The Director's Manual

Chapter 5Group Dynamics and Board Decision Making

What's in This Chapter?

• Why Working in Groups Is Difficult
• Groupthink: Managing Conflict in the Boardroom
• The Abilene Paradox: Managing Agreement in the Boardroom
• Optimizing Board Decision Making
• Chapter Summary and What's Next

As we noted earlier in this book, board decision-making practices should be focused on the most important aspects of corporate governance: Is the right CEO in place? Is the company pursuing the right strategy? Is the succession plan current and viable? In addition to these three main questions, boards also make critical decisions related to mergers, acquisitions, divestitures, compensation, and shareholder issues.

Accomplishing this mission, as simple as it appears from the outside, is more challenging than you might imagine, because successful decision making depends on the ability of board members to work together effectively. Since human factors and communication processes are involved, working together cooperatively toward the same goals is more difficult than it might at first appear. As we discussed in the previous chapter, the ultimate goal is to develop and maintain a Dynamic Culture that encourages honest, collegial debate and candor among board members, which, in turn, will lead to reasoned, rational decisions. Such an environment naturally improves both individual and group communications, and leads to better decisions, since emotion-driven reactions (perceived or real), peer pressure, or ...