Battling hubris before crisis strikes: Suggestions for researchers and practitioners. (2016)

“… there is a strong case for changes to be considered to governance, regulation and certain aspects of organisation design and reward.”

Matt Nixon – Associate, Ashridge Business School and Principal, Disraeli Group
Paper presented at Ashridge Developing Leadership Capacity conference, July 2016

“Only through better board scrutiny, new approaches to leadership selection and development, as well as radical changes to reward can we achieve the wholesale reductions in risk we seek, and protect leaders and organisations alike from the damaging crises brought on by hubris.

“… there is a strong case for changes to be considered to governance, regulation and certain aspects of organisation design and reward.”

Nixon’s hubris-battling suggestions for policy makers and practitioners include:

• Improving existing tools to enable more accurate and valid testing of hubris syndrome in individuals and organisations. “Recent advances in linguistic analysis and technology suggest that there are vast troves of data from employees and leaders … which can and should be analysed more fully”
• Giving Hubris testing stronger normative roots which can adapt for industry and country culture norms. “Low hubris in banking might be high hubris in another industry. High hubris in Singapore may be low in London”
• Strengthening the separation of Chairman and CEO roles and considering term limits for CEOs
• Counterintuitively, greatly reducing executive pay transparency. “If we didn’t know (exactly) what a given CEO is paid, but knew what KPIs and achievements are in her incentive package (and with what weighting), we might keep analyst focus where it belongs on total employee costs, and on understanding what the board has asked for more of and is paying for”
• Encouraging active investors to be more prepared to weigh in on pay design (including quanta) and execution before, not after, the payout
• Restructuring boards’ own incentives to help pressure remuneration committees and their chairs to reduce or at least contain executive rewards rather than increase them.

Read the full paper here: Matt Nixon. Battling Hubris

View the slides from the presentation here: Nixon BattlingHubrisSlides