[Excerpt] What if a small but definable subset of the employee population were responsible for a major share of corporate crime and ethical breaches? If so, then developing policies that target them would improve the firm’s performance, not to mention its ethical climate. In this article I claim that psychopathic employees constitute such a subset, and I suggest human resource policies that can help firms cope with them

Langbert, Mitchell B.

English

[Excerpt] What if a small but definable subset of the employee population were responsible for a major share of corporate crime and ethical breaches? If so, then developing policies that target them would improve the firm’s performance, not to mention its ethical climate. In this article I claim that psychopathic employees constitute such a subset, and I suggest human resource policies that can help firms cope with them.6_16_2010_Managing_Psychopathic_Employees.pdf: 3225 downloads, before Oct. 1, 2020

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Managing Psychopathic Employees

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Cornell HR Review 
6-16-2010 
Managing Psychopathic Employees 
Mitchell B. Langbert 
Brooklyn College, City University of New York 
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Managing Psychopathic Employees 
Abstract 
[Excerpt] What if a small but definable subset of the employee population were responsible for a major 
share of corporate crime and ethical breaches? If so, then developing policies that target them would 
improve the firm’s performance, not to mention its ethical climate. In this article I claim that psychopathic 
employees constitute such a subset, and I suggest human resource policies that can help firms cope with 
them. 
Keywords 
psychopathy, psychopathic employees, ethics, human resources, Cornell HR Review 
Comments 
Suggested Citation 
Langbert, M. B. (2010, June 16). Managing psychopathic employees. Cornell HR Review. Retrieved [insert 
date] from Cornell University, ILR School site: http://digitalcommons.ilr.cornell.edu/chrr/1 
Required Publisher Statement 
Copyright by the Cornell HR Review. This article is reproduced here by special permission from the 
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This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/chrr/1 
CORNELL H R REVIEW 
MANAGING PSYCHOPATHIC EMPLOYEES 
Mitchell B. Langbert 
The past three decades have seen one ethics debacle after another. No one knows if 
business ethics have changed since the days of Jay Gould and the robber barons, but the 
corporate scandals of recent years make it seem as though ethical standards are worse 
now than in the nineteenth century. A 2009 PricewaterhouseCooper global crime survey 
found that 30 percent of corporate officers have experienced fraud in the past 12 months, 
with about half of the crimes occurring within their firms. 
What if a small but definable subset of the employee population were responsible for a 
major share of corporate crime and ethical breaches? If so, then developing policies that 
target them would improve the firm's performance, not to mention its ethical climate. In 
this article I claim that psychopathic employees constitute such a subset, and I suggest 
human resource policies that can help firms cope with them. 
Psychopathy and the Traditional Workplace Paradigm 
Traditional management theories overlook the issue of corporate crime as well as the 
deeper, underlying pattern that psychopathic employees pose. Even the accounting-and-
control literature on workplace fraud has neglected the possibility that some employees 
tend to do wrong. The most influential model of workplace dishonesty is in Donald R. 
Cresey's Other Peoples' Money.2 Cressey's model of workplace theft focuses on 
employees who occupy fiduciary roles and are motivated to embezzle by a lapse in 
conduct (e.g., drug addiction). In contrast, psychopathy is a life-long pattern. 
Management paradigms such as Ouchi's Theory Z and McGregor's Theory Y emphasize 
trust and the motivation of normal employees. There is limited consideration of the 
possibility of an antisocial, manipulative, or conscienceless employee who aims to 
outsmart management. Yet a single psychopathic employee can have devastating effects 
on a firm as did Jeffrey Skilling at Enron. Skilling facilitated accounting manipulation 
and deception about earnings that led to Enron's collapse. 
I recently asked the listserv of the Labor and Employment Relations Association whether 
any participant knew of workplace policies concerning psychopathic employees. I 
received several replies about policies concerning alcoholic, bullying, and violent 
employees; and several that mentioned Harrison Trice's notion of constructive 
confrontation in Employee Assistance Plans.3 But none addressed the separate question 
of psychopaths. Psychopaths can be alcoholics, can be bullies, can be violent, and are 
anti-social—although the kind that flourish in the corporate world do not evidence these 
characteristics—but understanding psychopathy requires a different approach. 
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What is Psychopathy? 
In his book Without Conscience, Robert D. Hare described psychopathy as a combination 
of emotional and social deviance symptoms. With respect to the former, psychopaths do 
not experience emotions; they are socially deviant in the sense that they need excitement 
