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Authors: Adam M. Grant Ph.D.
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than triple the annual salary and bonus of anyone else in the company. By contrast, the average across the industry was for CEOs to earn just over one and a half times the next highest paid. The taker CEOs also commanded stock options and other noncash compensation of seven times higher than the next highest paid, compared with the industry average of two and a half times higher. *
But the most interesting clue was in the annual reports that the companies produced for shareholders each year. At the top of the next page are the pictures of Ken Lay and Jon Huntsman Sr. that I showed you before, but now they’re in context.
The photo on the left appeared in Huntsman’s 2006 annual report. His image is tiny, taking up less than 10 percent of the page. The photo on the right appeared in Enron’s 1997 annual report. The image of Lay takes up an entire page.
When Chatterjee and Hambrick looked at the annual reports from the computer companies, they noticed dramatic differences in the prominence of the CEO’s image. In some annual reports, the CEO wasn’t pictured at all. In other reports, there was a full-page photo of the CEO alone. Guess which one is the taker?
For the taker CEOs, it was all about
me
. A big photo is self-glorifying, sending a clear message: “I am the central figure in this company.” But is this really a signal of being a taker? To find out, Chatterjee and Hambrick invited security analysts who specialized in the information technology sector to rate the CEOs. The analysts rated whether each CEO had an “inflated sense of self that is reflected in feelings of superiority, entitlement, and a constant need for attention and admiration . . . enjoying being the center of attention, insisting upon being shown a great deal of respect, exhibitionism, and arrogance.” The analysts’ ratings correlated almost perfectly with the size of the CEOs’ photos.
At Enron, in that prescient 1997 report, the spotlight was on Ken Lay. Of the first nine pages, two were dominated by giant full-page images of Lay and then-COO Jeff Skilling. The pattern continued in 1998 and 1999, with full-page photos of Lay and Skilling. By 2000, Lay and Skilling had moved up to pages four and five, albeit with smaller images. There were four different photos of each of them, like a filmstrip—only they were better fit for a cartoon. Three of the photos of Lay were virtually identical, revealing the subtle, smug smile of an executive who knew he was special. A fairy-tale ending was not in the cards for Lay, who died of a heart attack before sentencing.
So far, we’ve looked at two different ways to recognize takers. First, when we have access to reputational information, we can see how people have treated others in their networks. Second, when we have a chance to observe the actions and imprints of takers, we can look for signs of lekking. Self-glorifying images, self-absorbed conversations, and sizable pay gaps can send accurate, reliable signals that someone is a taker. Thanks to some dramatic changes in the world since 2001, these signals are easier to spot today than ever before. Networks have become more transparent, providing us with new windows through which we can view other people’s reputations and lekking.
The Transparent Network
In 2002, just months after Enron fell apart, a computer scientist by the name of Jonathan Abrams founded Friendster, creating the world’s first online social network. Friendster made it possible for people to post their profiles online and broadcast their connections to the world. In the following two years, entrepreneurs launched LinkedIn, Myspace, and Facebook. Strangers now had access to one another’s relationships and reputations. By 2012, the world population reached seven billion. At the same time, Facebook’s active users approached a billion, meaning that more than 10 percent of the people in the world are connected on Facebook. “Social networks have always existed,” write
But the most interesting clue was in the annual reports that the companies produced for shareholders each year. At the top of the next page are the pictures of Ken Lay and Jon Huntsman Sr. that I showed you before, but now they’re in context.
The photo on the left appeared in Huntsman’s 2006 annual report. His image is tiny, taking up less than 10 percent of the page. The photo on the right appeared in Enron’s 1997 annual report. The image of Lay takes up an entire page.
When Chatterjee and Hambrick looked at the annual reports from the computer companies, they noticed dramatic differences in the prominence of the CEO’s image. In some annual reports, the CEO wasn’t pictured at all. In other reports, there was a full-page photo of the CEO alone. Guess which one is the taker?
For the taker CEOs, it was all about
me
. A big photo is self-glorifying, sending a clear message: “I am the central figure in this company.” But is this really a signal of being a taker? To find out, Chatterjee and Hambrick invited security analysts who specialized in the information technology sector to rate the CEOs. The analysts rated whether each CEO had an “inflated sense of self that is reflected in feelings of superiority, entitlement, and a constant need for attention and admiration . . . enjoying being the center of attention, insisting upon being shown a great deal of respect, exhibitionism, and arrogance.” The analysts’ ratings correlated almost perfectly with the size of the CEOs’ photos.
At Enron, in that prescient 1997 report, the spotlight was on Ken Lay. Of the first nine pages, two were dominated by giant full-page images of Lay and then-COO Jeff Skilling. The pattern continued in 1998 and 1999, with full-page photos of Lay and Skilling. By 2000, Lay and Skilling had moved up to pages four and five, albeit with smaller images. There were four different photos of each of them, like a filmstrip—only they were better fit for a cartoon. Three of the photos of Lay were virtually identical, revealing the subtle, smug smile of an executive who knew he was special. A fairy-tale ending was not in the cards for Lay, who died of a heart attack before sentencing.
So far, we’ve looked at two different ways to recognize takers. First, when we have access to reputational information, we can see how people have treated others in their networks. Second, when we have a chance to observe the actions and imprints of takers, we can look for signs of lekking. Self-glorifying images, self-absorbed conversations, and sizable pay gaps can send accurate, reliable signals that someone is a taker. Thanks to some dramatic changes in the world since 2001, these signals are easier to spot today than ever before. Networks have become more transparent, providing us with new windows through which we can view other people’s reputations and lekking.
The Transparent Network
In 2002, just months after Enron fell apart, a computer scientist by the name of Jonathan Abrams founded Friendster, creating the world’s first online social network. Friendster made it possible for people to post their profiles online and broadcast their connections to the world. In the following two years, entrepreneurs launched LinkedIn, Myspace, and Facebook. Strangers now had access to one another’s relationships and reputations. By 2012, the world population reached seven billion. At the same time, Facebook’s active users approached a billion, meaning that more than 10 percent of the people in the world are connected on Facebook. “Social networks have always existed,” write
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