In his terrific article, The Seven Deadly Sins of Deaning, Dean Steven Smith identifies decanal narcissism as one of the deadliest of sins. He refers to it as one of those sins that will rot a deanship and prevent a faculty from moving forward.
In an ideal world, there will be mutual respect between a dean and his/her faculty. Indeed, the best deans find ways to encourage and promote their faculty, and help them excel. In a prior posting, I mentioned Dean Tom Galligan (now President Tom Galligan) who was formerly the dean at the University of Tennessee College of Law. Tom was one of these rare individuals who had a strong relationship with his faculty, and who actively promoted the faculty's interests.
Unfortunately, when a dean suffers from narcissism (obviously not the case with Tom Galligan), there is a significant (and likely) risk that the dean will place his own narcissistic interests above those of the institution. If that happens, the result can be deadly and the psychology of an institution can be absolutely destroyed. The self-serving narcissist dean can affect both a faculty's morale and productivity. And, if a narcissistic dean continues in office over a long period of time, the deanship can severely damage the institution.
Of course, institutionally, a narcissistic dean may come with a silver lining. In some instances, an incompetent or malevolent dean may divide a faculty and create severe schisms or divides. In a few instances, such a dean may unwittingly help to create a more cohesive faculty. The narcissistic dean may stand as a common enemy for the faculty, and may unify the faculty against that enemy (who actually might come to regard the dean as a "foreign invader" if the dean came from the outside). Under such circumstances, the dean may have the beneficial effect of healing old rifts, and this "halo" effect may continue (in the sense of improved faculty relationships) once the narcissist is gone.
In my 26 years of teaching law, I have seen a range of deans. However, almost without exception, one knows that a deanship is in trouble when the dean is no longer the leader of the institution. When a dean is a respected leader, the faculty may follow the dean in a suggested course of action simply because they respect the dean's judgment (even if they may have mild reservations). In a troubled deanship, the dean's support produces the opposite effect. Not often, but I have seen situations when the dean's support for a proposition would guarantee a number of votes against the dean's position. I believe that this is what Steve Smith meant when he said that narcissism will "rot" a deanship and prevent an institution from progressing.
As Professor Ron Krotoszynski (Washington & Lee University School of Law, but visiting at Alabama this year) said, a dean can get away with holding her faculty (individually or collectively) in contempt, but she better not show it. I might add an addendum to this sentiment: a dean might place her own personal interests ahead of the institution's interests, but she had better not reveal that bias either.