Doing business with a sociopath is bad business

Here’s a scary fact about the prevalence of sociopaths, also called psychopaths: Dr. Robert Hare, the psychologist who developed the Psychopathy Checklist-Revised (PCL-R), says that approximately 1% of the general population meets his definition of a psychopath. But in a study of 200 high-potential executives, he found that 3.5% of them fit the profile of a psychopath. That means there are 3.5 times a many psychopaths in corporate offices as there are on the streets.

One of them, in my opinion, is Carl R. Greene, former executive director of the Philadelphia Housing Authority (PHA). I’ve posted several articles about him since he was fired from the agency that he ran for 12 years in August 2010.

Why was he fired? Well, there were the six sexual harassment complaints filed against him. Greene directed the agency’s lawyers and insurance company to settle three of them, for over $1 million, without informing the board of directors.

Then there was the hostile work environment Greene created. His rage was legendary. Anyone who stood up to him was fired, demoted, or relocated to some outpost in a crime-ridden neighborhood.

Then there was the “unapproved abandonment of his duties.” When the media reported that Greene’s luxury condominium was in foreclosure after he failed to pay the mortgage for five months, he stopped showing up for work. Greene disappeared for a week—no one knew where he was.

Looked the other way

The PHA board of directors apparently knew Greene was an abusive executive—after all, one employee, after being berated by him, went home and dropped dead. They may also have known about his inappropriate spending of agency funds, such as handing out $800 Tumi duffel bags to 20 staffers who attended an annual PHA conference. But they seemed to be willing to look the other way, because Greene got results.

Greene improved living conditions for thousands of Philadelphia residents. He demolished drug and crime infested high-rises and built low-rise housing that turned into stable neighborhoods. He rehabilitated many low-income homes owned by the agency. He created senior centers and job training programs.

As long as the job was being done, the board was not interested in “personnel matters.”

Lawsuit

When he was fired, Greene retaliated by hiring one of the toughest lawyers in Philadelphia to file a wrongful termination lawsuit. He originally demanded $4 million. The board of directors didn’t want to pay him anything.

The civil trial began at the end of January. It included acrimonious testimony from John Street, the former chairman of the PHA board and former Philadelphia mayor.

On Friday, February 23, the interim director of the PHA announced that a settlement had been reached. The agency would pay Carl Greene $625,000.

John Street did not support the settlement, saying it sent the “wrong message to every potential victim of sexual harassment as well as every potential perpetrator.”

So what happened? First, PHA had already spent $1 million defending itself from Greene’s lawsuit, and had exhausted the coverage provided by its insurer.

More importantly, the PHA board had itself given Carl Greene an iron-clad employment contract. According to the Philadelphia Inquirer, “It wasn’t enough for the agency to show that commissioners had reason to fire him. It had to also show that his behavior caused ‘demonstrable, material injury and damage to PHA.'” If the agency couldn’t prove the damage, it would have to pay the remaining years on the contract.

Read To ‘turn a page,’ PHA settled, on Philly.com.

Do not do business with a sociopath

Two years ago, I attended the Society for the Scientific Study of Psychopathy conference. Paul Babiak, a noted industrial and organizational psychology researcher, talked about explaining the PCL-R to corporate executives. One question they often asked, Babiak said, was at what score would employees be cutthroat competitors but not steal from the company?

The audience burst into laughter. People who know sociopaths know that they can never be trusted.

Just as they are in personal relationships, sociopaths in business are aggressive, hostile, manipulative, deceitful and ethically challenged. Their infatuation with risk could drive them to bet the company—and lose. This is what happened with Enron, Worldcom, HealthSouth. Or their seemingly sterling results can be completely fabricated, as in the case of Bernie Madoff.

Do not believe you can do business with a sociopath and come out on top. Do not believe that you can work for a sociopath and emerge unscathed. Even if there is no overt wrongdoing, you’ll likely suffer from unbelievable stress.

As in personal relationships, the only sane thing to do in a business relationship with a sociopath is get out of it.