Incorporating complexity

01 February 2024

Joe Roberts looks at how boards can accommodate multiple mindsets, cultures, systems and priorities in complex organisations.

In our 2021 Festival of Governance, called Good governance because we can flip the script, we explored the idea that in a complex world with competing priorities there are a variety of mindsets, cultures and systems at play at any one time and to ignore complexity will only further complicate matters.

Diversity in the boardroom is a live topic and a worthy objective. This is frequently defined in terms of demographic diversity—for example, including members from different ethnic backgrounds or age groups and having a balance between genders in the membership of the board. This form of diversity is vitally important, not least because it demonstrates an organisation’s commitment to equality of opportunity and helps it to understand the different types of people who use its services or buy its products.

However, this is not enough on its own. Boards need to be diverse in another way too—one that can be much more difficult to define and measure. They need cognitive diversity, also known as diversity of thought.

Cognitive diversity

A degree of harmony and mutual respect are undoubtedly needed for a board to function as a collective decision-making unit, but we should always be aware of the risk of groupthink, defined by the Collins dictionary as ‘a tendency within organisations or society to promote or establish the view of the predominant group’, and by Webster’s as ‘the tendency of members of a committee, profession etc. to conform to those opinions or feelings prevailing in their group’.

In a public sector and governmental context, groupthink has been blamed for extremely costly and harmful failures of public policy, such as the introduction of the poll tax in the early 1990s and the invasion of Iraq in 2003.

In the private sector, corporate disasters such as the collapse of Enron or the Royal Bank of Scotland showed elements of groupthink. In all cases, very intelligent, highly educated, successful and well-respected people came together to make bad decisions that had catastrophic consequences.

The benefits of having a range of opinions and perspectives around the board table ought to be clear. Constructive but challenging debate is a form of risk management; it exposes the weaknesses in ideas and proposals that have not been thought through so that they can either be strengthened or abandoned.

But it is not just a way of avoiding hazards; it is also a way of making positive change happen. It can drive innovation and improvement by challenging established ways of doing things that have gone unquestioned for many years. People with different perspectives may see new business or service development opportunities that their colleagues do not.

How groupthink develops

We need to understand why boards may lack cognitive diversity and how groupthink develops.

Firstly, while there are different views about the extent to which nature and nurture affect how we think and behave, we are all to some degree the products of our environment. Senior people in many organisations have generally followed similar career paths and been exposed to the same corporate culture. They frequently have similar educational pedigrees and may originate from similar socio-economic backgrounds. All of these factors can contribute to a shared worldview consisting of implicit beliefs and taken-for-granted, rarely questioned assumptions.

It is also the case that many people feel more comfortable with people who are in some important respect like them, for example, because they worked for the same institutions or attended the same university. Thus, leaders often recruit and promote in their own image. Sometimes this is a conscious choice, where ‘cultural fit’ is a criterion in the recruitment process, but sometimes it is not.

Another aspect of human nature that can favour groupthink is the preference of most people to get along well with others and avoid conflict. More often than not, it is more comfortable to go with the flow than to point out the flaws in an argument, and in doing so, to antagonise someone that we will have to work with long after the decision has been taken and implemented. For this reason, some people self-censor—either dialling down their criticisms in the meeting or not sharing their reservations about a decision with others at all.

The cultural dynamics within some boards can also favour groupthink. If a board has a dominant, overbearing chair or chief executive, other board members may simply fall in line, even if those board members are accomplished professionals in their own right. Hazards also arise when one member of the board is seen as the subject matter expert on a particular topic, so other members defer to their superior expertise whenever that topic is discussed. Another source of risk is when board members are disengaged and fail to prepare thoroughly for meetings or to ask many questions.

Nurturing diversity of thought

If we recognise the importance of diversity of thought on boards, we need to be equally clear about how to make it happen. Recruitment practices are important, particularly job descriptions and person specifications. We should ask whether all of the mandatory criteria in a person specification—such as having worked in a particular type of job in a particular industry for however many years—are strictly essential (recognising that for some roles they will be) or if there should be more emphasis on transferable soft skills, thus attracting people from different backgrounds or industry sectors. Another advantage of casting the net wider is that it gives the organisation access to a wider and deeper talent pool; board roles are not always easy to fill.

Board members—chairs in particular—need to ensure that there is psychological safety in the boardroom such that all members can express their views and ask questions confidently, even if they are in the minority. Sometimes they may need to play devil’s advocate if nobody is prepared to argue a point.

All members need to remember that they have a collective responsibility for strategic direction and oversight, so for example, it is not acceptable to leave scrutiny of the organisation’s finances to the only accountant on the board.

Board members need to understand their professional duties and accountabilities from the time that they take office, so training and an ongoing programme of board development are really important.

Meet the author: Joe Roberts

Consultant

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Prepared by GGI Development and Research LLP for the Good Governance Institute.

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