The Psychology of Good Governance

Tuesday, 10 September 2019

Scott Way photo
Scott Way
Director Industrial & Organisational Psychology BDO

    Good Governance is essential for investors, shareholders and taxpayers to have confidence in the corporations, agencies and systems that underpin our society.

    Those entrusted to oversee and manage these systems receive training and development (we hope!) to understand the contemporary tools and the techniques required to do this wisely. Are they, however, aware of the many psychological traps that can undermine good judgement and decision making and hence good governance? I fear not…so let me alert you to a few.

    Unconscious Bias – the bio-computer in our heads, otherwise known as our brain, is designed to make quick decisions in order to move on to the next challenge. Nobel Prize winning psychologist and Princeton Professor Daniel Kahneman1 identified the many unconscious short cuts our brain takes to cope with complex stimuli. There are at least 40 of these ‘traps’ and they can be grouped into the following categories:

    • Decision-making biases e.g. group think – the tendency to believe in something because others do. ‘Everyone else seems to think this is a good idea. It must be a good idea.’
    • Social biases e.g. – halo effect – when positive qualities spill over to influence our perception of another. ‘Fred likes the same things I do. Fred is a good fellow.’
    • Memory errors e.g. – recency effect – the most recent memories have the most impact on us. ‘Wow …that same thing happened last week. It must be bad.’

    The bottom line is that we are fundamentally flawed in our decision making despite our best efforts to correct this. Be very careful, even scared, when making important decisions.

    Psychological Safety – in 1990 William Kahn, sometimes described as the father of employee engagement, identified the concept of ‘psychological safety’. In broad terms it describes a perception whereby individuals feel safe to speak up without fear of loss or repercussion. Boards and senior leadership teams must have ‘psychological safety’ in order to facilitate their members to raise alternative viewpoints and break free of group think. The trouble comes where an overbearing CEO, Chair or colleague makes the ‘heretic’ feel threatened, or at worst belittled, creating a subtle but powerful climate of fear.

    How safe do you and/or your colleagues feel? When was the last time this was assessed?

    Requisite Variety – Ross Ashby, a pioneering British cyberneticist and psychiatrist, formulated this law in biology but the principles apply within good governance. In order to deal effectively with the issues that are presented to them, board members and senior leaders need to have the requisite skills to respond. For example, we wouldn’t ask someone untrained to fly a plane or undertake surgery, therefore, we hope that our leaders are trained and skilled to lead, solve complex problems and work effectively together. If they haven’t been trained in these skills then it raises the question…What processes are they using?

    What are the formal skills of your colleagues? Do they have the requisite tools to provide ‘good governance’?

    These three topics lead us to consider the role of psychology in governance. There is ample research to support the proven ways registered organisational psychologists can assist boards and senior leadership teams to function more effectively. This can come in the form of skills training to solve problems, heightening the awareness of our many cognitive biases and to evaluate the psychological safety of a group. It may be worthwhile periodically allowing registered organisational psychologists to observe the functioning of a group and to offer constructive feedback.

    Whatever your view on the role of psychology, there can be no doubt that those leading our organisations need to be operating at an elite level; constantly developing their skills, continuously improving their knowledge and searching out better ways to add value.

    1 Kahneman, Daniel (2011) – Thinking, Fast and Slow

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