http://www.projo.com/opinion/contributors/content/CT_drut20_09-20-07_JB75ES1.1f8ebf7.html
LEE DRUTMAN
WASHINGTON
SO, AT LONG LAST, and with the begrudging signature of the president of the United States, the so-called lobbying- and ethics-reform bill is now law. Well, hip, hip, hooray.
“A great day it is indeed,” House Speaker Nancy Pelosi (D.-Calif.) said at a press conference. “Democrats in Washington are draining the swamp to make this the most honest Congress in history.” Take that, culture of corruption!
Oh, if only the world of Washington influence-peddling were so simple that a little bit of new fundraising disclosure here, a well-meaning ban on junkets there, and a sprinkling of earmark disclosure all around, and bam, presto, shazam! The most honest Congress in history! In history!
Lest we get too cynical, though, there is some good here. Disclosure, for example, is a helpful, knowledge being power and all that. Now, thanks to this new bill, we the public will know more about what lobbyists are giving to whom, and how they are bundling contributions. We will know more about “earmarks.” And soon, we will be treated to a steady stream of reports from the good-natured numbers crunchers at various public-interest watchdogs around town, each nourishing our sense of outrage at how much money is sloshing around. Each full of sound and fury, signifying . . .
But then, come election time, our beloved member of Congress will arrive at the local pancake breakfast, cheerfully telling us how he got this federal funding for a regional biotechnology center that is creating jobs (an earmark), this federal grant for a new cancer ward at the city hospital (an earmark), and that federal grant to keep a cherished museum afloat (an earmark). Then he will offer the usual nostrums about the awful corruption in Washington that he (tirelessly, and mostly on his own) is working to fix, and we will think: What a great guy. I’m voting for him!
As for the ban on meals and free corporate travel and other tasteless gifts to lawmakers, it only means that lobbyists will just have to spend even more time at $1,000-a-plate fundraisers, which members of Congress, in their infinite wisdom, never considered banning lobbyists from attending. But the lobbyists will be okay. More regulations mean more specialized and valuable expertise to navigate the process. Sure, they have might more paperwork now, but they are getting well paid for their time.
The big question, of course, is what is lobby and ethics reform trying to change? Is it the “culture of corruption,” the supposed mechanistic quid-quo-pro graft and bribery that Jack Abramoff came to symbolize? If so, there’s no need for new laws. Just enforce the existing ones, as the Justice Department ultimately did. Remember, Jack Abramoff is in jail now. The need is for better people. But that has been the need since Day One.
Still, you have to be pretty cynical about politicians to think that they are such ciphers that their unconditional support can be secured for a prime rib or a prime seat at a Nationals game. Sure, there are bad apples, and instances of what we know as corruption. But from a perspective of representative democracy, the problem is not that it is a venal swamp in need of draining, but simply that a minority of interests with the majority of financial resources hire the majority of the lobbyists, who in turn convince the majority of the elected representatives what the “right thing” to do is. And they are darn persuasive about it. For example, why would a pharmaceutical company risk bribing a congressman when it can just bring in sick patient after sick patient to beg politely for continued full Medicare drug reimbursements? The media like to focus on the scandals. But most lobbying happens above board. What really matters is the quantity of it.
So, what is to be done? Well, for one, pay congressional staffers better so they’ll stick around longer, developing independent expertise on issues instead of going off to work as lobbyists as soon as they turn 26 or 27. Give Congress more independent sources of information so they don’t have to depend on lobbyists so much to know what’s going on with an issue. And enact public financing of federal elections so lawmakers don’t feel any extra pressure to keep those with the most money the most happy. But, most importantly, let’s have a real conversation about the ways in which the current lobbying system does or does not represent the public at large instead of overblowing a few instances of corruption that were punishable under existing laws.
Lee Drutman, a frequent contributor, is the co-author of The People’s Business: Controlling Corporations and Restoring Democracy.
