OPINION: We need MOT tests for bad bosses so that boards can spot hubris before it derails the company

By CHRIS WISCARSON

Updated: 04:55 EST, 24 September 2012

Chris Wiscarson, chief executive of Equitable Life

No one would deny that chief executives have egos. In many, it is restrained and agreeable. In others, I see hubris. Self doubt, self criticism and open-mindedness don’t much feature.

Are chief executives like this from childhood, or do they develop extraordinary levels of self belief when they get a few successes under their belt?

The Daedalus Trust, founded by Lord David Owen, aims to answer exactly that sort of question.

He tells us that hubris is ‘a disorder of the possession of power, particularly power which has been associated with overwhelming success’.

So what we have to look out for is when successful CEOs begin to believe in their own invincibility after a good run. What we need is an MOT for chief executives.

It’s not that all top bosses suffer from hubris. It’s just that we need a way to spot the ones who do before they derail their company. I am not at all sure it is self-diagnosable. 

The job of a chief executive is lonely. Who influences them? Other CEOs in my experience. It’s not so much a club as a cult, where power and reward are huge motivators. Customers and staff are often distant beings.

The eminent doctor Lord Robert Winston reflected recently that CEOs in insurance and banking are not actually faced immediately with a responsibility to the person in front of them, and that makes a very big difference to their ethical assessment of what they’re doing.

Disorder of possession: We need a way to spot the bosses who suffer from hubris before they derail their company, says Chris Wiscarson

Hubristic behaviour is not difficult to spot. Chief executives taking big bonuses this year for example. Misguided enough in itself but even more misguided to defend the indefensible, then capitulate anyway.

Carried out annually by the senior independent director, an MOT for chief executives could comprise a set of penetrating questions to the CEO, private interviews with the executive team, and visits to key parts of the business without executives present. If a CEO is not comfortable with this, does that not signal hubris?

What I like to see in company bosses is confidence that they can lead their organisation in the right direction; that they are able to explain simply what that direction is and the risks associated with it; and then have a good dose of humility, knowing that they don’t have all the answers.

Transparency, and self-doubt from time to time, are truly good signs. Good manners too show a consideration for others and their views. How often my wife has sat next to a chief executive when he has spent the whole evening talking about himself, not once asking what she does. Where is the self awareness in that!

In a strong economy, CEOs simply need to perform averagely and their results will follow the economy upwards. Average is not good enough when the economic tide turns.

The real test for executives is in rough seas, particularly if hubris has set in. The real test for external directors is to spot hubris early. If they don’t, the wrong people will continue to run large organisations, the life blood of our economy.

In the MOT, we need to identify changes in how the CEO goes about his job. ‘Does the chief executive listen as much as they used to?’ ‘Do they speak to customers as much as they used to?’ ‘Do they portray the company results more favourably than they really are?’ ‘Do they argue for a bonus even when the results have gone in the wrong direction?’

What would it take for a Board to tell the successful chief executive ‘we don’t like the way you go about your leadership’?

Not once have I seen that in my career. A failed MOT would give external directors the information they need to have just such conversations.

The notion of a hubris index was mooted by Martin Dickson back in 2007. For chief executives, its day has come.

Chris Wiscarson is chief executive of Equitable Life.