The Dark Side of Leadership

When the dark side of leadership emerges, organizational catastrophe is just a step away. Financial news proves this year after year. For instance, former CEO Adam Neumann contributed to devaluing the commercial real estate company WeWork by approximately $37 billion in mere months.¹ Now, we all know that the dark side of personality can derail everyone’s behavior from time to time. But leadership derailment is a higher-order problem. As in the case of WeWork, the dark side of leadership can result in bankruptcy and ruin.

Organizational performance is tied to effective leadership, which is the ability to build and maintain a high-performing team. In contrast, executive derailment directly impacts organizational culture and effectiveness, customer satisfaction, employee engagement, productivity, and brand reputation. A leader’s context and rank also affects how publicly or disastrously they tend to derail. The scale of consequences would be completely different for a first-time manager versus an Adam Neumann.

How Executives Derail

The personality strengths that help top leaders win big can also cause them and their organizations to lose big. Neumann’s charismatic leadership approach, which bordered on recklessness, exemplifies how strengths can become liabilities.

When a leader is under stress and pressure, becomes bored, or otherwise stops monitoring their behavior, their derailers can emerge. Derailers are potentially overused behavioral strengths. For example, charm as an overused strength may seem manipulative, and creativity as an overused strength may seem like impracticality.

Hogan measures 11 potential derailers using the Hogan Development Survey (HDS) alongside two other personality assessments. Dark-side characteristics combine with each other and with personality strengths and values in complex ways. In general, however, derailers may be grouped into three categories based on how the dark side tends to manifest:

• Moving Away, which relates to withdrawal or isolation—the HDS Excitable, Skeptical, Cautious, Reserved, and Leisurely scales
• Moving Against, which relates to intimidation or manipulation—the Bold, Mischievous, Colorful, and Imaginative scales
• Moving Toward, which relates to conformity or acquiescence—the Diligent and Dutiful scales

As in the case of Neumann, leaders who lean too much on dark-side behaviors can easily derail. It’s not surprising that Neumann took risks and tested limits since these same strengths are required for the type of role he held. But these behaviors were taken to the extreme.

So in what ways do executives around the world tend to derail?

The Dark Side of Leadership

Hogan Assessments has built the world’s largest database of global personality data. This means we know which strengths, values, and motivations enable people to advance in nearly any job or industry, anywhere in the world. And of course, it means we can describe how people in particular roles, such as entrepreneurial CEOs, are likely to derail.

To determine how executives tend to derail, we analyzed personality profiles of more than 700 CEOs globally. We found that executives typically derail by Moving Against. (Note that this sample heavily features US males aged 40 and older.)

Positive behaviors associated with high scores in the Moving Against category often cause people to seem leaderlike and get placed in leadership roles. With this profile, an executive might appear self-confident, driven, gregarious, risk-tolerant, and innovative when performing at their best. During derailment, however, this same person could appear arrogant, stubborn, dramatic, limit-testing, and undisciplined.

Bold

The strengths of someone with a high Bold score are confidence and assertiveness. As an overused strength, Bold might show up as impulsive, self-promoting, competitive, and demanding behavior. The leader’s extreme self-confidence may stem from the belief that they have unusual, unique talents. To others, they probably seem arrogant, hypercompetitive, unrealistic, and unresponsive to negative feedback..

Mischievous

Someone with a high Mischievous score may seem bright, charming, and daring when at their best. In derailment, a high Mischievous person may take ill-advised risks, seek excitement, behave impulsively, and push limits. Their impulsivity makes them seem disorganized, impetuous, and unpredictable, and they probably have a reputation for overreaching or holding unreasonable expectations.

Colorful

Leaders with high Colorful scores can seem outgoing, fun, and socially skilled. But Colorful derailers can manifest in dramatic, attention-seeking, distractable behavior. They’re curious, they’re easily bored, and they seek constant stimulation. The next new idea, goal, or project will usually appeal more than any that are currently in progress.

Imaginative

A person scoring high on the Imaginative scale tends to have the strengths of being unconventional, innovative, and creative. Their Imaginative derailer will likely show up as preoccupied, eccentric, and impractical behavior. They may believe that they can see and understand things that others don’t. This conviction that they have superior perception likely causes them to generate ideas that seem eccentric or just plain odd.

Now when it comes to entrepreneurs, our leadership derailment data tell a slightly different, more extreme story, especially on the Imaginative scale.

The Dark Side of Entrepreneurs

Entrepreneurs differ from the enterprise CEOs described above in that these leaders tend to have even higher scores across the Moving Against category. Compared with the global average for executives, their Moving Against scales are elevated. Their Imaginative scale scores are extremely elevated, which makes sense for their context. After all, today’s volatile startup market calls for a high degree of unconventional thinking.

According to Hogan’s Matt Lemming, director of knowledge and infrastructure, the difference in personality data may also be related to difference in age. Entrepreneurs in their 20s and 30s have high aspirations and ideals, while later-career CEOs have more stable, established personalities. “Those who are aspiring and showing initiative are more extreme, especially on Moving Against, because they are fighting for relevance and success,” Lemming observed.

Organizational Impact of Leadership Derailment

The strengths associated with the Moving Against category can genuinely support organizational effectiveness. CEOs who are innovative, comfortable with the spotlight, socially skilled, and competitive are often needed in demanding and public roles that balance multiple interests. CEO capability can make or break a merger, for example. During times of M&A, healthy organizations—that is, those steered by effective leaders—gained 5 percent total shareholder return while unhealthy organizations lost 17 percent.² The dark side of executive leadership impacts investor wealth and so much more.

Knowledge about executive derailment is the starting point for course correction. Unfortunately, most leaders aren’t self-aware. Although 56 percent of employees experience an unhealthy work environment as a consequence of CEO behavior, such leaders usually don’t believe their behavior is negative.³ To become strategically self-aware, leaders must understand how their derailers affect others and the need to adapt behavior to increase leadership effectiveness. Executives who fail to adapt their behavior can cause organizational failure.

Consider WeWork. Neumann cofounded and led a remarkable company. Yet his behavior led to massive investor losses, billions in debt obligations and legal settlements, severe friction with the board and investors, and destruction of market credibility that forced withdrawal of the company’s IPO.¹ The right leadership development opportunity might have helped him build strategic self-awareness, prevent derailment, and bring the right degree of boldness and imagination to his organization.

Expert Contributor

Matt Lemming, MA, director of knowledge and infrastructure at Hogan Assessments

References

1. Nguyen, B. (2023, November 7). WeWork’s Rise To $47 Billion—and Fall to Bankruptcy: A Timeline. Forbes. https://www.forbes.com/sites/britneyguyen/2023/11/07/weworks-rise-to-47-billion-and-fall-to-bankruptcy-a-timeline/
2. Camp, A., Gast, A., Goldstein, D., & Weddle, B. (2024, February 12). Organizational Health Is (Still) The Key to Long-Term Performance. McKinsey & Company. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/organizational-health-is-still-the-key-to-long-term-performance
3. Wolor, C. W., Ardiansyah, A., Rofaida, R., Nurkhin, A., & Rababah, M. A. (2022). Impact of Toxic Leadership on Employee Performance. Health Psychology Research, 10(4), 57551. https://doi.org/10.52965/001c.57551