Impact of narcissistic leadership on employee work outcomes in banking sector of Pakistan

Abstract

Background

Narcissism has been studied as a positive as well as a negative trait. It is a personality disorder in which a person is preoccupied with power, self and vanity. Narcissists often pursue leadership and work for their personal interests which ultimately affect others’ well-being. It affects employee performance and leads toward turnover. The purpose of this study is to examine how narcissistic leadership can impact subordinates’ job-related outcomes.

Method

Data are collected from 310 banking professionals using Likert scale survey questionnaire and analyzed through SEM using AMOS.

Results

Results show that narcissistic leadership has a negative impact on subordinate job satisfaction and well-being, whereas a positive relationship with stress and intentions to quit. However, its relationship with job performance was observed to be insignificant.

Conclusion

Bosses with narcissistic tendencies drive hardworking employees away. The initial problem in narcissistic individuals is their elevated ego. To reverse the trend of narcissism, changes should be made at different levels, i.e., home, school, college or university. In order to tackle narcissism at work place, different established strategies can be used to deal with such individual/leader.

Background

Recent studies have reported an association between narcissism and employee work outcomes. Narcissism has been studied for a long time, but its relationship with employee work outcomes is not much explored, particularly in Pakistani context [44]. Banking sector of Pakistan has been a fast growing business sector in Pakistan [7], and the literature suggests that mental distress among banking professionals has increased drastically over the last decade [15, 17, 27, 52]. It affects their performance and leads toward turnover. There may be different reasons for this alarming change, but unsupportive leadership is considered one of the main factors [7]. Therefore, the purpose of this study is to examine the effect of narcissistic leadership on employee work outcomes (job satisfaction, job performance, well-being, stress and intentions to quit) in the banking sector of Punjab, Pakistan.

Narcissism has been studied as a positive as well as a negative trait [45, 46]. The supporters state that people with narcissistic personality are intelligent [5], highly creative [50, 61] and have high self-esteem [60, 21]. On the other hand, some researchers believe that people with narcissistic personality hate themselves and the high self-esteem is just a defense mechanism [10]. The central focus of a narcissist’s behavior is his own self, i.e., the behavior is highly focused on self and doing things that are just good for themselves, instead of focusing on the needs of others around and affected by them [54]. According to Campbell et al. [14] and Fahy [22], the people with narcissistic personality are not good at teamwork as narcissists tend to blame others for their failures. Narcissistic leadership has negative relationship with team’s creativity as well [30]. That’s why, people do not like them and try to avoid them. Studies have shown that narcissists, when given the chance, try to take more than others, make competitive choices [12, 13] and try to do good when they see higher opportunity [59]. According to Campbell [11], they are only attracted to people with high status. On the other hand, people are impressed by them at first because of their energy and extraversion, but this is a short-lived duration [47]. When people start to notice how self-centered they are, this phase of attraction most likely fades. It is reported by narcissists’ partners that initially they had an exciting relationship, but the relationship lacks intimacy [25]. They most likely behave in an erratic and aggressive manner when criticized [10, 41]. Overall, a narcissistic individual can have many outcomes for himself that are positive, but there are many negative consequences of his/her behavior for those who are in relationships with him/her.

Narcissistic leaders are observed to follow their own agenda rather than thinking about their followers and do what suits them instead of doing what is best as a whole [16, 45, 46]. As compared to others, narcissists are most likely to self-promote and self-nominate toward management positions [34]. Managers with such personality engage their skills in influencing, bullying and deception [28] to get desired positions. They use these tactics more often than their actual skills and take extra credit for success than they actually deserve; and if they fail, they blame others for it [34]. There are certain psychological problems related to narcissistic leadership like inferiority feelings, unquenchable need for power, hypersensitivity, anger, lack of empathy and inflexibility.

Malik and Khan [44] examined the impact of narcissistic leadership on psychological contracts of employees (i.e., motivation level, commitment level, ownership of work, and behavior and attitude). The results showed that narcissism of boss causes a decrease in psychological contracts of the employees who work for such bosses. According to Robbins [51] and Akehurst et al. [2], employees set their attitudes toward their jobs by considering their behavior, feelings and beliefs. The satisfaction of employees toward their jobs is influenced by many factors within the organization. However, the satisfaction of an employee with his job and the leadership style of the boss are two main elements that have a definitive impact on the effectiveness of an organization [7]. Leadership style of the boss or manager has a direct relationship with employee satisfaction [3, 58]. However, narcissism seems to have a complex relationship with job satisfaction of the employees. Some studies find a direct positive relationship of narcissism and employee job satisfaction [1], some find a direct negative relationship [43], whereas some find no direct relationship at all [56]. Therefore, it is hypothesized that:

Hypothesis 1

Narcissistic leadership would have a significantly negative impact on employee job satisfaction.