and have poor behavioral controls; they are impulsive; and they are antisocial. 
Furthermore, they lack guilt, remorse, or empathy.4 In general, corporate psychopaths 
will emphasize emotional but not social deviance traits. Psychopaths tend to be higher-
level executives who succeed despite negative performance reviews.5 The psychopaths 
who succeed in the corporate world are a select group who can manage the gaps in their 
personality structure. 
Only about 1 percent of the general population is psychopathic, and a 2010 study found 
that three to six percent of corporate employees may be responsible for the majority of 
ethical breaches in corporations. Furthermore, corporate psychopathy tends to be 
concentrated at the higher levels of organizations. Coincidentally, several of the 
emotional aspects of psychopathy positively correlate with performance appraisal 
dimensions, such as communication skills, creativity, and strategic thinking.6 
Thus, many managers perceive psychopathic patterns as evidence of good 
communication skills, creativity, and strategic thinking. It is not unusual for top 
management to support psychopathic employees because of their apparent creativity. 
Case-in-Point: Jeffrey Shilling at Enron 
One of the most well-known examples of a workplace psychopath is Enron's Jeffrey 
Skilling. During his tenure as president, Fortune named Enron the most creative company 
for six years in a row. According to the book Smartest Guys in the Room, the pervasive 
culture at Enron emanated the aforementioned signs of psychopathic leadership: the 
executive team took a life-risking motorcycle ride on rough terrain in Mexico during 
which one of the executives was seriously injured; one of Skilling's henchmen, Lou Pai, 
frequently had strippers visit him in his office; Skilling cursed at a short seller of Enron's 
stock in public and once "gave the finger" to a lower-ranking employee who cut him off 
in the parking lot; and Skilling was unable to identify CFO Andrew Fastow's self-
appointment as lead partner of special purpose entities (SPEs) that were trading with 
Enron at arm's length as a conflict of interest.7 
Skilling encouraged Fastow even as he engaged in ongoing breaches of fiduciary duty 
and self-dealing in obtaining financing from Wall Street. Skilling did not question 
Fastow's use of Enron stock as collateral to secure loans whose proceeds were used to 
purchase Enron's failing investments. Enron employees like Vince Kaminski, Jordan 
Mintz, and Jeffrey McMahon were vocal in assessing the risk of total financial collapse 
o 
that Fastow's SPEs created. Despite persistent failure, Skilling approved one far-fetched 
business plan after another, believing that each would be what he called the "big 
enchilada"—the successful investment that would pay off the firm's escalating debt. One 
example was an investment in broadband at the peak of the broadband bubble. He 
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Q2010 Cornell HR Review 
believed himself, Fastow, and other Enron senior executives to be geniuses—"guys with 
spikes"—who were capable of coming up with major breakthroughs even though literally 
hundreds of their ideas failed and occasionally involved criminality. 
Understanding Corporate Psychopathy 
In his book Without Conscience, Hare points out that the symptoms of white collar 
psychopaths differ from those of the more general syndrome. They tend to be 
manipulative, glib and grandiose but less anti-social than blue collar psychopaths.9 
Skilling's case illustrates this pattern. He emphasized mark to market accounting that 
recognized earnings before they materialized because, he claimed, creativity was all that 
mattered. He held to this claim even as Enron collapsed because of repeated failures in 
execution. 
Ordinary interpersonal skills can be manipulative. But psychopaths do not feel remorse at 
lying or manipulating, and they will lie without limit. Psychopaths frequently contradict 
themselves, and they enjoy harming and bullying others. They cause conflict and 
turnover, and in the case of Enron, even when thousands of employees had lost their jobs 
and their 401(k) benefits, Skilling believed he had done nothing wrong and passed a 
polygraph testing this belief. 
In Snakes in Suits, the authors argue that corporate psychopaths follow a pattern that 
involves pawns, patrons and patsies.10 Psychopaths recruit pawns such as lower-ranking 
employees or peers, whom they can manipulate. Patrons are higher-level managers whom 
the psychopath wins over. The patsies are pawns and patrons whom the psychopath has 
abused. Frequently, psychopaths are charming and can be expert at grasping others' 
psychological needs. They are excellent at the kind of impression management that is 
essential to corporate success. Because the psychopath seems charming to higher-ups and 
co-workers, he or she can counter accusations. In Skilling's case, Andrew Fastow and 
Kenneth Lay played the roles of pawn and patron. Kenneth Lay and Enron's board were 
convinced the special purpose entities were legitimate and that Enron's investments were 
performing well. 
As they are uncovered by co-workers, workplace psychopaths become embroiled in 
conflict. They have trouble with teamwork for the same reason. They will say one thing 
to one person and something different to someone else. They tend to be flattering of 
