grandiose scale—the possession of unlimited power has a negative transforming effect. In workplaces around the world, even the mildest narcissists seize the opportunity, when it presents itself, to reincarnate themselves as living gods. In that transformation, they lose the ability to distinguish between fantasy and reality. Like Messier and Shaka Zulu, reactive narcissists who head companies are preoccupied with glory, power, status, and prestige. Restless and bored when they’re not in the limelight, they’re flagrant attention-seekers 16. They live in a world of instant gratification, exhibiting excesses of pomposity, arrogance, envy, greed, rage, and vindictiveness in dealing with the external environment. Their disregard for rules and the conventions of social structure leads them to engage in unethical behavior, while their tendency to blame others if things go wrong leads to a culture of fear.
The excitement generated by a charismatic narcissistic leader is temporary; it easily wears off. Too often, and too soon, the dark side of narcissistic leadership behavior overshadows the initial benefits. Narcissistic leaders frequently reveal a lack of conviction and a tendency to resort to political expediency at the cost of long-term goals. Actions that were originally interpreted as bold and imaginative are gradually exposed as short-term opportunism. Their inability to accept criticism or the free exchange of ideas, their self-righteousness and self-centeredness, their poor problem-solving, and their inability to compromise impair organizational functioning and prevent organizational adaptation to internal and external changes. In extreme cases this sends the organization into a downward spiral.
One of a leader’s most important roles is to address the emotional needs of his or her subordinates. Leaders at Messier’s and Shaka Zulu’s extreme end of the reactive narcissism spectrum are unable to handle this. They disregard their subordinates’ dependency needs and take advantage of their loyalty. This narcissistic attitude encourages submissiveness and passive dependency in subordinates, stifling their critical functions and their reality-testing skills. Narcissists’ lack of commitment to others, their blithe discarding of subordinates who no longer serve a selfish purpose, their narrow self-interests, and their search for new alliances preclude a creative, innovative organizational culture. Indeed, these traits practically guarantee organizational self-destruction.

LOST IN SPACE: INTRODUCING THE T-WORD

In order to understand how the psychopathology of relationships between narcissistic individuals and others works, we have to grasp the concept of transference, introduced in the previous chapter. Transference is the name that psychoanalysts use for a patient’s present-day repetition of childlike ways of relating that were learned in early life. The unconscious redirection of feelings from one person to another, transference results in emotional confusion regarding time and place 17-18. In essence, it suggests that no relationship is a new relationship; every relationship one experiences is colored by the nature of previous relationships.
During analysis, the patient begins to transfer thoughts and feelings connected with parents, siblings, or other influential figures in their life to the therapist. For example, a patient who is hostile toward his father may experience that same hostility in exchanges with his therapist; a patient who is loving toward her mother may feel a parallel version of that love for her therapist. Recognizing and discussing transference helps the patient gain insight into the ways he or she relates to other people in present life.
Although the word transference conjures up images of the analyst’s couch, it’s a phenomenon that all of us are familiar with: all of us act out transferential (or historical) reactions on a daily basis, regardless of what we do. Understanding the process of transference is critical to being able to understand the nature of the leader-follower interface. Executives arguing in the boardroom over issues of corporate strategy are unconsciously still dealing with parental figures and siblings over issues of power. The subordinate whose inability to listen reminds the CEO of his father, or the colleague whose unpredictability reminds another executive of her mother, inspires in the adult the same feelings that those particular people inspired in the child. The psychological imprints of our early caregivers—particularly our parents—cause this time-place confusion and make us act toward others in the present as if they were significant people from the past. These imprints stay with us and guide our interactions throughout our lives.
Two important subtypes of transferential pattern are especially common in the workplace: mirroring and idealizing 16. These traits are important to our discussion here because they’re often exaggerated in reactive narcissists. Let’s look at each in turn:
 
Mirroring. It’s said that the first mirror a baby looks into is its mother’s face. Starting with that first mirror, the process of mirroring—taking our cues about being and behaving from those around us—becomes an ongoing aspect of our daily lives and our relationships with others. Within organizations, the mirroring process between leaders and followers can become collusive. Followers use leaders to reflect what they want to see, and leaders rarely resist that kind of affirmation. The result is a mutual admiration society. Leaders who are fully paid up members tend to take actions designed to shore up their image rather than serve the needs of the organization. In times of rapid change, embedded mirroring processes can be fatal to organizations. When things change quickly, we all need to be able to face the new reality and evolve quickly to meet developing challenges.
 