Thursday, September 20, 2007
Wednesday, September 05, 2007
The challenge of the narcissistic CEO -- Providence Journal
WHY DOES THE PAY of American chief executive officers surge year after year, no matter how well their companies are doing? Maybe it’s just plain old narcissism — pathologically self-important executives who can never get enough external validation, and so they have to keep paying themselves more and more as a salve for their wobbly egos. Of course, they do this with the acceptance of the boards of directors they so assiduously cultivate.
If so, do companies that keep indulging their CEOs in their Sisyphean pay-raise chases only make their narcissism worse? And if they do, what are the consequences? Don’t narcissists become more psychologically unstable over time, taking more ever more extreme and ill-advised actions in pursuit of some elusive psychological self-justification? And can that really be a good thing for the economy?
In psychiatric parlance, one is said to have “narcissistic personality disorder” (NPD) when he/she makes exaggerated claims about talents and abilities, needs constant admiration from others and has a hard time feeling empathy for others.
Not surprisingly, those who score high on the Narcissistic Personality Inventory (NPI) test do things we generally frown on as a society. They cheat, they take more than their share and hoard it, they value material goods excessively, and they spend way too much time looking at themselves in the mirror. They also tend to gravitate to high-profile, high-paying positions of leadership — such as corporate executive.
In upcoming issue of Administrative Science Quarterly, two professors from Pennsylvania State University’s Smeal College of business, Arijit Chatterjee and Donald Hambrick, examine the impacts of CEO narcissism on company performance. Their study, intriguingly titled “It’s All About Me: Narcissistic CEOs and Their Effects on Company Strategy and Performance,” suggests that the more narcissistic the CEO, the more the company tends to pursue big, high-risk strategies. More acquisitions, more frequent big changes in direction, more fluctuations in just about everything. But “although narcissists tend to generate more extreme and volatile performance than non-narcissists, they do not generate systematically better or worse performance.” (The study is based on 111 CEOs in the computer and software industry; the researchers measured narcissism by seeing how much the CEOs got paid relative to others in the company, how much they spoke about their company in the first-person singular, and how prominently they were featured in company materials.)
Other research, however, does suggest that overly narcissistic leaders are actually quite destructive in the long-term. For example, Roy Lubit’s work (“The Long-Term Organizational Impact of Destructively Narcissistic Managers”) makes a convincing case that, over time, narcissism leads to recklessness, and eventually, big trouble. It also alienates and drives away the most talented people in the company. Or, as management guru Peter Drucker once wrote, “The leaders who work most effectively, it seems to me, never say ‘I.’ And that’s not because they have trained themselves not to say ‘I.’ They don’t think ‘I.’ They think ‘we’; they think ‘team.’”
Psychologists have no real cure for narcissism, though it can be dampened through humbling life experience. Conversely, the more one is allowed to indulge in narcissism, the worse all the symptoms generally get — the never-ceasing quest for self-importance and approval that leads to more outrageous and unreasonable attempts to reach the slippery heights of feeling okay with yourself. So maybe paying CEOs more and more with each passing year is only fueling their narcissism, which leads them to pursue grander but more outrageous moves, until one day — Wham! Bam! Crash!
Sure money motivates. And sure a little bit of narcissism is probably a condition for the risk-taking that our economy thrives on. But eventually, the money itself becomes meaningless. It is merely status, and there will always be somebody with more. Likewise, beyond a certain level, risk-taking just becomes idiotic thrill-seeking for its own sake. And worse, it’s reckless thrill-seeking with thousands of employees and investors along for the ride.
It’s hard to say exactly where healthy incentive turns into harmful addiction, where productive drive turns into damaging disorder. But with each passing year, as CEO pay reaches ever higher stratospheres while average worker pay stagnates (the ratio is now on the order of 400-to-1 — truly remarkable since all other industrialized nations have kept the ratio around 20-to-1), it seems more and more like a line is being crossed. And as a general rule, it’s probably not good policy to indulge and encourage the potentially destructive psychological disorders of those who have the power. It can only lead to no good eventually.
