Harvard Business Online
Why Jerks Are Bad Decision-Makers
There are many reasons for not working with jerks, as Bob Sutton has pointed out in his memorably-titled book The No Asshole Rule. But I think I've discovered another reason for not having them in your organization's employ: they often make bad decisions. While all jerks don't always make bad decisions, and non-jerks occasionally decide badly too, I'd guess that there is a sizable correlation between jerkiness and bad judgment.
For example, I've been reviewing some examples of bad decisions in the financial crisis; fortunately, there is no shortage of them. The mother of all bad decisions in the crisis was probably AIG's decision to issue credit default swaps for subprime mortgage derivatives, which led to the over $180 billion U.S. bailout of AIG. Michael Lewis describes the core of the problem in its Financial Products (F.P.) business unit in Vanity Fair:
How and why their miracle became a catastrophe, A.I.G. F.P.'s traders say, is a complicated story, but it begins simply: with a change in the way decisions were made, brought about by a change in its leadership. At the end of 2001 its second C.E.O., Tom Savage, retired, and his former deputy, Joe Cassano, was elevated. Savage is a trained mathematician who understood the models used by A.I.G. traders to price the risk they were running—and thus ensure that they were fairly paid for it. He enjoyed debates about both the models and the merits of A.I.G. F.P.'s various trades. Cassano knew a lot less math and had much less interest in debate.
Cassano is, by all accounts, a jerk. Lewis suggests that "...his crime was not mere legal fraudulence but the deeper kind: a need for subservience in others and an unwillingness to acknowledge his own weaknesses." Other sources suggest that he was resentful of those with more degrees from better schools. But as post on Business Insider put it, "Finance is not a good business if you've got a chip on your shoulder."
In another recent article—this one by Malcolm Gladwell in The New Yorker—the role of overconfidence in the fall of Bear Stearns is explored. At the core of the problem is, you guessed it, a jerk: Jimmy Cayne, Bear's CEO. There have been many accounts of his personality in various books and articles, and the word "charming" never appears in any.
One more example from a failed financial services firm: in Larry McDonald's book A Colossal Failure of Common Sense, Lehman Brothers CEO Dick Fuld is the clear winner of the "jerk with bad judgment" prize. Here's just one quote:
If only Dick Fuld had kept his anger, resentment, and rudeness under control. Especially at that private dinner in the spring of 2008 with Hank Paulson, Secretary of the United States Treasury. That was when Fuld's years of smoldering envy of Goldman Sachs came cascading to the surface and caused Paulson to leave furious that the Lehman boss had disrespected the office he held. Perhaps that was the moment Hank decided he could not bring himself to bail out the bank controlled by Richard S. Fuld.
Of course, it's not just in financial services that jerks make bad decisions (although there does seem to be a pattern in that industry). In politics, George W. Bush wasn't the classic jerk, but he was widely viewed as insecure and unwilling to listen. Dick Cheney would be described as a jerk by many observers, including this one. In baseball, George Steinbrenner, owner of the New York Yankees, was both clearly a jerk (controlling, micro-managing, petty) and made a lot of bad decisions (as well as some good ones, of course). Former Yankee manager Joe Torre's new book The Yankee Years is replete with evidence of George's bizarre personality and occasionally bad decisions.
So what are the mechanisms that translate being a jerk into being a poor decision-maker? Jerks tend to think their own perspectives are the only ones worth considering, but good decisions require serious consideration of alternatives. Jerks think they're never wrong, but good decisions require acknowledging and learning from mistakes. Jerks are consumed with petty resentments and grievances, but good decisions require clear-headed, objective thinking. Jerks alienate other people, but good decisions require collaboration across a social network (as a recent MIT Sloan Management Review article by Rob Cross and Bob Thomas suggests.) This falls short of a complete description of either jerkdom or decision excellence, but you get the picture.
Jerks often seem to get ahead in firms and advance through the ranks, but that's a dangerous phenomenon. If you want good decisions in your organization, don't hire, promote, or retain jerks.