Dissent in the boardroom: how to create a culture that values dialogue, inquiry and debate
By Manini Sheker, Research Officer, Johnston Centre for Governance
Board diversity has increasingly moved to the top of the agenda, with some of Canada’s largest companies committing to reserve 3.5% of board seats for Black directors over the past summer. Companies have previously made a similar voluntary commitment to increasing gender diversity. But once these new directors are a part of the board, how can we ensure that their views are considered during discussions? If new directors are to add value to existing decision-making processes, it is critical for the board to have a culture of dialogue, inquiry and dissent.
Here are some suggestions on how to foster a culture of disagreement and debate in the boardroom.
Dissent in the Boardroom
Think about the last time someone in your boardroom expressed a dissenting point of view: what happened to that discussion? If your answer is that the person was cut off or the conversation was redirected towards its “true” purpose – you might need to think about whether your board encourages dissent and disagreement in making decisions. In fact, most groups have a tendency to stifle disruptive or contentious opinions. Yet we know that silence can be costly and result in grave mistakes when making decisions.
From a director’s point of view, there can be a strong compulsion to not rock the boat: first-time directors, in particular, are often advised to spend their initial days just observing and getting to know the board and its dynamics, even when they are recruited for the fresh perspectives and insights they have to offer the board. The reluctance to speak up can stem from a fear that one’s ideas will be dismissed, or the fact that new ideas are often deeply threatening to the status quo. It is important, thus, to be deliberate in rewarding candour through encouragement and praise.
Set the tone at the top
There is a wonderful example from the 1920s of GM President Alfred Sloan Jr who, when he realized that senior members of an appointed committee were in full agreement on a matter, adjourned the meeting till there was sufficient disagreement and therefore a fairer assessment of the decision at hand. It is crucial, as Sloan realized, to set the tone at the top, for the board chair and other leaders to not merely wait for opposing points of view to surface, but to take concrete steps in soliciting disagreement while minimizing any interpersonal conflict that can arise from an expression of dissent.
Some ways of doing this include appointing a director to play ‘devil’s advocate’ to ensure that every proposal is sufficiently assessed, or having some directors role-play what the decision-making process for a course of action might look like on the board of a competitor. A structured approach to comparing and evaluating alternatives and cultivating lively debate can help minimize conjecture about whether people truly agree or disagree with a course of action.
Reflect on your own cognitive biases
All decisions are inherently prone to various biases. For example, we have a tendency to filter out evidence that contradicts our beliefs, or stick with a risky course of action if we have already invested a lot of time and money in it. While it is impossible to eliminate bias, it goes a long way to acknowledge your own fallibility and the impact it can have on the way decisions are made.
Spend time with all your peers outside the boardroom
Contrary to what people might expect, many strategic decisions actually take place outside the bounds of official board meetings, during side conversations when individuals or subgroups meet and lobby each other to gain support for ideas. In other words, these crucial decisions are often merely formalized in board meetings. This process can inadvertently silence new directors or members of underrepresented groups who are excluded from these informal ‘back channels’ of communication and are therefore often unequipped to fully contribute to discussions or debates when they return to the boardroom. It is important to include all directors in these informal conversations and spend time cementing relationships outside the boardroom.
We also know that people are most likely to share information, take risks and disagree with people they know and trust and in a context in which they feel it is safe to do so. To foster deeper ties between board members, it can be of tremendous value to spend time with all peers outside the boardroom. Some organizations have even formalized this process, scheduling field trips and other activities of mutual interest to forge closer personal ties and encourage deeper discussions.
Recruit for diverse perspectives, expertise and personalities
A diversity of perspectives, expertise and personalities is critical for effective decision making. One way of increasing diversity of thought is through recruiting members who differ on certain demographic characteristics such as gender, race, age and ability. There are typically three arguments that are put forward for increasing demographic diversity in the boardroom. First, some argue that there is evidence to suggest that demographic diversity can increase performance – a recent study by Rotman Professor Aida Wahid, for example, showed that firms with a blend of men and women outperformed boards with only men by having fewer errors in financial reporting and a lower incidence of fraud. However, there is plenty of other evidence to suggest the links between demographic diversity and performance are more tenuous.
Second, many argue that increasing the demographic diversity of the board can enhance decision making processes since it is likely to increase the diversity of thought and perspective in the boardroom. Cognitive diversity can improve existing decision-making processes by introducing new information and perspectives and encouraging more robust discussions and debate. However, it is reasonable to assume that demographic diversity is highly unlikely to increase cognitive diversity if new directors who differ along a particular dimension such as gender or race also share a similar upbringing, education, values and knowledge with incumbent directors or because they are chosen for how well they ‘fit in’ with the board.
The third argument for demographic diversity is an entirely moral one – to provide groups who are as skilled and knowledgeable but have been vastly underrepresented in the boardroom because of structural constraints, an opportunity to assume a place alongside others who have been privy to that privilege. If we accept that we ought to provide every one with the right to be a part of the highest seats of challenge and authority in the corporate world, the key to ensuring that demographic diversity translates into cognitive diversity is to recruit in such a way as to ensure that members who differ along dimensions such as gender or race also bring different approaches to problem solving.
This might involve carefully reviewing the background and experiences of potential candidates and having discussions with them and their referees to assess whether they would bring original ideas, a critical mindset, and true diversity of perspective to the boardroom. One notable way of expanding the pool from which candidates are typically drawn is to not rely on the current networks and recruitment practices of board members, and to search for people who inhabit truly different business and social circles.