Sensitive CEOs are all the rage. A leader who understands and relates to their workforce and colleagues is nowadays viewed as an asset, while brash and aggressive CEOs are seen as trouble.
But, according to new research, Machiavellian chief executives—those with a pragmatic focus on outcomes that “minimises” concern for others—are able to reduce company costs, an indicator that they may be more valuable than attitudes would suggest.
Academics gathered videos of 198 US chief executives and used a team of expert psychologists to rate them on a Machiavellian scale. The researchers then cross-referenced the findings with financial information about firm acquisitions.
Their first finding was that Machiavellian chief executives pay less for acquisitions—on average 12.11% lower than those of less aggressive leaders. Based on an average US acquisition this may mean a saving of at least $157m.
“This suggests that Machiavellian CEOs can utilise their social influence propensity and skills, focusing on bargaining to achieve favourable terms for their firms in acquisition contexts,” the researchers write.
The research also finds that Machiavellians also win better terms on debt financing costs, meaning “lower cost structures”.
Managing Machiavellian CEOs
Machiavellian—a term drawn from Niccolo Machiavelli’s leadership bible, The Prince—is a character trait common among company leaders, but also viewed widely as a negative trait.
However, the authors point out that Machiavellians are “strategic”, “deliberately plan ahead” and “successfully build alliances”. However, they add that Machiavellians have a “dark side”. “High Mach” leaders are associated with “counterproductive” behaviours and “unethical leadership”, such as manipulation of other directors to seize more power, dodgy accounting practices and, potentially, bribery. Research has found they are “more prone to illegal kick-backs” and “more willing to lie”. Their character might also be closely associated with theft and “excessive politicking”.
The research appears to give boards and investors much food for thought when looking for chief executives, or acquisitions. Companies with low-Mach CEOs may need more negotiating skills in their organisation to get the best value from deal-making. Others with high-Mach CEOs will want to focus on constraining their unwanted behaviours, such as increasing transparency for their decision-making, knowing that “visibility” is a strong moderating force.
But the findings may also explain why Machiavellian characteristics are so so frequently found in CEOs. “In essence, our study highlights a particular characteristic that is generally seen as negative but has been shown to have important advantages in evolutionary psychology.
“While the levels of Machiavellianism in the CEO population are larger than those in the general population, differences between them are still significantly predictive of organisations’ bargaining outcomes.”