4.6.4 “Group Think” and Herd Behaviour
When the credit crisis unfolded there was a desperate search for the causes. Naturally board
performance came in for close scrutiny. Shareholders of failed or failing companies wanted
to hold responsible director’s “feet to the fire” and understand why corporate leadership
had failed so spectacularly. From the findings of the numerous reviews of the crisis, it is
abundantly apparent that board decision making was poor – and in the case of Northern
Rock “reckless” (House of Commons 2009). While numerous recommendations have been
made about the appointment, experience, induction, availability and evaluation of board members,
the process that boards should adopt for decision making has received scant attention.
However, what brings boards and companies down is dysfunction within their social system
(Cairnes 2003).
4.6.4 “Group Think” and Herd BehaviourWhen the credit crisis unfolded there was a desperate search for the causes. Naturally boardperformance came in for close scrutiny. Shareholders of failed or failing companies wantedto hold responsible director’s “feet to the fire” and understand why corporate leadershiphad failed so spectacularly. From the findings of the numerous reviews of the crisis, it isabundantly apparent that board decision making was poor – and in the case of NorthernRock “reckless” (House of Commons 2009). While numerous recommendations have beenmade about the appointment, experience, induction, availability and evaluation of board members,the process that boards should adopt for decision making has received scant attention.However, what brings boards and companies down is dysfunction within their social system(Cairnes 2003).
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