Directors do not operate in a social vacuum. As members of a board they are subject to group membership effects that can have pervasive effects on independent mindedness. That is to say that when individuals get together in a group, they think and act in ways they may not have done on their own because of the effects of group membership. Most prescriptions for high performing boards underestimate the impact group dynamics has on how collective decisions are made and accountability practiced. In the main these prescriptions adopt a legal or economic lens, thereby promoting an “under-socialised” view of corporate boards. Dr. Meena Thuraisingham’s doctoral thesis reveals the socialised reality of board life and its impact on board decision making. It carries implications for the effectiveness of boards.
What really happens to the individual (in this case the director) when they join a group? How does the individual change and how does the group change? What does the individual gain and what do they give up on becoming a group member and how conscious are they of these processes? These are critical questions that illuminate how group dynamics shapes decision making behaviours. This is not a simple process either for the non-executive director (NED) or the board as a decision-making group.
The social context matters in decision making
Decisions are influenced as much by a social context in which they are made, as by the cognitive skills of the decision makers. In particular, the social context plays out in an invisible social hierarchy which in turn determines an NED’s preparedness to mount influence attempts and the strength with which such attempts are mounted. It also determines the extent of social support an NED will show for the influence attempts mounted by others. The resulting behavioural variations in an NED’s use of influence are critical in that it ultimately shapes the character of a given board and its decision dynamic.
Boards rarely speak openly about this hidden hierarchy. However recent research into directors’ decision making behaviours showed varying levels of awareness of it and the identity politics that accompanies this hierarchy (Thuraisingham, 2018).
The question for any chair then should be how to deal constructively when they encounter power assymetries and group identity effects. While most directors understand that independent mindedness (contrasted with independence as a structural construct) is critical, the pervasive effects of group membership on independent mindedness are often not fully understood.
The character of a board is shaped by group identity effects
Recent research into the lived experiences of directors on public boards has resulted in a typology of board cultures that helps directors explain their own experiences of board cultures and what may be needed to shift or transform it (Thuraisingham, 2018). This typology has both diagnostic value and predictive value in assisting chairs/chairs of nominations committees to look beyond a skills map to guide their efforts in selecting directors and engaging in board renewal.
So how exactly do these subconscious processes that shape the character of the board operate? When a director joins a board group, there are two subliminal and subjective processes that occur. These two processes, elucidated by social identity theory, are critical to the processes of influence in and around the boardroom.
The first process, which is largely intuitive, relates to a self-categorisation that the individual makes—a ‘like me’ or ‘not like me’ identification, deriving comfort and confidence from associating with people most like them. Such affiliations have been shown to result in subgroups that are more open to the views of people they perceive as having common experiences. These affiliations are loose and exist as part of a social reality that provides a board member with a guide about where they fit into a board group. While this process of self-categorisation might determine feelings of affiliation, similarity and attraction, and the degree of openness to others’ viewpoints, it does not necessarily affect the strength or direction of a director’s influence attempts.
It is a second process, that determines and defines the strength or direction of an NED’s influence attempts. In this second process of identification, a director prejudges and validates the legitimacy of others to influence and relies on the sense they make of their peers’ legitimacy to influence. Their sensemaking is based on the three dependencies: the competence and professional credibility of an influencer (relative to their own); the diversity of cognitive communities an influencer is connected to or embedded in; and shared perceptions of board work, particularly an NED’s role in strategy (Thuraisingham, 2018). This subjective validation determines the importance that NEDs attach to the influence attempts of their peers and the withholding or granting of social support for the influence attempts of others.
Culture poses risks to the boards’ collective influence
At a collective level, these two individual processes generate a complex set of behavioural norms that evolve through the working history of the group—behavioural norms that the group come to expect, advocate and exemplify as ‘what is acceptable around here’. Subgroups, coalitions and factions can emerge which create expectations of disagreement, materially sublimating robust debate. For instance, our research showed that self-censorship, silencing of doubt and revisions of confidence are common behavioural changes when power differentials are large. This can lead to unjustified support for the views of a powerful director or subgroup of directors, even when they are in the minority. A director’s desire to fit in be accepted by his/her peers and conform to the norms of what is generally accepted by the board acts as a constraint on ‘deviant’ views. It shapes how or why they may, or may not, choose to use their influence. Some of these norms and their behavioural effects are so subtle that the individual may not be fully aware of how it has shaped their contributions (Thuraisingham, 2018).
When identification and power effects are not in equilibrium, some directors may be heard over others, some may speak up more than others, some may under-speak and some may choose to pay more attention to confident and strident views. When this occurs, independent mindedness—a critical attribute of a NED—is lost and decision-making processes are compromised. This in turn affects the board’s effectiveness as the peak decision-making group.
Consensual boards can masquerade as highly functioning and efficient boards but they are nothing but. Similarly, factional boards can masquerade as highly functioning because decisions are carried quickly often by a powerful clique, leaving those not in the clique to feel they have not been fully heard. Importantly the appointment or departure of one or more NEDs can change the culture of a board. For example, a high performing board can, through the poor hiring decisions, morph into a factional board, just as some great hiring decisions can turn a consensual board into a high performing one. Chairs and chairs of nomination committees therefore need to be alert to the direction of travel of a culture and be aware of the impact hiring decisions can have on board cultures.
Building a high performing board needs more than good procedures and processes. Board chairs will need to become alert to the tell tale behaviours that point to the lack of social equilibrium. By taking deliberate steps to build or restore equilibrium they will ensure the independent mindedness of individual directors.
In conclusion
For a board to optimise its collective impact as a strategically influential group, a deeper understanding is required of how a board culture emerges and how it may be changed for the better. Identity politics (which is largely invisible and subjectively construes everyone’s place in the group) determines if, how and when influence attempts are made or responded to, as well as who listens to who, making every board dynamic unique. Until the social context NEDs operate in is fully acknowledged, efforts to strengthen board effectiveness may achieve little.
Identity, Power and Influence in the Boardroom (Thuraisingham, Routledge, 2019) reveals behavioural alerts and offers strategies for neutralising the effects of identity politics and strengthening a board’s effectiveness.