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Book chapter
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Reference no. BEP0010
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 10. In this final chapter we attempt to draw out some themes that have emerged from this work. First, we point to a set of tensions that are nearly inevitable in boardroom settings. These tensions require striking a balance - recognizing that some board characteristics bring both good and bad effects, depending on which group behavior is being considered. Next we summarize some of our most salient suggestions, those that can help minimize the effects of more than one pathology. Finally, we provide some cautions. Even the best boards, for example, those of the right size and composition, are not perfect. There are inherent limits as to what can be expected of them. Regulators and society must understand these limitations and consider them when they institute other forms of governance and oversight. 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 10. In this final chapter we attempt to draw out some themes that have emerged from this work. First, we point to a set of tensions that are nearly inevitable in boardroom settings. These tensions require striking a balance - recognizing that some board characteristics bring both good and bad effects, depending on which group behavior is being considered. Next we summarize some of our most salient suggestions, those that can help minimize the effects of more than one pathology. Finally, we provide some cautions. Even the best boards, for example, those of the right size and composition, are not perfect. There are inherent limits as to what can be expected of them. Regulators and society must understand these limitations and consider them when they institute other forms of governance and oversight. 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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