The success of any organization relies on the ability of its leader to optimize the human resource of that organization. A good leader understands how important employees are in accomplishing the goals of organization and the importance of motivating employees to move toward these goals. It is believed that leadership style of the boss has significant relationship with employee job performance [19, 36, 49]. Fang et al. [23] conducted a study on hospital employees to check relationship between leadership style and employee job satisfaction, commitment and job performance. The results indicated that leadership style has a significant direct positive impact on job satisfaction. On the other hand, there is an indirect positive relationship of leadership to job performance through job satisfaction. This suggests that leadership style effects job performance of employees through job satisfaction. Godkin and Allcorn [29] stated that satisfied employees cause the organization to be successful. As narcissistic leadership is considered to be a negative kind of leadership, it would have negative association with job performance. However, its relation with job performance is yet to be examined. Therefore, it is hypothesized that:

Hypothesis 2

Narcissistic leadership has a significantly negative impact on employee job performance.

The stress caused by poor supervision often results in compromised well-being, and the outcomes are either mental or physical disturbance. The literature suggests that leadership is linked to employee well-being in a way that it acts as means to affect the well-being of employees [39]. According to Gilbreath and Benson [26], employee well-being is not only affected by the physical work environment, but also by the psychosocial work environment. Godkin and Allcorn [29] found that narcissists spend unlimited amount of time in order to succeed. In this process, they blame and exploit others working for them. If the narcissistic leader is working overtime, then he/she expects the same from his employees without considering about their well-being. Narcissistic leadership is considered as a negative style of leadership. Therefore, the relationship between narcissistic leadership and employee well-being needs to be studied.

Hypothesis 3

Narcissistic leadership has a significantly negative impact on employee well-being.

Leadership is one of the main causes of stress among employees. It is reported that employees face distressed situation if they face an abusive leader or a passive leader. Both kinds of leaders result in increased stress among the followers [9, 53]. Hsieh [37] also validated that leadership style has a significant negative influence on job stress and significant positive influence on job satisfaction. Narcissistic leaders tend to be arrogant [35] that leads to vanishing the sense of community from organization and leaving employees depressed, feeling anxious and disengaged from work [29]. Based on the above discussion, this is assumed that narcissistic leadership would have significant relationship with employee job-related stress.

Hypothesis 4

Narcissistic leadership has a significantly positive impact on increased stress level of employees.

The behavior of supervisor is one of the most important factors in increasing or decreasing employee’s morale. Manager expects from employees, in terms of productivity and quality of work, but fails to develop sense of belonging among employees [18]. It results in hateful feelings about the leader. To start over and have a new beginning, employees have to leave the place and find new work. According to Grier [31], a couple of employees had to leave the organization and start over new due to narcissistic boss. There is a saying, ‘Employees don’t leave companies—they leave bosses.’ Satisfied employees execute more positive feelings toward their jobs with increased feelings of responsibility and accountability and stay with the organization for a long time [55].

Elçi et al. [20] examined the effects of ethical leadership and leadership effectiveness on employee turnover intentions using work-related stress as a mediator. They concluded that ethical leadership and leadership effectiveness have negative association with employee turnover intentions, whereas work-related stress has a positive effect on employee turnover intentions. As narcissistic leadership is considered to be a negative kind of leadership, its relation to employee turnover intensions is yet to be examined.

Hypothesis 5

Narcissistic leadership has a significantly positive impact on employees intent to leave.

Methods

Participants

The participants were 310 banking professionals (52% females) from all commercial banks of Punjab Province in Pakistan. Seventy-two percentage of the participants were 20–30 years old. However, all of these did not make the target population for this study. Only those employees were considered who had spent at least 1 year in the same work environment with same boss.

