Unpacking board culture
How behavioral psychology might explain what’s holding boards back
No boardroom has a perfect culture. Derailed discussions, dismissed opinions, side conversations, and dominating personalities pop up in every boardroom. Each director brings his or her own habits, preferences, past experiences, and individual biases. These all impact the board’s culture and decision-making. Boards can’t achieve a truly strong board culture without taking these dynamics into account. Here, we lay out how boards can spot the issues that may be holding them back.
Boards are focused on composition issues like diversity and subject matter expertise. But are they forgetting about the human element?
Common boardroom biases: four dynamics that commonly affect the boardroom
- Authority bias
- Groupthink
- Status quo bias
- Confirmation bias
Authority bias
The boardroom needs experts. Directors are, of course, recruited for their skill sets and expertise. But in some cases, boards may rely too much on one director’s experience or opinion. They can become too influenced by that opinion, dismissing what others have to say, or abdicating responsibility. Directors who are seen as an expert in one area might not contribute much to other discussions. Read more about the signs that your board may have an authority bias problem and tips to minimize authority bias.
Groupthink
While consensus-building is important, boards may be too inclined to seek harmony or conformity. This can lead to groupthink, where dissenting views are not welcomed or entertained. In fact, while most boards work to solicit a range of views and come to a consensus on key issues, 36% of directors say it is difficult to voice a dissenting view on at least one topic in the boardroom according to PwCs 2020 Annual Corporate Directors Survey. This can point to dysfunctional decision-making as the board members avoid making waves. In fact, the most common reason that directors cite for stifled dissent on their boards is the desire to maintain collegiality among their peers. Read more about the signs that your board may have a groupthink bias problem and tips to minimize groupthink.
Status quo bias
Boards, too, often prefer a set of established norms, and value that which is familiar. They may overvalue what they know and be reluctant to pursue initiatives involving substantial change, simply because it brings too many risks of the unknown. Boards may also be reluctant to embrace new strategies and ideas. While individually they may be creative thinkers, as a group they may be more likely to want to stick with the status quo. This can also lead to boards and companies under-investing in long-term projects like research and development, which may not lead to returns for some time. Read more about the signs that your board may have a status quo bias problem and tips to minimize status quo bias.
Confirmation bias
Confirmation bias can lead to overconfidence in the outcome that directors are hoping for. If the company has had success in the past, the board may expect that success will continue, and overvalue the evidence that supports it. The board members that were strongly in favor of a project, or a new hire, or a new strategy, can find glimmers of positivity in almost any report from management. But confirmation bias isn’t always about overconfidence—it can also confirm a negative view. The director who was against the project from the start may, in the same report, see only the bad news. Read more about the signs that your board may have a confirmation bias problem and tips to minimize confirmation bias.
Board dynamics won’t change unless directors are willing to take a hard look at the biases and practices on their own boards. Use these insights into behavioral psychology to see your board interactions through a new lens. And once you’ve identified some potential issues, apply the tools here to help bring about change.
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