Leaders can choose to self-deceive or get wrapped up in an environment that enables self-deceptive behavior. The great danger to the organization led by a leader who lacks self-awareness is that their reality does not match the organization’s reality. Sydney Finkelstein is the author of Why Smart Executives Fail: And What You Can Learn From Their Mistakes. He explained how leaders could create their own reality. They can become disconnected from the realities that their peers and subordinates within the organization have.
Anyone in any organization receives status checks on their performance through feedback from peers, supervisors, and subordinates. This feedback could be formal or informal. Leaders are no exception, but they may get less feedback than others do. The feedback they receive may be lacking or distorted. The leader then receives filtered feedback, often mostly positive, because of their position of power. Longer tenured leaders particularly receive less feedback. Others may choose not to give them feedback for fear of offending their boss. The leader may also choose not to seek out or accept feedback, thinking they are in control and are confident in their abilities due to their success. Either way, this lack of or refusal to accept feedback may help create a divide between their believed reality and actual reality.
Example: Raju of Satyam
In Craig, Mortensen, and Iyer’s case study of Ramalinga Raju, Chair of Satyam, they uncovered written indicators of his deception from his letters and statements about his involvement in the biggest corporate scandal in India to date. Raju orchestrated an elaborate fraud on the top functionaries of Satyam by fictitiously portraying their balance sheet with made-up cash and bank balances and accrued interest rates. He was charged with criminal breach of trust, cheating, forgery, and fraudulent cancellation of securities. Prior to his confession in 2009, Raju had acquired a stellar reputation, personal recognition, and corporate accolades. He received the Ernst and Young Entrepreneur of the Year award two years before he confessed to fraud. Such acknowledgments shaped how Raju was perceived not only inside Satyam but also in the public. This constant recognition placed great pressure on him to present himself and Satyam in a highly favorable light. Over the years before his confession, Raju’s deception grew in scale and effect.
External pressures seem to foster one’s proclivity to project themselves as an exemplary leader incapable of fallacy. They may accomplish this by lying to themselves so they believe their confidence is real or by knowingly lying to others when they recognize they are not the leader they want to be. A leader that needs to rationalize these internal or external lies may create an organizational culture that drives lying underground, rather than addressing it and trying to limit it.
Perhaps it’s the pressure of succeeding in a complex, fast-paced environment that drives leaders to deceive. The propensity to rationalize self-deceptive behavior, plus the feeling of the need to be in control, tends to facilitate behavior that is unethical and ultimately harmful to the organization. Less pressure-filled environments, like organizations that focus more on social responsibility and service to society and are less dependent on profit, may help reduce the propensity to self-deceive or overtly deceive.
Any organization wants its leaders to buy into their products or services and the culture the organization wishes to build. The negative side of congruence between leader and organization is when a leader cannot separate themselves from the organization and have a personal life. Alisher Faizullaev wrote an article in the journal, Diplomacy and Statecraft, describing the strong attachment diplomats have with their state. He provided a great example of strategic leaders as diplomats needing to maintain high self-esteem to represent their country.
Being a part of the leadership representing a nation becomes a part of what Faizullaev called the diplomatic selfhood. He explained that diplomats, especially ambassadors, normally exhibit high self-awareness. The state becomes a part of themselves, and any hostility directed at the state may be met with a reaction of self-protection on the diplomat’s part.
Certainly, long-time diplomats at the most strategic levels must get used to such attention and the privilege it brings. The honor and attention paid to the diplomat symbolize the honor and respect for the state they represent. Over time, diplomats may feel a sense of exclusiveness as a result of this extraordinary status. However, the level of public attention and the official state representation they hold affects their self-perception, self-esteem, and self-schema. They develop a need for status and respect.
Too Close to the Decision
Sydney Finkelstein talked about senior leaders creating alternate realities for themselves, even when they associate extremely closely with their organization. Any organization wants its leaders to associate closely with their cause and their people. However, when executives are too close, egregious mistakes can be made. When executives treat the organization as an extension of themselves, there may be no clear boundary between their personal and professional lives. He gave the example of Samsung’s chief executive, Kun-Hee Lee, who decided to enter the auto industry because he, personally, liked cars.
Such self-deceptive executives may end up throwing good money after bad and investing the organization’s resources into expensive projects that do not work but suit their preferences. In an interview I conducted with experimental social psychologist Anthony Pratkanis, he discussed peoples’ escalating commitments to doomed courses of action. Committing fraud crimes and joining cults were examples of someone making a small decision that sets actions in motion, then having to justify their previous decision by making further pledges down that same path. The strategic leaders during the Vietnam War, for example, made some decisions that did not achieve the results they intended, but instead of changing course they doubled-down to prove that their initial decision was best. Some ways to avoid this trap, he explained, was to be very cautious about making commitments before making them, and always asking about alternative explanations and courses of action.
If You Want Self-Aware Leaders, Give Them Help
Leaders are born or built. To create great leaders, organizations can help by encouraging ethical and sound leadership practices and putting mechanisms in place to build leader competence and responsibility. Creating self-aware leaders should be the goal of any responsible organization. For a leader to achieve self-awareness, the leader needs subordinate managers with positive work attitudes. Self-awareness cannot be achieved in isolation. Leaders and followers must work together to build each other up.
When employees are a good fit for an organization and feel like they are a good fit for their job, one can expect high-productivity from the person and happiness at work. A high person-environment fit relates to authentic living and engagement with others. It is a buffer against one’s reaction to stress at work through self-alienation. When employees feel they can express themselves openly and constructively at work, they are less motivated to engage in self-preservation strategies that typify environments characterized by pressures to conform.
Executives committed to the cause of the organization is an end result from leader development and indoctrination. Some leaders may buy into this more readily than others. What is important to an organization is to help leaders develop and connect to the organization’s goals and values without succumbing to pressures to succeed.
a self-deceptive leader’s perception of reality may not match the reality of the organization
leaders may receive less honest feedback from employees that are fearful of the leader’s position and influence
leaders confident in their abilities, believing they are in control, may shun feedback that says otherwise
 Finkelstein (2003)  Finkelstein (2006)  Goleman et al. (2002)  Taylor (2010)  Post et al. (2009)  Craig et al. (2013)  Williams et al. (2009)  Desai et al (2018)  Faizullaev (2006)  Faizullaev (2006)  Faizullaev (2006)  Finkelstein (2006)  Pratkanis, A., in discussion with the author (February 2021)  Sosik (2001)  Hinkle (2018)  Kuntz and Abbott (2017)