Idealizing. We all idealize people important to us, beginning with our first caretakers, assigning powerful imagery to them. Through this idealizing process, we hope to combat feelings of helplessness and acquire some of the power of the person admired. Idealizing transference is a kind of protective shield for followers. Reactive narcissists are especially responsive to this sort of admiration, often becoming so dependent on it that they can’t function without the emotional fix. It’s a two-way street, of course: followers project their fantasies onto their leaders, and leaders mirror themselves in the glow of their followers. The result for leaders who are reactive narcissists—and the Messier case is a good example of this—is that the combination of disposition and position wreaks havoc on reality-testing: affected leaders are happy to find themselves in a hall of mirrors that lets them see only what they want to see. In this world of illusion, the boundaries that define normal work processes disappear, at least for the entitled leader, who has nothing to restrain him or her from acting inappropriately, irresponsibly, or even unethically. Any follower who challenges the leader’s behavior risks triggering a tantrum.
 
A close relative of transference is a defensive maneuver known as identification with the aggressor. When faced with an aggressive leader, followers become anxious. To overcome that anxiety, some followers resort to a defensive process known as identification with the aggressor. When people find themselves in the presence of a superior force with the power to do unpleasant things to them, they feel a strong incentive to become like that superior force, as a form of protection against future aggression 15; 19. In full-fledged identification with the aggressor, individuals impersonate the aggressor, assuming the latter’s attributes and gradually moving from being threatened to making (and carrying out) threats. The more extreme the actions of the leader, the more aggressive the self-defense has to be—and the more tempting it is for subjects to strengthen themselves by becoming part of the system and sharing the aggressor’s power.
Although people who identified with the aggressor were the backbone of the security forces of leaders such as Shaka Zulu, Adolf Hitler, and Saddam Hussein, they can also be found skulking around the water coolers in offices headed by reactive narcissists. For them, the organizational world is starkly black and white. People are either for or against their leader. Those who hesitate or refuse to collaborate become the new villains, providing fresh targets for the leader’s (and loyal followers’) anger. Supporters help to deal with the leader’s enemies and thus share his or her guilt for any wrongdoing—a guilt that can be endlessly fed with new scapegoats, the designated villains on whom the group exacts revenge whenever things go wrong. These scapegoats fulfill an important function: they’re a point of reference on which to project everything people fear, everything perceived as bad or threatening.

