By Leslie Pratch
This series suggests that it may be useful to assess the whole person when making predictions regarding how an executive might behave under new and stressful conditions, rather than just examining the executive’s track record and experience.
The focus in this series has been on understanding the personality characteristics of executives who are likely to act with consistently high integrity in applicable business situations. The executives I examined were similar in terms of background and temperament. Differences were noted between the two groups in terms of original family background, work history, objective tests of intellectual ability, and some overt behaviors. The difference between the two groups was most striking, though not obvious or immediately apparent, was in their underlying motivation and their coping tendencies.
The low integrity executives did not steal outright from the company or cheat its customers. But three met the tests for low integrity by misleading customers, employees, investors, and/or bankers, each of whom was materially harmed by their duplicity. Three of the low integrity executives defrauded their investors or redirected funds to their personal use. Two had affairs with subordinates that resulted in sexual harassment lawsuits, which created economic costs to their employers. Two behaved in ways that resulted in accounting scandals which also created economic costs.
A CEO with high integrity is likely to attract a team of high integrity executives who will spend time fixing the problems and ensuring they do not recur. A CEO who lacks integrity is more likely to feel threatened by a management team that works together openly where each member can speak. Such a CEO is more likely to select managers who will comply with his or her wishes. The team is more likely to spend more time assigning blame than fixing problems. As a result, their companies are in the long run likely to perform worse than those led by high integrity executives. This paper suggests that there are ways to predict how an executive is likely to behave in situations where active coping and integrity will make a difference.
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Leslie Pratch, Ph.D. is a clinical psychologist from the Northwestern Medical School with an M.B.A. in Strategy and Finance from Chicago Booth and a B.A. in Religion from Williams College. She works with boards of directors of public companies as well as private equity investors to assess and develop executives. She can be reached at (312) 464-7919 or leslie@pratchco.com or www.pratchco.com.
