Perhaps no aspect of a successful board is more critical — and yet more challenging to identify, build, and sustain — than a positive board culture. Consider a stable oak tree to be a metaphor for effective government. The tree represents the company, and the taproot represents its governance in relation to the board of directors. The fibrous roots that emerge from the main root are the board culture, procedures, structure, and policies that promote good governance and transparency. By being strategic and focused on long term performance, the board develops a sound governance root structure. However, the question is whether the board is biased or unbiased in the boardroom. When demonstrated in a boardroom, these biases had led one to over or undervalue certain individuals or thoughts around the table.

 

PwC's Governance Insights Center identified four boardroom dynamics: deference to authority, groupthink, a desire for the status quo, and confirmation bias, along with warning signals to identify these challenges and tools to resolve them. PwC’s report titled “Unpacking board culture: How behavioral psychology might explain what’s holding boards back” provide deep insight into board culture that may have negative effect on the growth of any organization.

 

Authority bias

The boardroom requires experts; considering these directors rely exclusively on a director's unique experience, allowing themselves to "become too swayed by that viewpoint, ignoring what others have to say, or relinquishing responsibilities." Alternatively, directors can defer to an authority, such as the Chief executive or board member, who is considered to wield control over the board. The board may favor the opinions of its male members, long-tenured directors, or others with a superior stature or tone of voice, and instead of revealing views publicly at the meeting, the directors may engage into inside discussions or reserve most of their problems for executive session, which are signs that the board may have an authority bias problem. As a result, boards fall into the trap of either hoping to hear from these officials first or giving them the final say, resulting in authority bias.

 

To resolve these biases, Board leadership should elicit opinions from each director in turn, or invite each director to share insights or suggestions at the start of the meeting about what they would like to discuss, or at the end, on issues that were not caught during the meeting, so that all directors have a voice on a topic.

 

Groupthink

There is more power in unity than in division, but what if only one individual speaks up and the others are forced to obey the decisions? This often occurs in the boardroom. For instance, a director wants to express his or her thoughts, the CEO or chief immediately moves on without taking their concerns into account. If they raise their voices again, they could be asked not to stand for re-election, giving the message that opposition is not tolerated. Even, according to the survey, 36% of directors admit it is difficult to express disagreement on at least one subject in the boardroom. Meetings are set up in presentation format to prevent debates or questions since there would be no time left to address them.

 

To reduce groupthink, the board can form a committee that can solicit feedback from directors by individual interviews or questionnaires, or bring in outside experts to express a new or challenging viewpoint on topics and shake up discussions. Furthermore, rather than telephonic sessions, the board can have in-person meetings or through video conferencing.

 

Status quo bias

In a world of constant change, boards are expected to affirm the best aspects of the status quo while employing generative thinking that leads to innovation—which makes conflict inevitable. But what is the point of tampering with success? Boards may prefer to adhere to existing standards and maybe "reluctant to adopt policies requiring significant reform, primarily because it introduces so many risks of the unknown."

 

Another prejudice is a ‘sunk cost' bias—the idea that the board has invested too much time and money in an idea,” even though the idea no longer makes sense. Some indicators of status quo bias include directors pursuing a consistent strategy in the face of changes in situations or key metrics; reluctance “to support entering into new sectors or to sell lines of business that no longer make sense”; inability by the nomination/governance (or other) committee to participate in long-term succession planning for board members or the C-suite, instead of addressing only immediate needs etc.

 

To reduce status quo bias, the board should think like a competitor and answer the following three questions: What will they hope you do? What would they be afraid of if you did it? What would their reaction be if you did what they feared? Also, bring in outside professionals, reschedule a strategic offsite workshop, or take a new look at board content and ask advisers and other contributors to suggest updates and recommend best practices.

 

Confirmation bias

Confirmation bias occurs when decision-makers unconsciously seek out information that confirms (or ignore information that contradicts) their initial judgment. This bias can potentially lead directors to continue pursuing the status quo when change may be a better alternative. Decision-makers also tend to be more confident in their judgments than is warranted by the evidence. The overconfidence (confirmation) bias can be a barrier to effective professional decision-making as overconfident directors pursue actions predicated on an overestimation of their knowledge or abilities. However, confirmation bias isn't only about overconfidence; it may even validate a pessimistic viewpoint. The director, who was opposed to the project from the beginning, could just see the bad news in the same report.

 

Some indicators of confirmation bias include directors' use of previous experiences as a foundation for their judgments, as opposed to observations, data, and facts; directors seeming to have reached a decision before any real debate or without a reasonable attempt to reflect on future uncertainty.

 

To reduce confirmation bias, the board should select a director from an entirely different sector to take a fresh look at old issues and raise major questions that those with long experience in the field might not have thought about or ask internal audit and other support roles to offer clear, data-based challenges to the predominant opinion.

 

Corporate boards must equip themselves to reduce decision biases given their responsibility for the long-term success of their companies. Directors should examine the biases and behaviors of their boards to eliminate bias and function appropriately.