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Four common biases in boardroom culture

Biases in boardroom culture do exist: here’s what behavioral psychology can tell you about the human dynamics of your board.

Written by: Maria Castañón Moats, Paul DeNicola, and Leah Malone
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The mythology of corporate boards goes something like this: put a group of high-achieving, experienced, strategy-minded, and diverse individuals in a room together. Add commitment and a lot of hard work. What you get is a top-notch board with a healthy culture that provides effective oversight. The reality, however, is somewhat messier. In practice, no boardroom culture is perfect. Every board is plagued by derailed discussions, dismissed opinions, side conversations, directors who dominate, and those who seem to be biting their tongue.

Boards are quite rightly spending a great deal of time thinking about composition issues such as director expertise and diversity as paths to more effective governance. But, according to a recent PwC report, “Unpacking board culture: How behavioral psychology might explain what’s holding boards back,” board members may be overlooking the importance of group dynamics—the human element and the biases that everyone naturally brings to the table.

Applying the principles of behavioral psychology in the workplace is a popular trend in the corporate world for good reason. Building on foundational work by Nobel laureate Daniel Kahneman, George Loewenstein, Richard Thaler, and others, behavioral psychology offers valuable insights into the biases that help the brain order information and make decisions, and that influence the ways people judge themselves and others. In business settings, such as a meeting of a corporate board, these biases can cause people to over- or undervalue others who sit around the table, or the ideas they express. They can also influence collegiality, whether people feel “safe” enough to speak out, and the ability to nurture diversity of thought.

It’s clear that improving board dynamics is an ongoing challenge facing modern companies. For two years running, PwC’s Annual Corporate Directors Survey has revealed that about half (49%) of directors believe that at least one fellow director on their board should be replaced. Here, we lay out how boards can spot the issues that may be holding them back in four key areas: authority bias, groupthink, status quo bias, and confirmation bias. Each has clear warning signs. And for each, equally clear techniques are available to combat the harmful effects.

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