Last editedJul 20212 min read
We require competence and confidence from our business leaders, but when does a healthy self-esteem cross the line into arrogance? When CEOs and executives follow their own paths to the detriment of those around them, it can cause problems within the organization. This is the idea behind hubris in business – so what is hubris, and how can it be avoided? Keep reading to learn how to recognize management hubris.
What is hubris?
The original hubris definition traces back to ancient Greece, where it was used in myths and drama to describe defiance of the Gods. When characters thought they knew better than the divine due to their own arrogance, they’d face punishment for it.
The hubris meaning in business and management relates to this concept. An overabundance of unwarranted confidence or pride can cause irrational or even harmful behavior, because the hubristic individual doesn’t stop to think about consequences. Instead of evaluating potential impacts on others, someone displaying hubris in business would simply take the plunge. Of course, any action in business taken without the proper planning put in place can lead to failure.
You can apply the hubris definition to corporate executives, investors, CEOs, or anyone in management displaying this type of behavior. They might not think about their actions or listen to team members. Often, they’ve experienced past success which leads to a belief that their own thoughts are more valid than others, setting the company up for risk.
Hubris meaning in investing
Hubris is also common in investing. A trader might be riding high on past successes. As a result, they become overconfident and stop listening to market experts. This leads them to take risks going against professional advice, thinking they know better and will enjoy higher returns. Yet these risks don’t always pay off, setting the trader up for greater loss. Overconfident traders often put all their eggs in one basket, failing to adequately diversify a portfolio or trade at the right time.
Hubris in business
Management or executive hubris is quite common in business. Confidence is a required trait in business executives, as is a top-tier education and proven track record of superior performance. All of these are positive traits for a CEO, but the problem arises if their bold business strategies cross over into reckless decision-making.
According to many, one of the warning signs of management hubris is narcissistic tendencies. A narcissist thinks more of his talents than is perhaps warranted, sometimes to the point of delusion. Narcissists also crave attention from others. If you combine overconfidence with the need for attention, you have a dangerous situation where CEOs focus more on ego-boosting projects and frequent acquisitions than what’s right for the company.
Another warning sign of management hubris is dismissiveness, meaning the tendency to ignore outside input. Think of a CEO surrounded by yes-men who only say what the CEO wants to hear. When outside views are presented, they’re cast aside or dismissed. Small details are unimportant, which can lead to things going wrong in everyday management.
How to overcome management hubris
Although it’s common for business leaders to show tendencies of hubris every now and then, putting some safeguards into your workplace culture can help. Here are a few ways to avoid hubris in business.
Create a strong company culture devoted to continuous improvement. Invite feedback from all team members with an aim to catch small problems early before they become larger issues.
Encourage management to ask for help when they don’t know the answer to a question. You’ve hired a team of talented individuals, so turn to them for input – and listen.
Boost employee engagement with regular communication, company retreats, and performance-based rewards systems. This prevents the creation of an inner circle that excludes the rest of the team.
If you’re in a management position, stop and check in to determine whether you’re truly listening to others. It’s good to feel confident in your decisions. Just be sure you have all the facts in hand before acting.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.