Boards are fraught with extensive interpersonal dynamics, like any other group of people
(Carver 2006). Optimal board performance occurs when chairmen understand group dynamics
and foster openness and debate to reach informed decisions. People differ in their comfort
in confrontation, their ability to express their point of view and the personal agendas they
bring to a meeting. The human social dynamic within a group of individuals sees individuals
agreeing to, or failing to oppose, a group decision even though they are not satisfied with
it (Cairnes, 2003). Such dysfunctional boards can fall into “group think” where members
reach a consensus without critically testing, analysing and evaluating ideas. This is a form
of herd behaviour that tends to be more problematical within institutions. The term “group
think” was coined by psychologist Janis Irving in the 1970s. It was adopted to describe the
process in which a group can make irrational or bad decisions as a result of each member
of the group attempting to conform their opinion to what they believed to be the consensus
of the group. It can be argued that “group think” can occur on two levels: members of a
group (a board), and a group within multiple groups (boards within a specific industry, sector
or market).
At board level, when this group dynamic is present, independent thinking is sacrificed in
pursuit of group cohesiveness. Members of the group impose self-censorship, succumbing to
direct pressure to conform to avoid being considered disloyal. Irving discovered this behaviour
during a study of military disasters and found that there were people in decision-making groups
who believed that the group was making the wrong decision and had the information to support
that belief (Irving 1971). The information was not tabled or, when it was tabled, was put to
one side. Individuals did not fight for their point of view of even press their evidence for that
view. He discovered that when this group behaviour was present there was an “us-and-them”
mentality, a view that meant that each group member was either “with us or against us”
(see Box 4.2). During the financial crisis, full-time board members or NEDs may have been
reluctant to act according to their own information and beliefs, fearing that any contrarian view
may damage their standing and relationship with fellow board directors. Hence, directors will
“follow the herd” if they are concerned about how others will assess their ability to make sound
judgements. Human social relationships are a key determinant in decision-making processes.
The prevalence of emotional factors in corporate success and failure means that they should
be recognised as being at the heart of boardroom leadership and effectiveness (Lees 2010).
Lessons should be learnt from the corporate crisis in which such behaviour played such a
decisive role.
Box 4.2 Group dynamic behavi