Psychology of the Board Flashcards
THE IMPORTANCE OF BOARD DYNAMICS
Understanding board dynamics is vital if we are to do what?
Why?
What is the starting point for understanding board dynamics?
What are the 3 Cs that broadly capture board dynamics?
to do a better job at corporate governance
the people element of corporate governance is the number-one reason companies fail = boardrooms are not necessarily always rational places and human factors, such as trust, power, influence, and relationships, are going to be key to performance
starting point is to develop a clearer understanding of what board dynamics actually is, what its components are, and how we might influence these for the better
COHESION and CHALLENGE, which pair together to describe what effective boardroom dynamics are like, and CULTURE, which captures the theme of how the board’s behaviour influences and is influenced by external stakeholders
DEFINING BOARD DYNAMICS
How can board dynamics be defined?
How does psychology come into play?
Board dynamics are the interactions between board members individually and collectively, and how these interactions influence, and are influenced by, their wider stakeholder system
The definition employs the words ‘interactions’ and ‘influence’, hinting at their underpinning in the more human aspects of governance
DEFINING BOARD DYNAMICS
What is psychology?
What are the 6 psychological topics that relate to board dynamics?
Psychology = the scientific study of the mind and how it dictates and influences our behaviour
(1) Team cohesion/challenge
(2) Decision-making
(3) Stakeholder conversations
(4) Leadership culture
(5) Diversity (deep)
(6) Board environment
CHARACTERISTICS OF BOARDS AND BOARD MEETINGS
What are the 10 specific characteristics that make a board different from any other group or team?
- Meet episodically and at a low frequency
- Only have a duty to solve complex and strategic challenges
- Operate within severe time restraints (meeting time often limited)
- Always working with imperfect information (e.g., past performance)
- Includes outsiders = NEDs
- Board members can have high public profiles and strong personalities
- Board members often have other board or senior leadership role commitments
- Board members are expected to represent a particular stakeholder group but are also members of the board unit as a whole
- Boards are typically larger than senior management teams
- Board meetings have a specific compliance process that they must follow based on a governance mandate prescribed for boards
CHARACTERISTICS OF BOARDS AND BOARD MEETINGS
What are the ‘three gears’ of board meetings by Hawkins?
What are Chait’s three modes of governing framework?
monitoring/mentoring, strategising, and decision-making
Type I = fiduciary governing = the board’s responsibility is to see that resources are used efficiently and responsibly
Type II = strategic governing = strategic thinking and planning are the primary focus
Type III = generative governing = focuses primarily on framing problems and issues and making sense of them, so that goal-setting and decision-making are then possible
BOARDS AS HIGH-PERFORMING TEAMS - DEFINING BOARDS AS TEAMS
What is the definition of a group?
What is the definition of a team?
Are boards groups or teams?
Group = 2 or more people who interact with one another, share similar characteristics, and collectively have a sense of unity
Team = a small group of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable
a board may function as a group or as a team for limited periods, but they should aspire to become a continuously high-performing team
BOARDS AS HIGH-PERFORMING TEAMS - DEFINING BOARDS AS TEAMS
A team is a small group of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable.
How does a board stack up against the definition of a team? (6)
(1) ‘small group’ = average board size globally is 10
(2) ‘complementary skills’ = boards are much more likely to function as teams if they have a diverse and balanced skillset and mindset
(3) ‘committed to a common purpose’ = a key attribute of effective directors is their level of motivation and commitment
(4) ‘performance goals’ = boards that work as teams regularly reflect on the appropriateness of their performance goals and ensure that all board members are on the same page at all times
(5) ‘approach’ = a board will only function as a team when there are also agreed group norms and ground rules of appropriate and inappropriate behaviour in place
(6) ‘mutually accountable’ = board members as a team will support and challenge each other and not wait for the chair to fulfil this function
BOARDS AS HIGH-PERFORMING TEAMS - WORKING GROUPS VS TEAMS
What are Hawkin’s 9 factors that distinguish working groups from teams?
- Leadership
WG = defined by strong, clearly focused leadership
T = share leadership roles (in boards that work well as teams, all directors take responsibility at different times) - Accountability
WG = members have individual accountability
T = members have individual and mutual accountability - Purpose
WG = group purpose is the same as the broader organisational mission
T = purpose different from both the organisational mission and the sum of individual team members’ objectives - Work products
WG = produces individual work products
T = produces collective work products - Meeting style
WG = run efficient agenda-based meetings
T= focus more on creating generative dialogue, with open discussion and active problem-solving - Performance measures
WG = measures its effectiveness indirectly by its influence on others
T = measures performance directly by assessing their collective work products - Working together
WG = discuss issues, make decisions, delegate to others
T = discuss issues, make decisions, do ‘real work’ together - Working boundaries
WG = only exist when its members are together
T = member will still be part of the team when they are not together - Board focus
WG = task-focused
T = task-focused and process and learning focused
BOARDS AS HIGH-PERFORMING TEAMS - DEFINING HIGH-PERFORMING TEAMS
What is a high-performing team according to Salas et al. (2006)?
