Bloomberg View columnist Bill Cohan has stumbled on a fascinating academic paper from British scholar Clive Boddy on corporate psychopaths and how they may have caused the financial crisis.


Interestingly enough, Boddy notes that psychopaths are specially able to thrive in Wall Street firms because of its very nature—filled with chaos, high turnover and rapid change.

Psychopaths are then able to use their charisma to appear like key leaders within the frenetic atmosphere of Wall Street, yet at the same time remain ruthless and calculating.

On Bloomberg TV this morning, Cohan also added that this kind of work atmosphere has only been prevalent recently as financial institutions have gone public. Back in the days of private partnerships, "there was a collegial nature and... everybody knew everyone else and you couldn't possibly get to the top if you were a crazy person," he said.

They “largely caused the crisis” because their “single- minded pursuit of their own self-enrichment and self- aggrandizement to the exclusion of all other considerations has led to an abandonment of the old-fashioned concept of noblesse oblige, equality, fairness, or of any real notion of corporate social responsibility.”

Boddy doesn’t name names, but the type of personality he describes is recognizable to all from the financial crisis.

He says the unnamed “they” seem “to be unaffected” by the corporate collapses they cause. These psychopaths “present themselves as glibly unbothered by the chaos around them, unconcerned about those who have lost their jobs, savings and investments, and as lacking any regrets about what they have done. They cheerfully lie about their involvement in events, are very convincing in blaming others for what has happened and have no doubts about their own worth and value. They are happy to walk away from the economic disaster that they have managed to bring about, with huge payoffs and with new roles advising governments how to prevent such economic disasters.”

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In an e-mail correspondence with me, he [Boddy] said his article has been warmly received and has been downloaded 9,440 times in the past 90 days. “Apparently this is a lot for an academic article and it is more than the next four most-downloaded papers combined,” he wrote.

CLIVE BODDY has been studying the effects of Corporate Psychopaths as experienced by hundreds of managers over the past five years. This has included collecting information on the perceived levels of incidence of experiencing Corporate Psychopaths, collecting reports of critical incidents involving potential Corporate Psychopaths and more recently, collecting data on the effects of Corporate Psychopaths on organisational outcomes.

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Psychologists have argued that Corporate Psy- chopaths within organizations may be singled out for rapid promotion because of their polish, charm, and cool decisiveness. Expert commentators on the rise of Corporate Psychopaths within modern corpora- tions have also hypothesized that they are more likely to be found at the top of current organisations than at the bottom. Further, that if this is the case, then this phenomenon will have dire consequences for the organisations concerned and for the societies in which those organisations are based. Since this prediction of dire consequences was made the Global Financial Crisis has come about. Research by Babiak and Hare in the USA, Board and Fritzon in the UK and in Australia has shown that psychopaths are indeed to be found at greater levels of incidence at senior levels of organisations than they are at junior levels (Boddy et al., 2010a). There is also some evidence that they may tend to join some types of organisations rather than others and that, for example, large financial organisations may be attractive to them because of the potential rewards on offer in these organizations (Boddy, 2010a).

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These Corporate Psychopaths are charming indi- viduals who have been able to enter modern cor- porations and other organisations and rise quickly and relatively unnoticed within them because of the relatively chaotic nature of the modern corporation. This corporate nature is characterized by rapid change, constant renewal and quite a rapid turnover of key personnel. These changing conditions make Corporate Psychopaths hard to spot because constant movement makes their behaviour invisible and combined with their extroverted personal charisma and charm, this makes them appear normal and even to be ideal leaders.

The knowledge that Corporate Psychopaths are to be found at the top of organisations and seem to favour working with other people’s money in large financial organisations has in turn, led to the devel- opment of the Corporate Psychopaths Theory of the Global Financial Crisis. The Corporate Psychopaths Theory of the Global Financial Crisis is that Cor- porate Psychopaths, rising to key senior positions within modern financial corporations, where they are able to influence the moral climate of the whole organisation and yield considerable power, have largely caused the crisis. In these senior corporate positions, the Corporate Psychopath’s single-minded pursuit of their own self-enrichment and self- aggrandizement to the exclusion of all other con- siderations has led to an abandonment of the old fashioned concept of noblesse oblige, equality, fair- ness, or of any real notion of corporate social responsibility.

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However, once corporate takeovers and mergers started to become commonplace and the resultant corporate changes started to accelerate, exacerbated by both globalisation and a rapidly changing tech- nological environment, then corporate stability be- gan to disintegrate. Jobs for life disappeared and not surprisingly employees’ commitment to their employers also lessened accordingly. Job switching first became acceptable and then even became common and employees increasingly found them- selves working for unfamiliar organisations and with other people that they did not really know very well. Rapid movements in key personnel between cor- porations compared to the relatively slower move- ments in organisational productivity and success made it increasingly difficult to identify corporate success with any particular manager. Failures were not noticed until too late and the offending man- agers had already moved on to better positions elsewhere. Successes could equally be claimed by those who had nothing to do with them. Success could thus be claimed by those with the loudest voice, the most influence and the best political skills. Corporate Psychopaths have these skills in abun- dance and use them with ruthless and calculated efficiency.