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The Costs of Ego

“Ego is the invisible line item on every company’s profit and loss statement.”
—David Marcum and Steven Smith in egonomics: What Makes Ego Our Greatest Asset (or Most Expensive Liability), Fireside, 2007

Fifty-three percent of businesspeople estimate ego costs their company 6 to 15 percent of annual revenue; 21 percent say this cost ranges from 16 to 20 percent.

That’s somewhat astonishing, considering “ego” is difficult to measure by any standards. But even if ego accounts for only 6 percent of revenue, the annual “cost of ego” would translate to nearly $1.1 billion to the average Fortune 500 company—roughly equal to the average annual profit of these same companies.

Big egos invade every team conversation, boardroom debate, marketing plan, client interaction, contract negotiation, employment interview and performance review. There’s no question it gets in the way and is a major cause of bad decision-making.

Most of us strongly believe our ego is healthy, contributing to self-confidence, optimism and success. Most of us don’t have overinflated egos, but we’re capable of letting them run amok—and our personal success and organization’s performance pay the price.

Using five years of research, David Marcum and Steven Smith write about the costs of ego in egonomics (Fireside, 2007):

• The person who develops an idea trumps the quality of that idea
• Hearing, but not listening
• People thinking “me first, company second”
• Only the “right” people have good ideas
• Pressure to fit in
• Failure to challenge status quo
• Candid discussion saved for outside the meeting
• Failures being buried and never mentioned again
• Silos created and tolerated
• Meetings going longer than necessary
• Fear of making mistakes or admitting them

Companies can be populated with talented, high-IQ people with no shortage of vision, education, experience or good intentions, yet they may still have an undercurrent of out-of-control egos responsible for huge losses in productivity and profits.

Liability or Asset?

There’s a significant difference between “big ego” and ambition. Professionals usually start out with big ideas, a healthy ego, ambition, talent and ideas, which drive success. With good timing and help from others, great things invariably happen.

But there’s an inherent trap. When people begin to believe their “own press,” successes create the illusion that they alone were responsible for workplace accomplishments. “Big ego” may then take over, leading to the belief that future accomplishments will be just as successful.

Ego Is a Good Thing

Titrated properly, ego is inherently positive, providing a necessary level of confidence and ambition. Left unchecked, however, ego goes on a hunt, seeking more of what bolsters it. But overconfidence and unbridled ambition can also attack our talents and abilities, with big ego leading to bad decisions.

Consider these organizational “strengths,” which can backfire:


Strength Return Costs

Charismatic
Paints a vision, inspires others, attracts talent, keeps people motivated

Manipulates bad ideas to sound good; people overlook substance for style

Dedicated
Produces, doesn’t let obstacles overcome the end goal, finds a way to get things done—no matter what
Won’t consider alternatives, resists changes (even when they provide better outcomes), cuts off creativity in the name of “getting things done”


Optimistic

Isn’t frozen by reality, even when it’s negative; can help people get through difficult times; reminds people of better times ahead


Won’t listen to bad news, believes a positive outlook can overcome anything, rejects bad news as the pessimism of the naysayers

(For a complete table of strengths and their returns and costs, visit www.egonomicsbook.com)

These subtle differences become leaders’ ultimate blind spots.

Four Signs of Big Ego

Your coworkers and team members are usually aware—much earlier than you’ll ever figure out—that your ego has become overinflated. Here are four telltale signs:

1. You find yourself being defensive. Defending ideas ultimately turns into becoming defensive.
2. You continually compare yourself to others. In truth, being too competitive actually makes you less competitive.
3. You seek acceptance to justify your ego needs. You crave respect and recognition from others, which eventually interferes with your success.
4. You make a point of showcasing your brilliance.

Your ego may be in control if you experience the following:

• Viewing a colleague as a rival and planning how to “beat” him/her
• Taking it personally when someone disagrees with your ideas
• Disagreeing with someone simply because you didn’t come up with the idea first
• Prematurely criticizing the competition’s strategies without considering their value
• Compulsively following a competitor’s lead, just to “keep up with the Joneses”
• Comparing others’ external environments to your own (signs of status or wealth, without regard for inner values)

3 Keys to Maintaining a Healthy Ego

There are three keys to developing a balanced ego:

1. Humility
2. Curiosity
3. Veracity

Without losing confidence in who we are or lessening the importance of what we’ve achieved, humility creates a desire to reach the next level of performance. It doesn’t lose sight of “me,” but it also prevents our personal needs and agendas from interfering with open dialogue and intense debate. Humility channels our ambitions into the success of “we,” rather than a selfish and short-lived agenda of “me.”

Once humility creates an open mind, curiosity drives the exploration of ideas. It gives us permission and courage to test what we think, feel and believe to be true, reminding us we don’t know everything.

Veracity is the habitual pursuit of the truth. It’s not that people don’t want the truth, but we often don’t want all of it—particularly the part that’s hard to hear or doesn’t support our agenda.

If openness and progress are the outcomes of humility, and innovation is the aim of curiosity, then veracity is the light that exposes the truths hidden in the shadows of our habits and comfort zones.

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