Board governance and reflections on bias

Dan Portes

I have served on many nonprofit boards and serve on a publicly held board for an insurance company. I find myself always engaged in achieving the best outcomes but clearly have noticed that some boards have been more effective than others.

I believe the tendency of many boards is to put too much reliance for the success and/or failure of the organization on the CEO. Board members often fail to take a closer look at the behavior of the entire board and themselves individually.

I read an article written by Adrianna Trainor and Byron Loflin about board governance and the conflicts and biases that can affect a company’s bottom line. They use a plant metaphor where they describe the roots of the plant representing governance by the board.

Without a strong root system no matter how hard you work at pruning the plant, or watering, fertilizing and providing sun access, the plant will never thrive. Board governance is a vital stabilizer and anchor.

Boards are not intentionally dysfunctional but often they lack honest self-evaluation that provides the framework for better decision-making. Enlightened boards are able to recognize barriers to objective decision-making rooted in bias.

Some biases stem from basic social constructs: Friendships, business relationships, peer pressure, loyalty and self-interest. But if biases like racism, sexism and conflict of interest pervade a board, the results can be devastating to a company culture and bottom line results.

Here is Trainor and Loflin’s list of the top 10 types of biases everyone and every board might want to reflect upon:

• Anchoring bias: Over-reliance on the first piece of information when making a decision.

• Belief bias: The inclination to only accept information that agrees with what one believes.

• Courtesy bias: The tendency for a culture of politeness to be a barrier to candid, necessary and constructive debate.

• Herd mentality: Abandoning one’s information and belief and following that of others in decision-making.

• Information bias: Basing a decision on key information that has been measured, collected or interpreted inaccurately.

• Inattentional blindness (bias): The failure to notice a perfectly visible but unexpected thing because our focus was on something else.

• Loss aversion: The feeling that losing something is worse than gaining the same thing.

• Narrative fallacy: The tendency to give context to facts by weaving in an explanation or story that satisfies an agenda.

• Unconscious bias: Social stereotypes that are beyond our control about groups of people.

• Unintentional bias: Also unconscious bias, it’s the personal bias that we all have and of which we are largely unaware.

Boards tend to rely on individual directors to recognize and control their biases, but few of us are sufficiently self-aware and candid about our inherent biases to be able to do this. Every board member must acknowledge that implicit biases impact his/her objectivity.

I believe it is important to reflect on how bias inhibits great governance:

A board is reluctant to ask the right questions.The group is unable to fully and effectively involve new board members.Excessive deference is afforded to a few board members with a long company history.Peer pressure and conformance minimizes constructive dissent.Inflexible adherence to tradition limits consideration of new initiatives.

Identifying bias is an essential element of being one’s best as a skillful leader and highly effective board member. Although it might not be possible to correct all of our biases, it is important to be aware that biases exist.

Reflecting on our different biases will truly help all board members make better decisions.