Lee Drutman, a frequent contributor, is the co-author of The People’s Business: Controlling Corporations and Restoring Democracy ( ldrutman@gmail.com).
If so, do companies that keep indulging their CEOs in their Sisyphean pay-raise chases only make their narcissism worse? And if they do, what are the consequences? Don’t narcissists become more psychologically unstable over time, taking more ever more extreme and ill-advised actions in pursuit of some elusive psychological self-justification? And can that really be a good thing for the economy?
In psychiatric parlance, one is said to have “narcissistic personality disorder” (NPD) when he/she makes exaggerated claims about talents and abilities, needs constant admiration from others and has a hard time feeling empathy for others.
Not surprisingly, those who score high on the Narcissistic Personality Inventory (NPI) test do things we generally frown on as a society. They cheat, they take more than their share and hoard it, they value material goods excessively, and they spend way too much time looking at themselves in the mirror. They also tend to gravitate to high-profile, high-paying positions of leadership — such as corporate executive.
In upcoming issue of Administrative Science Quarterly, two professors from Pennsylvania State University’s Smeal College of business, Arijit Chatterjee and Donald Hambrick, examine the impacts of CEO narcissism on company performance. Their study, intriguingly titled “It’s All About Me: Narcissistic CEOs and Their Effects on Company Strategy and Performance,” suggests that the more narcissistic the CEO, the more the company tends to pursue big, high-risk strategies. More acquisitions, more frequent big changes in direction, more fluctuations in just about everything. But “although narcissists tend to generate more extreme and volatile performance than non-narcissists, they do not generate systematically better or worse performance.” (The study is based on 111 CEOs in the computer and software industry; the researchers measured narcissism by seeing how much the CEOs got paid relative to others in the company, how much they spoke about their company in the first-person singular, and how prominently they were featured in company materials.)
Other research, however, does suggest that overly narcissistic leaders are actually quite destructive in the long-term. For example, Roy Lubit’s work (“The Long-Term Organizational Impact of Destructively Narcissistic Managers”) makes a convincing case that, over time, narcissism leads to recklessness, and eventually, big trouble. It also alienates and drives away the most talented people in the company. Or, as management guru Peter Drucker once wrote, “The leaders who work most effectively, it seems to me, never say ‘I.’ And that’s not because they have trained themselves not to say ‘I.’ They don’t think ‘I.’ They think ‘we’; they think ‘team.’”
Psychologists have no real cure for narcissism, though it can be dampened through humbling life experience. Conversely, the more one is allowed to indulge in narcissism, the worse all the symptoms generally get — the never-ceasing quest for self-importance and approval that leads to more outrageous and unreasonable attempts to reach the slippery heights of feeling okay with yourself. So maybe paying CEOs more and more with each passing year is only fueling their narcissism, which leads them to pursue grander but more outrageous moves, until one day — Wham! Bam! Crash!
Sure money motivates. And sure a little bit of narcissism is probably a condition for the risk-taking that our economy thrives on. But eventually, the money itself becomes meaningless. It is merely status, and there will always be somebody with more. Likewise, beyond a certain level, risk-taking just becomes idiotic thrill-seeking for its own sake. And worse, it’s reckless thrill-seeking with thousands of employees and investors along for the ride.
It’s hard to say exactly where healthy incentive turns into harmful addiction, where productive drive turns into damaging disorder. But with each passing year, as CEO pay reaches ever higher stratospheres while average worker pay stagnates (the ratio is now on the order of 400-to-1 — truly remarkable since all other industrialized nations have kept the ratio around 20-to-1), it seems more and more like a line is being crossed. And as a general rule, it’s probably not good policy to indulge and encourage the potentially destructive psychological disorders of those who have the power. It can only lead to no good eventually.
Lee Drutman, a frequent contributor, is the co-author of The People’s Business: Controlling Corporations and Restoring Democracy ( ldrutman@gmail.com).
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