Companies looking to protect themselves from financial ruin must do more to protect themselves from “corporate psychopaths” like Bernie Madoff—such is the conclusion of a new research article published this month in the International Journal of Market Research.
Psychopathy—a neuropsychiatric disorder that features a lack of emotions and empathy, usually resulting in poor behavioral control and antisocial behavior—is often associated with criminality.
But a subtype of psychopaths—dubbed “successful psychopaths”—often go undetected because they’re “better able to control their aggressive, anti-social impulsive inclinations” than typical criminal psychopaths, writes Clive Boddy, a research methodologist at Anglia Ruskin University in the U.K. and a pioneer in the field of corporate psychopathy.
Psychopaths are generally charming and intelligent at first blush, successful psychopaths all the more so. Because of this, they’re able to work “relatively undetected in corporate society,” according to Boddy. Such individuals have also been referred to as “industrial,” “organizational,” “business,” “workplace,” and “executive” psychopaths.
Psychopathic leadership may be discovered in “senior roles in the financial services sector,” which can impact economies and influence “unethical practices found in financial markets,” Boddy writes. He encourages companies to identify these leaders before they “ascend to power” in their institutions.
“This article arguably adds to critical contemporary views of prevailing capitalism by illustrating the traits, behavior, and outcomes of one of its more infamous 20th century leaders,” he writes, referencing Madoff—onetime chairman of Nasdaq and mastermind of history’s largest Ponzi scheme—whose behavior he explores.
How to identify corporate psychopaths
Boddy uses documented observations of Madoff’s behavior, which he examines via two psychopathy assessments used by psychologists. Among the traits of psychopaths, according to the the assessments:
- Superficial charm and apparent intelligence
- Untruthful and insincere nature
- Cheating personality
- Totally egocentric personality
- Has no remorse about how their actions harm other employees
- Emotionally shallow
- Unresponsive to personal interactions
- Sense of uniqueness
- Sense of entitlement
- Sense of invulnerability
- Chaotic sense of self
When Madoff is assessed, he “appears to embody, to a very close degree, all…behavioral traits of psychopathy” mentioned in the assessments “in addition to many others,” Boddy writes, mentioning British media tycoon Robert Maxwell; WorldCom cofounder Bernard Ebbers; former Sunbeam CEO Albert Dunlap; and Enron founder, CEO, and chairman Ken Lay as “other potential corporate psychopaths.”
“Psychopathically led organizations like Maxwell’s Mirror group, Lay’s Enron, Dunlap’s Sunbeam, Ebbers’s WorldCom, and Madoff’s investment firm ultimately fail and/or go bankrupt,” he writes. “Typically, investors, pension funds, pension holders and other stakeholders are impoverished, often severely.”
Market researchers could help “help identify business leadership that is non-ruthless, socially responsible, [and] non-polluting (i.e., non-psychopathic),” and offer this information to consumers, pension funds, and other investment firms to help them make better-informed decisions, Boddy suggests.
“Improved and more sustainable societal outcomes may result from this, such as helping to avoid further global financial crises,” he concludes.