Addressing Group Dynamics as Part of Your Board Assessments
by Donna Hamlin, Ph.D.
The latest PwC’s 2021 Corporate Directors Survey* notes boards and individual director assessments are a critical piece of the puzzle for boards looking to improve. To be effective, a board’s assessment process needs to be honest and thorough. Most importantly, it needs to lead to action or change.
On the positive side:
- the majority of directors (88%) report their board has effective processes,
- 89% give their board leadership high marks for how assessments are led, and
- more than three-quarters (76%) say there is sufficient follow-up afterwards.
Yet, boards still cite limitations.
- 67% of directors say it is difficult to be frank in the process, and
- 52% say it is too much of a “check the box” exercise.
In addition, recent research of the “Four Common Biases in Boardroom Culture”** cautions that board members may overlook the importance of group dynamics and the impact of personal biases brought to the table. The four key ones that may be in play are:
- Authority bias: Showing too much deference to – and reliance on -subject matter expert directors, who influence to balance in discussions.
- Group think: Putting harmony and conformity before debate and open discussion of dissenting vies
- Status quo bias: Overvalue for what directors know works vs. pursuing initiatives that involve substantial changes, e.g., an overhaul of a business model.
- Confirmation bias: Overvalue evidence that confirms personal beliefs instead of challenging them.
Does your board evaluate these human elements that contribute to the boards’ effectiveness?
We include these in our BOARD SCAN independent board assessment process. Our assessment includes twenty key areas of board performance. Two specifically address the
possible concerns noted in the survey and behavioral psychology in the recent research.
- We know the best way to avoid confirmation bias is to encourage diversity of thought. We include in our Board Bona Fide tool our proprietary psychometric assessment of orientation to individual problem-solving and board styles. This helps you understand if your composition of directors is too homogenous vs. well-balanced in diversity of thought. Our research shows boards made up of high diversity of thought increase the quality of problem-solving and innovation, provided the members understand diversity and how to respect it within the group.
- We explore the board interactions to identify existing or potential patterns that can be replaced with more effective behaviors and practices.
To learn more, here is a link to a short interview that explains more about the Styles of Thinking dimension to the BBF analysis. https://youtu.be/cpFDIWaubnk
If your board could benefit from enriching your board evaluation with a deeper look at group dynamics, feel free to contact us.
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*https://www.pwc.com/us/en/services/governance-insights-center/library/annual-corporate-directors-survey.
Four Common Biases in Boardroom Culture by Maria Moats, Paul DeNicola and Lean Malone
www.strategy+business.com
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