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Book chapter
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Reference no. BEP0008
Chapter from: "Blind Spots, Biases, and Other Pathologies in the Boardroom"
Published by: Business Expert Press
Published in: 2010

Abstract

This chapter is excerpted from ‘Blind Spots, Biases, and Other Pathologies in the Boardroom'. Chapter 8. This chapter explores the role of power in the group setting and how it can be misused. The most effective boards function as high-performance teams. Members have defined roles to play. They complement each other. They trust each other but are also not reluctant to challenge each other and to engage directly with senior managers on the critical issues. They are proactive, taking steps to ensure that they are well informed on the most important issues. And they exercise their power in positive ways, through persuasion and the building of alliances, not by deception and bullying. Corporate governance is one of the hottest topics in the business world now, as it always is in times of stress. Some of the recently discovered scandals and corporate failures can be traced back to corporate governance failures. Boards of directors must share some of the blame in many of the failures. Something was not working right, even in some boardrooms full of highly qualified individuals. In this book we argue that as a first step it is important to recognize these group dynamics and the problems they cause. Some of them can be minimized through, for example, properly designed decision processes. Others are more complicated. But all of them need to be recognized and understood so that we can properly shape our expectations of the degree and quality of oversight corporate boards of directors can provide, and so that we can turn our energy toward the many group level factors that could improve board performance going forward. This book is intended for board members, managers, and advanced students who want to further their knowledge of boardroom behavior and, particularly, the negative effects that are produced by common boardroom dynamics. The readers of this book will benefit by becoming aware of these potentially serious problems, possible remedies, and tradeoffs that must be made.

About

Abstract

This chapter is excerpted from ‘Blind Spots, Biases, and Other Pathologies in the Boardroom'. Chapter 8. This chapter explores the role of power in the group setting and how it can be misused. The most effective boards function as high-performance teams. Members have defined roles to play. They complement each other. They trust each other but are also not reluctant to challenge each other and to engage directly with senior managers on the critical issues. They are proactive, taking steps to ensure that they are well informed on the most important issues. And they exercise their power in positive ways, through persuasion and the building of alliances, not by deception and bullying. Corporate governance is one of the hottest topics in the business world now, as it always is in times of stress. Some of the recently discovered scandals and corporate failures can be traced back to corporate governance failures. Boards of directors must share some of the blame in many of the failures. Something was not working right, even in some boardrooms full of highly qualified individuals. In this book we argue that as a first step it is important to recognize these group dynamics and the problems they cause. Some of them can be minimized through, for example, properly designed decision processes. Others are more complicated. But all of them need to be recognized and understood so that we can properly shape our expectations of the degree and quality of oversight corporate boards of directors can provide, and so that we can turn our energy toward the many group level factors that could improve board performance going forward. This book is intended for board members, managers, and advanced students who want to further their knowledge of boardroom behavior and, particularly, the negative effects that are produced by common boardroom dynamics. The readers of this book will benefit by becoming aware of these potentially serious problems, possible remedies, and tradeoffs that must be made.

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