Measures

The scales for different variables were adopted from different instruments. Job satisfaction instrument is adopted from Spector [57]. Narcissistic leadership is measured using short version of Narcissistic Personality Inventory (NPI) by Ames et al. [4]. Job performance scale is adopted from Apenteng [6], and employee well-being is measured through survey developed by Black Dog Institute [48]. Workplace stress is measured through stress scale of The American Institute of Stress, and scale developed by Maertz and Campion [42] is used to measure turnover intensions of the employees. It was Liker-based scale ranging from 1 to 5, where 5 represents strongly agree and 1 represents strongly disagree.

Results

At the first step, normality of data was checked through skewness and kurtosis statistics. The descriptive statistics (mean and standard deviation) are also given in Table 1. The statistics show that intention to quit has the highest mean value (3.59) and employee satisfaction has the lowest mean value (2.20). The results show that data are normally distributed as the statistics of skewness and kurtosis are within the acceptable range (± 3) as suggested by Hair [33].

Table 1 Descriptive statistics (N = 310)

Correlation matrix

Statistics of α validate the reliability of data. Pearson’s correlation test is used to analyze the relationship among variables. The result shows that job satisfaction and well-being have a negative relationship with narcissistic leadership, whereas stress, intentions to quit and job performance show a positive relationship with narcissistic leadership. The relationships between narcissistic leadership and other variables are statistically significant except job performance. Correlation matrix also shows a significant negative relationship of narcissistic personality (NP) with job satisfaction of employees. Similarly, narcissistic personality is also seen to have a significant negative relation with employee well-being. On the other hand, workplace stress and intentions to quit are reported to have a significant positive relationship with narcissistic personality. As far is job performance of employees is concerned, the relationship is positive but insignificant at 0.077. Table 2 includes the results of Cronbach’s alpha and correlation.

Table 2 Correlations and reliability

CFA (confirmatory factor analysis)

To test the validity of the measuring instrument, CFA (confirmatory factor analysis) is used [32]. CFA confirms that the items used are good indicators for the construct.

CFA was performed to calculate the validity of the scale. In this study, convergent and discriminant validity of all unobserved variables was computed. To calculate the convergent validity, AVE was computed using the factor loading score of the items of latent variables. The value of AVE should be greater than .50 [8]. Table 3 provides the analysis of convergent and discriminant validity. As indicated in the table, all values lie above .50. Discriminant validity was measured by the method provided by Fornell and Larcker [24]. To satisfy the validity of the scale, the value of squared root of AVE must be greater than squared correlation between the variables. Table 3 indicates that the values of AVE, which are greater than squared correlation. The measurement model of this study is shown in Fig. 1.

Table 3 Standardized regression weights

Fig. 1

Measurement model

According to Jaccard and Wan [38], there are different fitness indices which are analyzed to see the fitness of model. The values of GFI, IFI, RMSEA, RMR, NFI and CFI (.963, .956, .026, .009, .974 and .957) are within the threshold values. This shows that the measurement model of this study is best fit.

Path analysis (structural model) and hypothesis testing

Hypotheses of this study are analyzed through path model. The fitness of model is analyzed using different fitness indices. The values of GFI, IFI, RMSEA, RMR, NFI and CFI (.951, .968, .045, .049, .977 and .964) are within acceptable range. The path model is shown in Fig. 2.

Fig. 2

Structural model

Results indicate that narcissistic personality of supervisor has a direct negative impact on job satisfaction of employees (estimate = − .531, p < .001); hence, H1 is accepted. Narcissistic personality has a direct negative impact on employee well-being of employees (estimate = − .517, p value < .001), suggesting that H3 is accepted. Results also indicate that narcissistic personality of boss has a positive impact on workplace stress faced by the employees (estimate = .314, p value = .007); similarly, narcissistic personality of boss has a direct positive relationship on employees’ intentions to quit (estimate = .317, p value < .001); hence, H4 and H5 are accepted, respectively. Whereas narcissistic personality of boss and job performance of employees showed an opposite relationship than what was predicted and hypothesized (estimate = .264, p value = .076), it was predicted that the relationship will be negative in nature, but the results show that the relationship is positive in nature; however, the significance level of this result is unacceptable; thus, H2 is rejected. Standardized estimates of path model are given in Table 4.

Table 4 Standardized estimates of path model

Discussion

Leadership style is one of the main elements that have a definitive impact on the effectiveness of an organization. It is also an important determinant of job satisfaction of employees as it can impact the motivation and dedication levels of employees [40].

