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Business News/ Opinion / Is the capacity for empathy a weakness in a CEO?

Is the capacity for empathy a weakness in a CEO?

Amazon is not an easy place to work in, and Jeff Bezos clearly doesn't care much about personnel issues chief executive officer Jeff Bezos. Photo: Reuters Premium chief executive officer Jeff Bezos. Photo: Reuters

Evidence is mounting that it might be so. The latest is the portrait of a man who many consider to be the best CEO today in America—if not the world—Jeff Bezos.

In his new book, The Everything Store: Jeff Bezos and the Age of Amazon, which came out last week, business journalist Brad Stone traces the connection between Bezos’ distinctive personality traits and Amazon’s work culture and organizational ethos, which he describes as “gladiatorial" and “notoriously confrontational".

He cites Amazon employees who “advance the theory that Bezos, like Jobs, Gates, and Oracle co-founder Larry Ellison, lacks empathy. As a result, he treats workers as expendable resources without taking into account their contributions. That in turn allows him to coldly allocate capital and manpower and make hyper-rational business decisions, where another executive might let emotion and personal relationships figure into the equation."

The theory advanced by Amazon employees is borne out by data. Amazon fares the worst among global IT firms in the most important human resource metric: employee retention. The median employee tenure at Amazon is just one year—poorer than that of nearly every other big IT company, with Google, EBay, Yahoo!, Microsoft, Intel, HP and IBM all faring better.

Amazon is not an easy place to work in, and Bezos clearly doesn’t care much about personnel issues. According to Amazon employees, Stone writes, “Bezos is primarily consumed with improving the company’s performance and customer service and that personnel issues are secondary." In this regard, Bezos is hardly exceptional as a CEO. What is worth noting is that sidelining personnel issues only becomes more difficult the greater your capacity for empathy.

I have engaged—as an employee—with half a dozen CEOs so far, spanning four different sectors. Barring one, who was also the owner of the company and not a professional CEO, I wouldn’t say any of them distinguished themselves by their empathy or great rapport with employees. They preferred to be feared and respected than to be understood or appreciated, let alone loved. Their very management style was predicated on not understanding and a reputation for being unreasonable, an approach that must be familiar to anyone who has worked closely with top management.

So what does one make of all the fuss over the importance of people skills in the business world? Or the idea peddled by some new age management thinkers that empathy is “essential to providing better customer experiences?" If employees are a company’s internal customers, as the latest HR fad has it, then it’s logical to assume that they should be treated with empathy.

But the science of management hasn’t yet advanced to a stage where it might be possible for a CEO to empathetically downsize while drawing a salary that’s 10 times the combined paycheck of all the staff being downsized. Rather, in such scenarios—which are all too common when the economy is not doing well—empathy and listening skills are more a hindrance than a necessity, no matter that self-styled management gurus like to play up such traits as critical leadership qualities. Such nostrums, which invariably seem to be more popular with retired management professionals and academics than with working CEOs, must be taken with the same quantity of salt as we reserve for homilies such as “employees are our greatest assets," which often sit snugly alongside “right-sizing" announcements.

In one of the most famous studies of CEO psychology, titled Which CEO characteristics and abilities matter?, Steven Kaplan, Mark Klebanov and Morten Sorensen assessed the personalities of 316 CEOs and their company’s performances. “Success is more strongly related to execution, resoluteness, overconfidence-related skills than to interpersonal-related skills," they concluded. In other words, a CEO who is warm, flexible, empathetic will not be as successful as another who is cold, inflexible and has no empathy. People like Bezos and Jobs were, in this sense, pretty much typical of the successful CEO personality type.

But, does the effectiveness of a CEO increase with progressively lower people skills and more and more of an anal-retentive devotion to shareholder value that can see little else? Sometimes, yes, but not always. So claims a feature in Forbes magazine, titled Why (some) psychopaths make great CEOs . The article focuses on the research of British journalist Jon Ronson and his book The Psychopath Test: A Journey Through the Madness Industry.

According to Ronson, the incidence of psychopathy among CEOs is four times what it is in the general population, which means that a CEO is four times as likely to be a psychopath as an average human being. And just so we are clear as to what we mean here by the term psychopaths, Ronson defines them as individuals who “lack the things that make you human: empathy, remorse, loving kindness". Not the first attributes that spring to mind when we think of Steve Jobs or Jack Welch, are they?

Ronson argues that many of the psychopathic traits are conducive for success as a CEO. Besides lack of empathy, which is crucial, “other positive traits for psychopaths in business is need for stimulation, proneness to boredom. You want somebody who can’t sit still, who’s constantly thinking about how to better things". He cites the famous example of ‘Chainsaw’ Al Dunlap, the former CEO of Sunbeam, the American home appliances company, who is described by Wikipedia as “a professional downsizer" and Ronson says “seemed to enjoy firing people".

But can one really blame individual CEOs if the economic system is rigged in a way that incentivizes psychopathic traits and rewards professionals for de-prioritizing the social dimension of doing business? In the words of the Israeli-American behavioral economist Dan Ariely, “once market norms enter, social norms leave."

According to Ronson, “the way capitalism is structured really is a physical manifestation of the brain anomaly known as psychopathy." If that is the case, then what qualities can we expect of someone who’s the brain behind an insanely successful capitalist enterprise? Such as Amazon, for instance?

It is startling that Stone falls back on the same cranial metaphor (that Ronson uses) to explain Amazon’s emergence. He writes, “In a way, the entire company is built around his (Bezos’) brain—an amplification machine meant to disseminate his ingenuity and drive across the greatest possible radius."

While the ingenuity and drive are obviously welcome, they only ever seem to come as a package deal with the other qualities that make such amplification possible. And these cannot but be unpleasant in the domain of personnel relations. For instance: “Managers in departments of 50 people or more are often required to ‘top-grade’ their subordinates on a curve and must dismiss the least effective performers. As a result, many Amazon employees live in perpetual fear," writes Stone.

So if the milk of human kindness is in short supply at Amazon, it’s because this scarcity is working well for Bezos. It’s one of the reasons why “ rivals Wal-Mart as a store, Apple as a device maker, and IBM as a data services provider (and) will rake in about $75 billion this year." Clearly, stuff like empathy is of no consequence in the context of such stupendous achievement. In the prevailing business ethos, it is bound to be considered as a drawback diluting the CEO’s focus on maximizing shareholder value.

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Updated: 24 Oct 2013, 01:28 PM IST
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