Two years before the turn of the millennium, two UK pharmaceutical giants planned a massive, £100bn merger. GlaxoWellcome and SmithKline Beecham were two of the country's biggest companies and together they would have formed the world's largest drugs company.

The combined company, said analysts at the time, would be "totally untouchable". There were few product overlaps and significant cost savings. Barely a month later, the talks collapsed with hundreds of millions of pounds being wiped off the value of the two companies as a result.
Shareholders, analysts and rivals were bemused about what might have gone wrong. SmithKline cited only "insurmountable differences" such as its "approach to the possible merger, management philosophy and corporate culture."

It was some time before the truth emerged. The chief executives of the two organisations—Richard Sykes at Glaxo and Jan Leschly at SmithKline—simply could not agree who would run the company. Both alpha males wanted the top job, even if not having it meant the entire deal collapsed and all the benefits to shareholders disappeared. It was two years before the merger was stitched back together and, when it eventually did happen, neither Sykes nor Leschly stayed with the firm in an executive role.

The damage that can be caused by senior executives whose egos have run out of control is clear. Yet business success and ego are inextricably linked. It is almost impossible to conceive of a successful business being led by a self-deprecating man or woman with little confidence, low self-esteem and no drive. The problems arise when ego runs out of control.

According to Kate Ludeman and Eddie Erlandson, authors of The Alpha Male Syndrome, the business world swarms with alpha males. By their estimates, 75 per cent of top executives fit the profile: hardwired for achievement, inspire awe and admiration, and can instill fear and trembling. At their worst, they are the corporate equivalent of the "big swinging dicks" immortalised by Michael Lewis in his book, Liar's Poker, which defined the worst excesses of behaviour on Wall Street in the 1980s. The BSDs were bond traders who swaggered, intimidated and exploited their way to the top.

Ludeman and Erlandson—executive coaches whose client list includes computer entrepreneur Michael Dell and eBay boss Meg Whitman—say ego-driven alphas can "produce astonishing results, and bring enormous value to their organisations". On the downside, these competitive and often belligerent, impatient bosses can "run roughshod over colleagues and employees, to the detriment of their careers and the company's bottom line."

Big egos are found not just at the top of large companies, but at every level. Some are larger-than-life legends who run giant companies; others lead in relative obscurity at the top of little-known firms or small departments. According to one London fund manager, who meets chief executives of the UK's largest companies on an almost daily basis, few FTSE-100 bosses would register on the BSD scale these days. "Maybe in the past," he says, "but they are all too professional now."

A senior financial PR executive who advises several FTSE-100 clients agrees. "A few years ago there were bosses that were bullies who would not tolerate discussion, let alone disagreement with their views. But the separation of the roles of chief executive and chairman forced by UK corporate governance codes has changed that. And there are now more and better non-executives (NEDs). They are more powerful and have moderated that sort of behaviour. Shareholders have more peace of mind."

There are still plenty of big egos around. Bart Becht at Reckitt Benckiser, Marks & Spencer's Stuart Rose, Sir Fred Goodwin at Royal Bank of Scotland, Ryanair's irrepressible Michael O'Leary and John Pluthero of Cable & Wireless were the names most often mentioned in a straw poll of financial journalists, financial PR executives and shareholders—but each also has an impressive track record. "Where you still find egos out of control," says one fund manager, "is in smaller quoted and private companies."

Many believe that an addiction to risky acquisitions or expansions is a sure sign of an over-inflated ego—and there is some supporting evidence. When Sir Ken Morrison's Wm Morrison supermarket group bid for Safeway, it was viewed by many City analysts as a big gamble. Safeway was at least four times the size of Morrisons, and it had a vastly different culture. Plus, Morrisons had no experience of takeovers. Shareholders, too, saw the pitfalls, and demanded that Sir Ken appoint NEDs to oversee the integration—a move he refused to countenance. He argued that he could get two check-out girls for the price of one NED, and that the girls would be more useful to the business.

Sir Ken, a blunt Yorkshireman, had always run his empire with a rod of iron, working all hours, and he batted away all suggestions that he might need extra help to bring the companies together. On the day the acquisition went through he strode into Safeway's head office and addressed the staff, telling them the deal was not a merger, but a takeover and that things would be done his way from now on.

Within a few months, things were in disarray. Sales and profits collapsed, Sir Ken was forced to admit his finance department had lost all control and there was open warfare in the boardroom. Calm has since been restored, but Sir Ken has had to forfeit day-to-day control and outsiders have been brought in to key positions in the company.

Other deals—such as Michael O'Leary's tilt at Irish rival Aer Lingus or Sir Terry Leahy's decision to take Tesco into Wal-Mart's backyard in the US—are simply seen as audacious. O'Leary has an ego the size of the emerald isle itself—bigger, he might argue—but, as with Leahy, he has delivered growth that, even a few years ago, would have been regarded by many as impossible.

Past success is no guarantee of future performance. Across the Atlantic there were several huge financial scandals at companies headed by aggressive deal-doers whose egos ran out of control, such as Ken Lay and Jeffrey Skilling at Enron, Bernie Ebbers at Worldcom and Tyco's Dennis Kozlowski, once dubbed "deal-a-day-Dennis". General Electric may never have begun an expensive and ultimately fruitless battle with regulators to buy Honeywell if anyone other than Jack Welch had been in charge.

