Strategies for Keeping Your Board Aligned and Avoiding Common Decision-Making Challenges
In an ideal world, having a board comprised of seasoned professionals—who ask challenging questions, engage in thoughtful debate, and steer the company toward success—should yield consistently wise decisions. However, even the most experienced boards are not immune to decision-making traps, biases, and ingrained behaviors that can cloud judgment and lead to suboptimal outcomes.
As Paul DeNicola, principal at PwC’s Governance Insights Center, shared at a recent Boardroom Summit, “Problematic group dynamics affect all kinds of teams. Boards are no different.” Joined by Catie Hall, director at PwC’s Governance Insights Center, DeNicola outlined several pitfalls commonly faced by boards and provided practical strategies to help directors enhance decision-making and team alignment.
Four Key Pitfalls That Can Disrupt Board Decisions
DeNicola and Hall highlighted four behavioral traps that often hinder board effectiveness:
1. Threat Rigidity
When faced with external pressures—like a cybersecurity breach, shareholder activism, or reputational risks—boards may find themselves clinging to established practices rather than adapting to new realities. Hall explained that this response is like “driving through a downpour without slowing down,” as boards often miss opportunities to pivot or explore innovative solutions. This inflexibility can stifle creative problem-solving, as directors revert to familiar approaches rather than challenge the status quo.
2. Escalation of Commitment
This trap involves doubling down on prior decisions, even when emerging evidence suggests a shift might be necessary. DeNicola noted the military-inspired “stick to your guns” mentality, which—while useful in certain settings—can lead boards to persist in failing initiatives, sinking more resources into projects that have already shown signs of limited success.
3. Undervaluing Collective Intelligence
Boards are often filled with high-caliber individuals with impressive backgrounds, but the board’s true strength lies in collective insights. However, in practice, boards sometimes defer to dominant voices rather than leveraging the full group’s diversity of thought. Hall underscored that the collective board’s intelligence is greater than any single member’s, and failure to embrace diverse viewpoints can lead to missed insights and narrower perspectives.
4. Lack of Psychological Safety
Psychological safety is crucial for open and constructive dialogue, where members feel comfortable taking risks, sharing ideas, and expressing dissent without fear of negative repercussions. Yet, in a PwC survey of over 700 directors, more than half reported discomfort with voicing differing views in board meetings. DeNicola emphasized the importance of fostering an environment where dissenting opinions are valued, as stifling such views can prevent critical issues from surfacing.
Strategies to Improve Board Decision-Making and Cohesion
Recognizing these potential pitfalls is essential, but taking actionable steps to mitigate them is even more critical. DeNicola and Hall shared practical strategies boards can use to boost alignment and foster a more effective, resilient decision-making environment:
- Encourage Fresh Voices First: To prevent authority bias and encourage a range of perspectives, give newer directors the opportunity to speak first during discussions. This helps break the hold of long-tenured voices, allowing fresh ideas to influence the conversation before dominant members establish a tone that may deter alternative viewpoints.
- Mandate Alternative Scenarios: To counter the natural tendency to settle on comfortable or familiar decisions, boards should require a structured discussion of alternative options. This “devil’s advocate” approach not only broadens the scope of possibilities considered but also safeguards against defaulting to the status quo.
- Model Openness to Change: For boards to overcome escalation of commitment, they must demonstrate a willingness to shift course when necessary. This sets an example for the management team, fostering a culture where adjusting strategy is seen as a proactive, wise move rather than a weakness.
- Focus on Behavioral Fit During Recruitment: Beyond credentials, a director’s behavior and approach to teamwork are critical for board cohesion. By including behavioral questions and role-play scenarios during recruitment, boards can better gauge how a candidate will contribute to a productive, dynamic team environment.
- Prioritize Psychological Safety: To cultivate an environment where all voices are heard, board chairs must be intentional about integrating new directors and ensuring everyone feels valued from day one. As DeNicola put it, fostering psychological safety is about “making sure everyone feels heard,” which leads to richer discussions and ultimately, more effective decisions.
A Unified, Adaptable Board Is Key to Success
When boards embrace diverse perspectives, adapt to changing circumstances, and create an environment where all members feel comfortable expressing their ideas, they transform from a collection of high-achieving individuals into a cohesive, high-performing team. This unity and adaptability are essential for navigating today’s complex business landscape and making strategic, forward-thinking decisions that drive sustainable success.
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