higher-ups and abusive of lower-ranking employees. They can seem trustworthy but use 
trust against the patsy. Psychopaths in leadership positions create an atmosphere of 
distrust among followers by discouraging interaction and sharing. Enron was riddled with 
cross-departmental conflict. The trading department, for example, disparaged the 
traditional natural gas pipeline business. 
Because psychopaths lack empathy, emotion and conscience, they have no qualms about 
harming their employer or their boss. Not all want to climb the corporate ladder; many 
seek power or the thrill of manipulating others. 
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Human Resource Management's Role 
Tests for psychopathy, like Robert D. Hare's Psychopathy Checklist Revised (PCL-R), 
require a trained psychologist to administer and cannot be applied in staffing or employee 
assessments. Other assessments, such as integrity tests and biodata, are unlikely to work 
because psychopaths are naturals at gaming tests. Psychopaths have no qualms about 
inventing fictitious biographical information. They see themselves as having integrity and 
are likely to depict themselves as so. They enjoy lying. 
It is not clear that my recommendations concerning workplace psychopaths can be 
statistically validated, which is a drawback. The reason is the small number of 
psychopathic employees. Most of the evidence is clinically based. Recognizing this 
methodological limitation, the best strategy available now is to look for contradictions in 
a job applicant's or employee's own narrative. Most employers consider lying in an 
interview to be inappropriate, and this belief is a foundation for a strategy for identifying 
psychopaths. It is critical to check resumes for factual evidence by calling former 
employers. Outright lying should be taken as a potential indication of psychopathy. 
Babiak and Hare recommend that firms use structured behavioral interviews to ferret out 
psychopaths.11 In structured interviews, the interviewer asks the interviewee to describe 
his or her responses to past problems. Every interviewee should be asked the same 
questions involving either how they reacted to past circumstances or how they might 
react to future circumstances. HR would then review answers for inconsistency. Multiple 
interviewers should compare answers to the structured interview questions. A candidate 
who is flattering to a higher level interviewer but condescending toward a lower level 
interviewer may be psychopathic. Thus, interview processes should include lower level 
employees. Applicants who are rude to them should be rejected. 
Monitoring systems can be simple. Some firms have adopted anonymous tip lines. 
Discussion of teamwork and integrity in performance appraisal forms might contribute. 
Companies should also encourage open-door policies. 
Training can be helpful. A training program that identifies the psychopathic pattern can 
help employees recognize it. The content of the program would include a discussion of 
the traits and characteristics of psychopaths; how they manipulate employees and 
organizational control systems; why psychopathic behavior is often confused with good 
or creative leadership, as in the case of Jeffrey Skilling; the pattern of pawns, patrons and 
patsies; and how the firm can protect itself. 
As well, matrix organization structures that encourage interaction across departments will 
limit the ability of psychopaths to tell one story to one person and another story to 
another. The more interactive the organization structure and the more porous departments 
are, the more difficult it will be for psychopaths to manipulate, lie and deceive. 
Unfortunately, there are no magic bullets. K 
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O2010 Cornell HR Review 
MichellB. Langbert is an Associate Professor of Business, Management, and Finance at 
Brooklyn College, City University of New York. His credentials include a Ph.D. in 
Industrial Relations from Columbia University, an MBA from UCLA, and an AB from 
Sarah Lawrence College. Dr. Lambert served as an expert witness in the proceedings of 
Tittle et al. v. Enron et.al, and prior to pursuing a career in academia, he held roles in 
HRfor Johnson & Johnson and mining company Vale. 
(2009). "Global Economic Crime Survey." PricewaterhouseCoopers. Retrieved June 11, 2010, 
from http://www.pwc.co nVgx/en/econonuc-crime-survey/key-findings/economic-downturn-fraud-
risk.jhtml#. 
Cressey, D. (1973). Other People's Money. Glen Ridge, NJ: Patterson Smith. 
Trice, H. & Roman, P. (1979). Sprits and Demons at Work: Alchohol and Other Drugs at Work. 
Ithaca, NY: ILR Press. 
Hare, R. (1993). Without Conscience: The Disturbing World of the Psychopaths Among Us. New 
York, NY: Guilford Press. 
Babiak, P., Neumann, C. & Hare, R. (2010). "Corporate Psychopathy: Talking the Walk." 
Behavioral Sciences and Law, 28: 174-193. 
Ibid. 
McLean, B. & Elkind, P. (2004). The Smartest Guys in the Room. New York, NY: Penguin Books. 
Eichenwald, K. (2005). Conspiracy of Fools. New York, NY: Broadway Books. 
Hare, R. (1999). Without Conscience: The Disturbing World of the Psychopath Among Us. New 
York, NY: Guilford Publications. 
Babiak, P. & Hare, R. (2006). Snakes in Suits: When Psychopaths Go to Work. New York, NY: 
HarperCollins. 
Ibid. 
5 


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