Board Dynamics, Group Behaviour and Decision-Making
What the exam tests
This is the behavioural heart of the syllabus: why sensible people on a competent board still make bad collective decisions, and what the chair can do about it.
Group pathologies to name
- Groupthink (Janis): illusion of unanimity, self-censorship, direct pressure on dissenters, mindguards who shield the leader from bad news, and stereotyping of outsiders. It shows in minutes as a note that the board fully agreed.
- The Abilene paradox: the group collectively chooses an option no individual actually wants, because each assumes the others support it.
- Dominant chair or CEO: agenda control, speaking first, and rewarding agreement.
- Cognitive biases: anchoring on the CEO's framing, confirmation bias, sunk-cost escalation on a failing project, overconfidence, and social loafing on large boards.
Countermeasures
- The chairman speaks last; round-robin views before the recommendation is debated.
- Appoint a devil's advocate or run a pre-mortem: it is two years from now and this failed - why?
- Independent pre-reading and a decision log capturing alternatives considered.
- Regular non-executive sessions and direct access to management and internal audit.
- Psychological safety: dissent must be safe, recorded and answered.
Worked example
A board approves a regional expansion. The paper presents one option, the CEO advocates it, and the chairman summarises support before the finance director can raise FX exposure. Better process: three options including a do-nothing baseline, FX sensitivity analysis, a pre-mortem, and deferral for independent review. The decision may be identical, but it is now defensible.
Traps
- Reading silence as consent.
- Confusing harmony with effectiveness.
- Treating challenge as disloyalty.
- Minutes that omit dissent, leaving no evidence that alternatives were tested.