Groupthink can dent a board’s decision making ability. John Adams explains why one shouldn’t just follow the pack.
Directors have a legal and ethical responsibility to ensure that their boards make the most effective decisions in the interests of all stakeholders. However, despite all the best intentions, boards often fail in this endeavour. Managing a board’s decision making activities is one of the most difficult tasks because this process is often plagued by the complexity of qualitative, subjective and psychological elements.
Failure is usually linked to a breakdown in group dynamics. For decades, social psychologists have examined examples of organisational failure in the US Government. Irving Janis, a Yale University academic during the 1970s, pondered why highly intelligent people in high executive positions of the US Government were susceptible to making significant blunders in US foreign and domestic policy. Korea, the Bay of Pigs and Vietnam were examples of a breakdown in group dynamics cited by Janis in her seminal thesis called Victims of Groupthink. According to Janis, groupthink is a situation where individuals substitute their own thinking and expression of their own thoughts for the apparent immediate consensus of a group in order to reach a unanimous consensus amongst group members. Janis concluded that such behaviour leads to a deterioration of mental efficiency, reality testing and moral judgement.
In layman’s terms, groupthink is the situation where people ‘follow the crowd,’ without carefully examining the group’s thoughts or actions. Everyone has experienced this in their working lives in some form. However, at board level where quality decision making is vital to organisational performance, the groupthink phenomena is the poison chalice that can destroy an organisation. It is the complete failure of governance. The groupthink hypothesis has continued to gain creditability among the international business and academic communities over the past three decades. Its relevance has been cited in the intelligence failures related to the September 2001 attacks on New York and Washington and the pre-Iraq war weapons of mass destruction intelligence failures. In the Australian context, I would personally add the collapse of HIH as an example where a board of directors succumbed to groupthink.
Conventional wisdom in the directorship profession is for management and the board to work in a collegial relationship underpinned by harmony and mutual trust. This type of relationship should lead to greater effectiveness. However, boards that operate in this manner provide fertile ground for groupthink to flourish, particularly in either goal or task orientated groups, where group participants become obsessively focused on achieving a particular goal or completing a particular task rather than critically thinking and questioning the groups’ actions.
Directors need to be vigilant in identifying the symptoms of groupthink before its effects lead to organisational ineffectiveness. Directors should be on the look out for the following symptoms:
Illusion of invulnerability: Members are overly optimistic and ignore obvious danger, leading to greater risk taking, poorer risk management and a failure to plan for contingencies.
Collective rationalisation: Members discredit and explain away any information or opinions that are contrary to group thinking. This leads to poor information search and selective bias in processing information.
Illusion of morality: Members believe their decisions are morally correct, ignoring the ethical consequences of their decisions. This leads to a failure to re-appraise initially rejected alternatives.
Pressure for conformity: A majority of members pressure dissenters in the group to conform to the group consensus and may accuse them of being disloyal.
Self-censorship: Members fail to raise their own doubts and counter arguments to the group consensus so that they don’t damage their personal status or political effectiveness.
Illusion of unanimity: The group’s silence or lack of discussion on areas of divergent thinking is interpreted as the unanimous view of the group. In these instances, areas of convergence are ‘played up’ in order to enforce the group’s apparent unity.
Self appointed mind guards: Individual members who protect the group from adverse information that might counter the group consensus regarding the effectiveness and morality of their decisions.
Shared stereotypes: The group collectively accepts stereotypes regarding the morality or effectiveness of people or organisations. This results in incorrect assessments made by the group.
Once identified, directors need to tread carefully on how to handle the issue of possible groupthink. Addressing this issue will require moral courage and tact, as fellow directors are likely to take offence at the suggestion that the board is suffering from groupthink (an outright objection could be further evidence of groupthink). Directors need to be aware that groupthink may be a result of personalities or processes or both. Directors need to carefully examine the origins of, and the solutions to, groupthink, as they vary from board to board. In the case of boards being submissive to dominant personalities, a change in personnel may be required if other counselling techniques – such as a private word from a fellow board member or a formal board evaluation process – is not successful in altering someone’s behaviour.
However, the good news is that groupthink tendencies can be diminished, if not eliminated, by a change in board process without having to go through the painful process of disciplining a director. A notable example identified by Janis was the stark transformation in the decision making processes of the Kennedy administration from the Bay of Pigs fiasco to the resolution of the Cuban Missile Crisis. The following procedural safeguards are consistently mentioned in the groupthink literature:
Role of board members: All directors should be given the role of critical evaluator. This function should form a part of a director’s formal duties and each director should be evaluated in performing this function. Boards need to regard critical thinking, objections and misgivings as important topics for discussion.
Alternative options: Agenda papers should consist of options for the board’s deliberations, rather than singular preferences put forward by management. A company secretary should be given a licence to present contrary evidence to the board’s or management’s position.
Reflective decision making: Directors should have the opportunity to have a second chance meeting where board decisions are reviewed regularly and where initially rejected alternatives are reappraised.
Identifying and challenging assumptions: A director with critical analytical skills should be given the formal role of a devil’s advocate, tasked with identifying and challenging board assumptions, as well as championing unpopular or contrary opinions.
External scrutiny of board meetings: Outside experts should be invited to attend board meetings, either as guest speakers or participants, on a staggered basis to scrutinise board content both in terms of form and substance.
Use of single-issue committees: Small committees should be formed under independent leadership to work on single issues that have already been initially considered by the board to create a multiplicity of solutions.
Postponement of decision making: Agenda items requiring a decision should be introduced well in advance before a decision is required. If there is a lack of information, options or debate, the required decision should be postponed until sufficient information and debate is achieved.
Role of dominant personalities: Dominant personalities, whether dominance is psychological or derived from status (for example, being the CEO or chairperson) should not state their preferences or expectations from the outset of a board room deliberation.
Outside consultations: All directors should routinely discuss the boards’ deliberations with a trusted associate and report back to the group on the associate’s reactions, mindful that such deliberations must take into account board confidentiality.
Boards around the world have encompassed these recommendations to foster a climate of openness and willingness to engage in debate. For historical and cultural reasons, Australian organisations may be at greater risk from groupthink tendencies compared to their overseas counterparts. The Australian psyche for the last 150 years has been consumed with the notion of mateship. Friendship, loyalty and harmony have been Australian values that have in certain cases led to people substituting independent thought and expressing unpopular ideas for group consensus.
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