Ludeman and Erlandson identify four types of alpha male boss: Commander; Visionary; Strategist; and Executor (see below). Each, they say, can bring value to an organisation, but each can also become a liability. A senior executive of one UK FTSE-100 company with experience of working for a classic Commander describes his former boss as "a man unable to take any guidance or input from others. He claimed credit when things went well and blamed events, or others, when things went badly.
"He wanted to impress everyone. He wanted to be seen as forceful and dynamic, even scary—as though that was a good thing. He also wanted to impress other businessmen. At a photoshoot one day he turned up wearing the tie of a gentlemen's club he had just been accepted into, simply because he wanted rivals to know he was a member." But the same executive believes business leaders need to have some alpha characteristics: "There is a fine line between egotism and charisma. Chief executives have to have the courage of their convictions. That can be infectious and energising. But they also need to listen—or at the very least pretend to listen—or the people who work for them begin to lose interest and become resentful. The best ones leave and the ones left are just yes-men."

This particular senior executive chose to leave while the chief executive in question was eventually fired after a series of extremely expensive mistakes, which cost shareholders dearly.

According to Cary Cooper, Professor of Organisational Psychology and Health at the Lancaster University Management School, there is no place for egotistical bosses in modern firms. "It's a problem because they don't engage subordinates in decision-making and take credit for what their subordinates do," says Cooper. "They don't praise or reward."
Spotting a boss with a bad ego problem, he says, is quite simple: "They always talk about their achievements, what they are doing and where they are going. You can deal with it by knowing what they want and delivering. But they then take the credit. Eventually you have to let them know that their behaviour—and you need specifics—is not acceptable." But ultimately, he advises, "you may have to leave". That may be a wise move, adds Cooper, because in the long term a company cannot thrive with a boss whose ego is over-inflated.

Other strategies also exist. Management trainers suggest indulging such bosses; show curiosity rather than cynicism; concentrate on possibilities rather than risks; disagree without being critical; refuse to be intimidated; confront one-to-one and not as part of a group and learn from feedback, regardless of how it's delivered. Non-executive directors, meanwhile, must stand united, follow procedure, sing from the same hymn sheet, and always make it plain that they represent shareholders.

Cooper reckons that gender also plays a part and that working for a female boss is the best way of avoiding ego problems. "It's a male thing. Women don't behave like that, by and large," he says.

Ludeman and Erlandson disagree, but this could be because their frame of reference, female American bosses, are different from their UK counterparts. It might also explain why so many senior women working in UK quoted companies are North American: Dame Marjorie Scardino at Pearson; Rose-Marie Bravo and now Angela Ahrendts at Burberry; Cynthia Carroll, who has just been appointed chief executive of Anglo American; Lloyds TSB's Terri Dial, and Deanna Oppenheimer at Barclays.

A report on corporate America by Arijit Chatterjee and Donald C Hambrick of Pennsylvania State University points to the size of the chief executive's picture in the annual report. If it is more than half a page, ego may be at play. The report also suggests counting the number of times a boss's name appears in press releases and the length of their Who's Who entry, as well as whether they overuse the first person singular pronoun, ie "I", "my", "me" and "myself".

Pay is also in the equation. "The narcissistic CEO believes he/she is far more valuable than anyone else in the firm and this is reflected in the CEO's compensation relative to others," says Hambrick.

It is possible to add other potential ego-indicators to the US academics' list. British shareholders are always concerned when chief executives star in their own adverts, such as Victor "I liked it so much I bought the company" Kiam of Remington and Sir Peter Davis, who was featured wandering along a beach with his trousers rolled up as "The Man from the Pru". Shortly afterwards the Pru stepped back from the UK market and Sir Peter turned up at Sainsbury's, where he was ultimately forced out as the grocer's fortunes lurched from dismal to dire.

Corporate jets are another giveaway. These flying hotels, which whiz executives from A to B without the hassle of check-in desks or mingling with the general public, are now viewed by shareholders as evidence of corporate largesse or executive ego-both equally unacceptable.

Greg Hutchings, who built the Tomkins industrial conglomerate, lost his job after investors raised questions about how his lifestyle, including access to a private jet, was linked to the company. Malcolm Walker, founder of the Iceland frozen food business, also had to defend his use of a private jet to visit his stores prior to being forced out of office after a sales and profits collapse.

But Walker is now back at the helm, lambasting those who ousted him and steering the business back to health. Which proves, if nothing else, that you can't keep a big ego down.

Which alpha are you?

Commander
Decisive and courageous. They focus aggressively on winning and encourage competition. The risk is they can become domineering and create anxiety among employees, who then cover up their mistakes and withhold information. Commanders can waste the talent of others and fail to bring on successors.

Visionary
Inspirational and energetic. They are bold, creative and often have a sense of mission but also prone to chasing unattainable goals and losing sight of business viability.

Strategist
Rational and fact-gathering. The highly accurate mind of a strategist can become a cold and unemotional know-it-all who cannot work within a team.

Executor
Disciplined and strong on detail. They spot problems early, hold others accountable and don't have hidden agendas. But they might not see the bigger picture, instill fear, and make unreasonable demands which can exhaust themselves or their employees.

Source: The Alpha Male Syndrome