Organizational Narcissistic Collapse

 In our work as organizational psychologists, we are constantly observing the ways individual behaviors scale up to influence entire company cultures. CEO Jeffrey Saltman has been considering a concept that has frequented the news recently, narcissistic collapse, and explores whether a business can experience these same destructive patterns. 

The term narcissism comes from Greek mythology. It tells the story of a youth so in love with his reflection in a pool of water that he becomes unable to leave, dies, and becomes the Narcissus flower.

According to the Diagnostic and Statistical Manual (DSM-5-TR),  Narcissistic Personality Disorder (NPD) is "a pervasive pattern of grandiosity (in fantasy or behavior), need for admiration, and lack of empathy, beginning by early adulthood" and may include traits such as entitlement, exploitative behavior, and arrogance. A diagnosis requires at least five of the following key diagnostic criteria to be met:

Malignant narcissism is considered a subcategory of Narcissism that adds antisocial personality disorders, sadism, and paranoia to the diagnosis. This would be very similar to a psychopathic or sociopathic individual. (The psychopath also has no morality and hence no guilt, engages in risky behavior, is promiscuous, commonly engages in criminal behavior, has a parasitic lifestyle, is a pathological liar, and yet can be charismatic and manipulative. This combination also goes by the name The Dark Triad, a series of disorders that are commonly co-morbid.)

Narcissistic collapse occurs when a narcissist has their false facade ripped away. It is a blow to their ego. The narcissist suffers public failure, humiliation, or abandonment by their allies, supporters, or subordinates. They feel exposed for who they truly are, and it becomes an “emperor has no clothes " moment. When that occurs, the narcissist often responds with rage, defensive behavior such as blaming others, personal attacks, vengefulness, and loss of control, which can result in physical outbursts or tantrums.

And while this all has been well documented at the individual level, the question we explore is, can this happen at the organizational level? Can an organization have narcissistic tendencies and experience narcissistic collapse?

Psychopathy is significantly more prevalent among leaders such as business leaders,  politicians, lawyers, police, religious leaders, and people who seek power over others. We also know that psychopaths are attracted to and surround themselves with similarly inclined individuals. And while that work has not been replicated among narcissists, it is not much of a stretch to think there is a good chance of a similar pattern given the overlap in symptoms.

There are plenty of organizations where the leaders think they know best. They believe they know better than their customers, even better than society as a whole. As organizational psychologists, we have time and again made suggestions to leaders of organizations, based on scientific evidence that is routinely ignored, because, as they say, they just know it in their gut what they should do. And as narcissistic leaders surround themselves with other narcissists, you could say that you have an organization that is certain that they know what is right, an organization deep into self-love, with a sense of hubris.

In his book “How the Mighty Fall", Jim Collins cites hubris as one of the factors that cause previously successful organizations to fail. Hubris in organizations occurs when “leaders become arrogant, view success as an entitlement, and lose sight of the true, underlying factors that created their success.” Companies that were once successful but died or nearly so because of hubris include: Sears, Blackberry, Nokia, Enron, Kodak – it is a long list and can go on for quite some time. The point being that this occurrence is not rare.  One way to address the hubris issue, according to Collins, is to put into place leadership that acts humbly, leadership that is open to learning, and leadership that can change course when the evidence says that is appropriate and needed.

It would seem that an organization can suffer from something similar to, even if not identical to, a narcissistic collapse that narcissistic individuals suffer from. But a narcissistic collapse at an organizational level could open up change opportunities. As Kurt Lewin, the Austrian/American Psychologist, documented in his change model, there are three phases to organizational/personal change:

1. Unfreeze

2. Change

3. Refreeze

The unfreeze phase typically needs what is often called a burning platform event. A burning platform event has to be a very significant event that makes it clear to the individual or the organization that severe consequences are going to occur unless change happens. At the individual level, that could be a medical diagnosis, threat of divorce or loss of a partner, or the potential loss of employment. At the organizational level, it could be the failure of a critical new product, the loss of major customers, the potential of bankruptcy, or going out of business.

Many times, but not always, when organizations radically change direction, it occurs because of a change in leadership. So, a narcissistic collapse, which triggers an unfreeze event, rather than signaling the death of the organization, could represent an opportunity for the organization to implement potentially organizational life-saving changes.

One method to foster change in people is to have them take a look in the mirror. Sometimes, if they don’t like what they see, change can occur. 360 assessments, under the right circumstances, can be that look in the mirror. 

Check out the OV Guide to 180 & 360 Assessments