In the May 2013 Harvard Business Review, researchers reported on companies led by CEOs who have large signatures–an indicator, the authors of the study contend, of narcissism, usually characterized as being dominating, vain and self-centered. The trait is named after the Greek myth of Narcissus, who fell in love with his own image.
According to Wikipedia, “persons diagnosed with a Narcissistic Personality Disorder are characterized by unwarranted feelings of self-importance. They have a sense of entitlement and demonstrate grandiosity in their beliefs and behavior. They have a strong need for admiration, but lack feelings of empathy for others. These qualities are usually defenses against a deep feeling of inferiority and of being unloved.“
The HBR researchers found that those companies with big-ego signatures perform worse than ones led by CEOs with small signatures. The study examined 605 signatures of a decade’s worth of annual reports from 400 S&P 500 companies. The large signatures were correlated with corporate overspending, lower returns on assets and high CEO pay for the industry. Similarly, CEOs who wrote out all components of their name–first, middle, last, etc.–presided over worse performance on average.
Narcissists tend not to take input from others, because of their high regard of their own opinion, and therefore tend to make worse decisions than those who are more collaborative.
Examples of large signatures are Rupert Murdoch’s of News Corp., Terry Lundgren of Macy’s, and Alain Belda of Alcoa. All three companies are currently under-performing the market. On the other hand, Craig Donohue of CME Group, Bruce Chizen of Adobe Systems and Howard Levine of Family Dollar are cited as CEOs with small signatures whose companies are doing well.
The researchers caution that boards evaluate leaders for warning signs of narcissism, including the size of their signatures. And law firms? How about passing the legal pad at the next Executive Committee meeting to get some insight into who you should keep your eye on?