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

There’s a significant difference between “big ego” and healthy ambition. Professionals usually start out with big ideas, a strong ego, ambition, talent and ideas, all of 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, success creates 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.

What Does “Ego” Cost?

Fifty-three percent of business people 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.

The Human Paradox

It’s inevitable: when you get good at something, you do more of it. When you’re recognized for a talent, you try to emphasize it. The problems arise when a strength becomes exaggerated into a liability.

Consider this example: Optimism is a common strength in leaders.

The optimistic leader isn’t frozen by reality, even when it’s negative, can help people get through difficult times, reminds people of better times ahead.

However, an optimistic leader won’t listen to bad news, believes a positive outlook can overcome anything, rejects bad news as the pessimism of the naysayers.

The very traits that get us through difficult times can end up costing dearly when they get out of hand.

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.

Overconfidence and unbridled ambition can attack our talents and abilities, with big ego leading to bad decisions.

Coming next: what traits do you consider useful for keeping ego in check?

How have you seen examples of “ego” costing organizations?