A high-performing team possesses unique and expert-level knowledge, skills, and experience related to task performance… and adapt, coordinate, and cooperate as a team, thereby producing… superior or at least near-optimal levels of performance
BOARD TEAM OUTCOMES
One indirect measure of a board’s teamworking dynamics will be what?
However, this influence has many intermediary steps. Name one of these.
Dulewicz and Herbet (2004) defined and measured 16 tasks of the board. Which task has been considered most important for high organisational performance?
What are the broad behavioural outcomes that lead to these board task outcomes? The 11 Cs model lists two key behavioural outcomes in answer to this question.
their organisation’s performance
how board dynamics influences board performance
whether boards are able to ‘determine the company’s vision and mission to guide and set the pace for its operations and future development’
cohesion and challenge
BOARD TEAM OUTCOMES - COHESION
How is cohesion defined? (The tendency…)
Various components create cohesion in groups and teams. Name 3.
How can cohesion be increased? (4)
= the tendency for a group to be in unity while working towards a goal or to satisfy the emotional needs of its members
(1) a social element, such that a group likes each other and will want to work together, (2) a task element, such that the group approaches a challenge with the same mindset and information, and (3) a utility element, such that a group will jointly gain meaning from working together
(1) enhancing the frequency of interactions, (2) improving the quality of relationships, (3) providing more opportunities for team members to notice each other’s similarities, and (4) decreasing group size
BOARD TEAM OUTCOMES - COHESION
What are the 4 benefits of cohesion?
Can too much cohesion be a bad thing?
Benefits:
(1) Can enhance decision-making = enables ‘team mind’ which is highly influential to team performance because it reduces information asymmetry
(2) Enhances motivation, team commitment, and team member satisfaction
(3) Can reduce levels of stress and anxiety = higher creativity, higher levels of sustained performance, and board members feeling able to express challenge
(4) Can improve the team’s ability to learn from its performance
Yes = overly high levels can prove detrimental to the quality of the board’s decision-making = cohesiveness is the most frequently noted cause of groupthink
BOARD TEAM OUTCOMES - CHALLENGE
How is groupthink defined?
To protect from the dynamic of groupthink, cohesiveness must also be accompanied by what?
This challenge is often termed in psychology as what?
How can this happen and be encouraged?
Groupthink = a dysfunctional mode of group decision-making characterised by a reduction in independent, critical thinking and a relentless striving for unanimity among members
an appropriate amount of challenge among members
‘cognitive conflict’, which refers to task-orientated differences in judgement among team members
If a board has selected a diverse range of directors who have complementary skillsets, cognitive conflict is both likely to happen and to be encouraged
BOARD TEAM OUTCOMES - SUMMARY - THE NEED FOR BALANCE
The key dynamic that must exist within the board to enable them to achieve their tasks, and thus positively influence organisational performance, is what?
It is therefore essential that a board can facilitate processes that what?
a balance of cohesion and challenge
that engender a team mind so that they can trust each other to share information but that also enable them to express high levels of cognitive conflict to enable appropriate challenge
BOARD TEAM PROCESSES - SLT PROCESS BEST PRACTICE
There is much transferrable learning that boards can take from the research on senior leadership teams.
Wageman et al (2008) identified 6 conditions that were required to be present for a team to be classified as outstanding. How are they split?
The research also uncovered 6 key challenges that arise when a chief executive officer is contemplating their leadership
Name the 6 conditions.
Name the 6 challenges a chief executive officer faces.
split into 3 ‘essentials’ and 3 ‘enablers’, which are the signature processes of outstanding leadership teams
Essentials:
(1) Condition 1= A real team; Challenge 1: Do I want a team?
(2) Condition 2 = A compelling purpose; Challenge 2: What is the purpose of the team?
(3) Condition 3 = The right people; Challenge 3: Who should be on my team?
Enablers (these push towards outstanding performance):
(4) Condition 4 = Solid structure; Challenge 4: members thinking meetings are a waste of time
(5) Condition 5 = A supporting context; Challenge 5: team not always productive when working together
(6) Condition 6 = Team coaching; Challenge 6: team is stuck
