Were our big banks run by psychopaths?

A psychologist suggests that the banks' current woes may be due to their bosses' psychopathic tendencies...

Last Updated: 20 Jul 2016

The level of recklessness and overweening ambition that has brought Britain’s biggest banks to their knees suggests that their bosses could have been affected by anti-social psychopathic personality traits, according to business psychologist Professor Binna Kandola. So watching Sir Fred Goodwin and co. appear in front of the Treasury Select Committee recently, the professor was not surprised (albeit distinctly unimpressed) by their refusal to accept any personal responsibility for the crisis, despite their ‘heartfelt’ apologies. What’s more, he reckons their behaviour in recent months will change the model of leadership for years to come...

Of course when we talk about banking bosses being psychopaths, we’re not actually using it in the popular sense, i.e. that they went around slaughtering people American-Psycho-style (although we’d be slightly nervous about bumping into a recently-axed CEO in a dark alley). We’re talking about the clinical condition, which is usually characterised by an almost total lack of empathy. Apparently, a study once found that psychopathic behaviour was twice as prevalent among high-potential managers as it was in the general population. In the good times, the kind of reckless disregard for the rules this engenders will have served these bosses well, as they squirmed their way up the greasy pole – but ultimately, it caused them to over-reach, and the whole edifice came tumbling down with them.

Kandola reckons the banking bosses have also been displaying signs of narcissism, which is usually characterised by a certain grandiosity (check out some of the gleaming HQs these people erected around the world) and also a strong sense of envy – RBS’s decision to take on Barclays for ABN could be seen in this light, he argues. They also seem to think the rules don’t apply to them; again, by pursuing an expensive acquisition while at the same time demanding that his staff count the pennies, Goodwin was suggesting that he was somehow exempt from his much-vaunted organisational values. So perhaps the shareholder who accused him of megalomania wasn’t far off the mark, he argues.

US psychologist Robert Hogan was one of the first to examine how strengths can actually turn into weaknesses – for instance, an empathetic concern about people is generally considered a strength, but in excessive quantities, it can make someone seem like a soft touch. By the same token, Kandola reckons that the very things that made banking bosses successful in the first place – ambition, drive, ruthlessness – were ultimately the very things that eventually brought them down. All very Shakespearean tragic.

One likely consequence, he suggests, is that the ‘real failures of leadership’ we have seen will affect all business leaders. Public trust has been eroded to such an extent that from now on, leaders will have to operate very differently – notably, they’ll have to be much more honest and open with people, and they’ll have to get used to much more scrutiny of their decisions. ‘It won’t just be about track records,’ says Kandola. ‘It’ll be about how they achieved what they did.’ In other words, psychopaths need not apply.

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Were our big banks run by psychopaths?
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