As they say, hindsight is 20/20. A strategic misstep or seething scandal, especially at the management level, can seem completely avoidable after disaster strikes. Gerry Brown, author and business leader, believes a better skill would be able to foresee these issues ahead of time.
As an experienced non-executive director, board governance expert, and author of The Independent Director: The Non-Executive Director’s Guide to Effective Board Presence, Brown has identified eight tell-tale board-level pathologies that allow investors, analysts and commentators alike to spot companies and boards on the curdle before they do so.
These eight warning signs are red flags that can appear at any level of the decision-making process. If your team, whether at board level, management level, or even at a project level, display any of the following red flags, it may be time for an overhaul.
1. Groupthink: when good people make bad decisions
People often strive for consensus in groups, and this phenomenon is known as groupthink. It encourages excessive conformity, and is the enemy of individualism and creative thought.
In order to counter groupthink, actively seek a diverse team, including people of both genders, varying age groups and cultural backgrounds. The more diverse (but experienced) the board, the greater the chance of countering groupthink.
2. Negative group conflict
Chemistry is everything, whether at the board level, or below. Factionalism based on differences either in basic values and beliefs, or in personalities can be damaging for the greater good, which is the good of the business.
Feuds damage the business from within, wasting resources, time, and increasing turnover. To nip conflict within the bud, consider bringing in a professional mediator to objectively assess the situation and suggest ways to bridge differences.
If you start to notice people manipulating others in order to acquire more personal power, it’s a tell-tale sign that your board, or even team, is in trouble. This can be a defensive mechanism if the power-seekers perceive that their own position is under threat. Counter this by making sure everyone on the board feels like they’re part of a larger group working towards a common goal.
4. Habitual routines
“That’s the way we do things around here,” is probably one of the most damaging phrases for a team. People become ingrained in certain practices and actions, and cannot or will not change, even if a threat emerges.
Shake up stagnant culture by being open to change, and trying something daring. For example, having meetings out of the boardroom may be the jolt you need to introduce new ideas. According to cognitive scientists, varying your environment can help you switch gears when it comes to the way you think.
5. Shared information bias
Shared information bias occurs when group members spend more time and energy discussing information that everyone already knows, rather than what they need to know. When people are told to try and recall relevant information before the meeting, this makes them more likely to mention facts that only they know. This could help cut down the inefficiency of having meetings where the same information is repeated over and over.
6. Pluralistic ignorance
This scenario is when people have important opinions and views but will not voice them because they fear to be seen differing from their colleagues. The “ignorance” results once again from a failure to share knowledge.
7. Social loafing
This is where people work less hard when part of a team than when on their own. On boards, this often manifests itself in a “why should I get involved? Someone else will do it” mentality.
8. Group polarisation
This is in some ways the opposite of groupthink. In group polarisation, members of the group encourage each other towards more extreme thinking. Those members who have doubts are encouraged to set them to one side. The collective decision, which is finally reached, is thus more risky than any of the group’s members would have made if left on their own.