The August issue of Board Leadership, Innovative Approaches to Governance (Wiley) includes Hugh Massie’s article, “Remove the Guesswork of the Human Behavior Behind Board Governance”. You can access the full article here and read a synopsis of it below.
Board governance is increasingly complex. Financial performance is still vital, but there is increasing focus on transparency and accountability. Institutionalizing behavioral insights, along with strategic oversight processes and procedures, can and will deliver an environment that minimizes compliance challenges.
I was glad to have an opportunity to write about this for Wiley’s Board Leadership, Innovative Approaches to Governance, and am happy to share a synopsis of that article here. ( To access the full article, visit here ).
The time is ripe to re-envision how effective boards are shaped in order to provide a corporate governance framework that satisfies and even exceeds legal, securities, accounting and ethics standards. At the crux of this reinvention is the discovery of why individuals and teams sometimes tend to do a “behavioral flip” when under pressure – within their own lives or on the job?
Scientifically validated behavioral discovery (think probing questionnaire) is available and delivers highly reliable insights, robust processes and real-time monitoring systems to better manage behavior and responses to pressure/stress through the board and organizational lifecycles, including detailed reports on where compliance risks may exist with specific members.
We know that human behavior is 93 percent predictable and, therefore, taking a scientific, psychodynamic approach has many payoffs. Understanding combinations of human behavioral factors that trigger emotions when facing key decisions can provide board members, management and other stakeholders with significant insight into the degree to which bias and emotions can skew decision processes.
If culture is not clearly defined and ascribed too at the board level, how then, one wonders, might the organization respond. Deep due diligence regarding every individual is necessary. And if board members are not cohesively aligned under a banner of integrity, honesty and morality, how can they point the organization in the direction of compliance and governance?
While larger businesses are investing more in cyber security and other monitoring programs, virtually nothing is being put toward identifying and monitoring costly board member (and employee and management) behavior risks. The reality is that any person with a weak or temporarily broken character on the wrong team or facing external pressure, can, and will, make flawed decisions.
But who should undertake and monitor this behavior? The person in this role should have the autonomy to liaise with a broad range of internal stakeholders, primarily at executive level, and with stakeholders and customers as needed. They should have the freedom and skills to periodically take the pulse of the organizational culture to establish if intervention might be needed and if corporate governance and regulatory requirements are being adhered too.
Where there is currently a board in situ, undertaking a review should be set against agreed-upon benchmarks. This involves building a profile for the board as a whole, followed by benchmarking existing directors against the board benchmark profile. Once the gaps are identified, it makes the process of filling them easier and likely to be more accurate in the selection process.
The advantage gained by institutionalizing the behavioral insights process combined with strategic oversight processes and procedures can and will deliver an environment that minimizes compliance challenges.
To read “Remove the Guesswork of the Human Behavior Behind Board Governance” in its entirety in Wiley’s Board Leadership, Innovative Approaches to Governance (Wiley) visit this link.