DOWNSIZING THE NARCISSIST

Given the number of grandiose, vain, and greedy senior executives we have all known, it’s clear that many boards of directors haven’t been as effective as they could have been. While on rare occasions a board will act to disempower a narcissistic leader who’s harming the organization, board members generally fail to recognize the danger signs associated with narcissistic behavior and with psychological pressures on the CEO. But organizations need not be helpless in the face of reactive narcissistic leadership. They can take action, both preemptive and follow-up. Strategies include distributing decision-making and erecting barriers against runaway leadership; improving the selection, education, and evaluation of board members; and offering coaching and counseling to executives showing signs of excessive narcissism.
The first strategy, distributing decision-making and erecting barriers against runaway leadership, is best effected through structural mechanisms—a system of leadership checks-and-balances. This entails clearly and specifically detailing the roles of the CEO and the board. Combining the roles of CEO and chairman in one person is an invitation to disaster. There are very few leaders who can resist the siren call of this sort of power.
The second strategy focuses on those who work closely with the CEO. Organizations that want to avoid the dangers of narcissistic leadership must have structures in place to guide the selection, education, and evaluation of board members. These men and women must be taught to recognize the danger signs associated with potentially destructive narcissistic behavior and be willing to tighten the reins if the CEO pulls away. Latent narcissistic tendencies suppressed by a young, high-potential executive on the way up the career ladder are likely to blossom when that person reaches his or her ultimate goal and the pressures from peers and superiors lose their power. The power of high office can make a monster out of someone who has hitherto seemed a very reasonable human being. Even constructive narcissists can go astray, though reactive narcissists are far more susceptible. Thus board members need to be on guard against collusion between predisposition and position and draw boundaries—dismissal of the CEO being the ultimate sanction—when executive behavior warrants it.
Organizations must also establish systems of accountability to encourage the participation of employees and shareholders in corporate decision-making, thereby balancing the power equation. Actively involved shareholders, particularly institutional investors, will help solve many corporate challenges. This sort of structuring can prevent the emergence of extreme oligarchic corporate structures, in which CEOs completely control the agenda and manage (in the US at least) to be paid 500 times as much as their lowestpaid employee. Corporations that establish such countervailing powers are better equipped to create wealth and compete in global markets.
The third strategy typically comes into play only when narcissistic behavior has already been detected in an executive: offering counseling and coaching. While the wisdom of experienced board members can often modify potentially destructive behavior, a board that feels unequal to the task can turn to professional help (see Chapters 10 and 11). Unfortunately, few reactive narcissists are willing to accept professional help. Part of their self-delusion is that they’re able to solve their problems by themselves.
If they do accept professional help, it will probably be because of personal pain, not board pressure. The weight of the typical symptoms—dissatisfaction with life, feelings of futility, a lack of purpose, a sense of being fraudulent, the absence of meaningful relationships, a lack of excitement at work, the inability to step out of their routines, mood swings, and hypochondria—may finally become too much. Frequently, however, the motivation is a major life event such as separation, divorce, or a significant professional setback, sometimes in conjunction with depression. It’s important to recognize what these complaints represent, because they’re the foundations on which individuals and organizations can build a change effort.
Since narcissists fail to take personal responsibility for their failures, intervention by a coach or psychotherapist is likely to be an uphill struggle. Narcissists see others as the source of all their problems, and the sense of personal infallibility exhibited by excessive narcissists is difficult to change. Such individuals can be masterfully seductive at inducting the therapist/leadership coach into their own mutual admiration society, attempting, sometimes successfully, to persuade him or her that the problem isn’t their responsibility.
Another hindrance to psychological intervention is the narcissist’s hypersensitivity to negative feedback. Even constructive feedback is perceived as humiliating criticism. Narcissistic individuals need to learn to tolerate constructive feedback about their behavior and actions. They need time to realize that most human imperfections aren’t catastrophic. And they need time to learn to become more sensitive about the feelings of others, become more willing to seek out cooperative forms of social behavior, and understand that reaching out to others can be gratifying.
The key challenges for the psychoanalyst, psychotherapist or leadership coach are to enable such people to recognize their own responsibility, regardless of the mess they find themselves in, and to make them aware of the primitive defensive processes they’re engaged in. Narcissists have to understand the destructive nature of their defensive behavior and reduce their reliance on infantile fantasies of power and glory. They need to be helped to construct more realistic, attainable fantasies that help to build self-esteem. There’s no quick fix for the trauma of having been deceived, exploited, or manipulated at some critical early developmental period. Healing is a lengthy and difficult process. Psychopharmacological intervention may be needed to ward off depressive feelings.
In The Seven Pillars of Wisdom, T. E. Lawrence wrote: “All men dream: but not equally. Those who dream by night in the dusty recesses of their minds wake in the day to find that it was vanity: but the dreamers of the day are dangerous men, for they may act their dream with open eyes, to make it possible.” If narcissistic behavior can be channeled into more positive directions, it can be the motor that drives a successful organization. If not, employees and shareholders, along with the defeated narcissist, may pay the price in disillusionment and broken dreams.

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