Your board is made up of experienced, high-caliber individuals who know how to ask tough questions, are capable of constructive debate, and are all eager to help steer the company in the right direction. That should ultimately lead to timely, savvy decision-making…right?
Not always. As seasoned directors know too well, even boards with top-tier talent and the best of intentions fall prey to biases, entrenched thinking, and internal dynamics that hinder effective decision-making. “Problematic group dynamics affect all kinds of teams,” Paul DeNicola, principal at PwC’s Governance Insights Center, told attendees gathered for CBM’s recent Boardroom Summit. “Boards are no different.”
In a session that dug into the common pitfalls that plague boards, DeNicola and his colleague Catie Hall, director at PwC’s Governance Insights Center, offered solutions and actionable strategies for directors looking to elevate their board’s performance.
Four Pitfalls That Undermine Board Decisions
DeNicola and Hall highlighted four major behavioral traps that boards often encounter:
1. Threat rigidity: Hall described this threat as “the tendency for a group to become less flexible when external pressures mount.” In simpler terms, when a crisis hits—a cyber breach, a shareholder activist letter, a reputational issue—board members may instinctively retreat into old patterns rather than adapting to the new circumstances. “Imagine it starts pouring rain while you’re driving—do you pull over, or just keep going the same speed?” she said, noting that boards in crisis often metaphorically “keep going,” missing opportunities to adjust course. This response leads to suboptimal decisions, as boards focus too narrowly on traditional paths and fail to consider innovative solutions. “Directors who were creative and independent by their nature in certain environments can become disinclined to challenge the status quo,” said DeNicola.
2. Escalation of commitment: This is the tendency to double down on past decisions, even when new evidence suggests a change of direction is needed. “I’ve always been fascinated by the term ‘stick to your guns,’” DeNicola said. “If you had a soldier that was at a specific strategic point that was important, they were ordered to keep fighting regardless of whether or not they were winning in the battle.” While this attitude may be commendable in battle, in a boardroom, it often results in stubbornly pursuing failing projects. “Ask yourself this question: have you ever ‘stuck to your guns’ and put more time and effort and money into a failing project long past the point when you know you should have changed course or potentially abandoned it?”
3. Undervaluing collective intelligence: While boards are typically composed of accomplished individuals with impressive resumés, their strength lies in their collective intelligence. Too often, boards overlook this in favor of deference to a few dominant voices. “The collective board is and should be more intelligent than any one individual,” Hall said. Yet, without structured turn-taking and a focus on leveraging diverse viewpoints, boards risk missing out on this advantage.
4. Lack of psychological safety: DeNicola defined psychological safety as a group’s ability to take risks, voice ideas, and admit mistakes without fear of negative consequences. Yet, in PwC’s survey of over 700 directors, more than half admitted they did not feel comfortable expressing dissenting views in their boardrooms. “Your ability to be effective as a board member depends on your ability to voice your view—even if it’s unpopular,” he emphasized. When boardrooms lack this safety, important conversations get stifled, and potential issues go unaddressed.
Strategies to Improve Board Decision-Making
Recognizing these pitfalls is only the first step. DeNicola and Hall provided a series of practical strategies that board members can implement to improve decision-making and foster a healthier boardroom environment:
• Encourage fresh voices first. To combat threat rigidity, consider allowing newer directors to speak first in discussions. This helps prevent authority bias, where a senior or more vocal member sets the tone, potentially silencing different perspectives. “When the first voice in the room is a long-tenured director or the board chair or even the chair of a committee, there’s authority bias that comes with that first voice,” DeNicola said.
• Mandate alternative scenarios. Boards should require a discussion of alternative courses of action before settling on a decision. “You would think that this is a given, right? But in order to avoid moving to the most obvious, most comfortable decision, mandate a discussion of alternatives,” said DeNicola. Using a devil’s advocate approach can help ensure that all angles are considered and prevent the board from defaulting to the most comfortable option.
• Model openness to change. When it comes to overcoming escalation of commitment, boards need to “change the paradigm on course corrections,” DeNicola said, noting that there are times when changing course is exactly the right way to move forward. And boards that show flexibility can set a tone that encourages management to do the same.
• Focus on behavioral fit during recruitment. To foster collective intelligence, Hall suggested changing how boards evaluate potential directors. “Behavioral fit is as important as what’s on paper,” she noted. By including behavioral questions in interviews and assessing how candidates might interact in real-world scenarios, boards can build a more cohesive and effective team.
• Prioritize psychological safety. Boards need to consciously cultivate an environment where dissent is not only allowed but encouraged. DeNicola recommended that chairs pay particular attention to how new directors are integrated, ensuring they feel comfortable voicing their views. “It’s about making sure everyone feels heard from day one,” he said. This can lead to richer discussions and more robust decision-making.
Ultimately, boards that embrace diverse perspectives, adapt to changing conditions, and create a space where every voice is heard will be better equipped to navigate today’s most complex challenges. When boards recognize the importance of their dynamics and take intentional steps to improve them, they transform from a collection of high-achieving individuals into a powerful, unified team—which, in today’s ever-shifting business environment, could make all the difference.