The results of the study regarding job satisfaction and narcissistic leadership of boss did not contradict previous studies [31, 43]. The findings of this study show that narcissistic leadership has significant association with job satisfaction of employees in the banking sector of Pakistan. The relationship was found significant with a negative coefficient of −.531 with a p value of .000. This negative coefficient reveals that leaders with grandiose sense of self, who exaggerate about their accomplishments, have a negative impact on the satisfaction level of employees that work for them. As the previous works do suggest, narcissistic tendencies of the boss relate to less satisfaction of the employees who work for such boss. Narcissistic leaders exploit others for their personal gains and blame whoever and wherever they feel like to save their own selves. Employees in such situations feel threatened and un-supported. On the other hand, employees who are supported have better attitudes toward their jobs and appear to be much happy.

Based on the findings of this study, narcissistic leadership does not have a negative impact on job performance, as suggested by Shurden [56] that an indirect relationship exists between job performance and narcissistic leadership through leader member exchange, but in this study it was found to be positive, but the results were insignificant. The relationship was found insignificant with a coefficient of .264 with a p value of .076. The reason of this unexpected finding might be that because some dimensions of narcissistic personality, i.e., authority and self-sufficiency, are ignored by the employees as they little care about the level of authority their boss has over them and focus primarily on their own work.

The results of this study did indicate that there is a strong negative relationship between narcissistic leadership style of boss and the employee well-being of employees. The relationship was found to be significant with a negative coefficient of −.517 with a p value of .000. This proves that in the presence of self-centered bosses who do a favor only to get two more in return, employees are more than likely to feel that their employee well-being is at stake. It was also found that narcissistic leadership in fact affects employee workplace stress levels. The relationship was found significant with a coefficient of .314 with a p value of .007. This represents that narcissistic leadership contributes to elevated stress levels of the employees who work for such an individual.

The study also highlights that narcissistic leadership has a strong positive relationship with employees’ intentions to quit the organization. The relationship was found significant with a coefficient of .317 and a p value of .000. This indicates that bosses with narcissistic tendencies are more than likely to drive hardworking employees away simply with their extreme sense of superiority and a grandiose sense of self.

All of us have some sort of narcissism in one form or another; it is not necessarily a bad thing as it is related to self-esteem. A higher degree of extraversion is reported in such individuals. The problem does not occur as long as you are aware and know what you are doing and the kind of ways you are reacting. It becomes a problem when it crosses the normal limits of self-indulgence and turns into self-absorption, verbal or physical abuse, paranoia and other humiliating behaviors. A huge amount of money is spent every year on training and development programs, but narcissism in bosses remains ignored. It is needed for organizations to understand that without changing the behaviors and attitudes, all the training is not going to do any good. Employees get de-motivated when they see the same behaviors and narcissistic tendencies in their bosses.

Conclusion

Leadership style has a significant impact on subordinates’ performance which ultimately leads to organizational success. Narcissistic leadership has a significant association with job satisfaction of employees in the banking sector of Pakistan. Based on this study, it can be inferred that leaders who exaggerate about their accomplishments and have narcissistic personality cannot satisfy their subordinates. If management wants their employees to perform better, leaders should not exploit others for their self-interests, rather support them. Narcissistic leadership style elevates stress levels of the employees and ultimately affects workplace environment and individual well-being.

Implications

Parents are the initial perpetrators that inculcate narcissistic tendencies in their children [35]. Therefore, to break this cycle of narcissism, awareness is to be made to help future parents. The initial problem in narcissistic individuals is their elevated ego. So, the solution is to stop feeding the ego.

To reverse the trend of narcissism, changes can be made in school, college or university levels or additional programs can be urged. The basic premise behind this addition is to focus on the similarities within students rather than on differences. These programs help students in developing social skills and teach them to resolve conflicts peacefully.

In order to tackle narcissism at work place and to positively influence the workforce, some big steps at the organizational level are to be taken. If a narcissistic individual is employed, different established strategies can be used to deal with such individual/leader, for instance, appeasement tactic (to let the narcissistic individual have his way), defensive tactic (to fight the narcissist and dealing with the problems as they arise), retaliatory tactics (to fight fire with fire). In addition, organizations can have professional development programs that focus on developing personality and utilizing narcissistic approach in productive matters.