Friday, June 28, 2019

Silencing the Specialist on Corporate Boards or Management Teams

Imagine that you have hired a specialist on your management team, and they are, by far, the most qualified and knowledgeable team member on a particular topic.  Perhaps they know far more about cybersecurity than anyone else on the team, for instance.  What happens when generalists on the team comprise a majority and push for a particular decision about which the specialist disagrees strongly.  How do you handle this conflict?   How do you reconcile the views of the majority with the lone dissenting voice of the specialist?  

Randall Peterson of London Business School has written about this topic in the context of boards of directors.    He describes how specialists can be silenced on boards in many cases, and how that can lead to big trouble.   Here is an excerpt of an article Peterson wrote several months ago for Strategy & Business. In the article, he argues that boards often lack "open and frank discussion" and makes the case for a process of "qualified consensus" to protect against truly disastrous decisions.  Peterson explains: 

I have found consistently in my own research that majority-rule voting actually fails when the will of the majority is used to silence legitimate and specialist minority voices. What is right for the many ought to prevail, but not at the expense of the rights and specialist knowledge of a minority. This means that boards must understand the full implications of their two duties — care and loyalty — especially at a time when they are hiring more specialists. And it’s worth remembering that the sincere embrace of those two duties on the part of each director is key if majority rule is to function effectively.

So if, say, the digital specialist director in my example ends up voting against a cybersecurity-related decision she believes to be ill-advised, but a majority of her fellow board members vote for it, that director needs to consider whether her peers truly understand the risks. She needs to ask herself whether their decision is fully informed, and if not, she is obliged to raise this issue, rather than simply accept the vote. What follows in practice is that when a director believes that a particular decision is fundamentally wrong, whether for ethical reasons or because it violates regulations or because it represents a disastrous strategy, that individual director should be able to challenge boardroom colleagues. This does not mean that each board member must entirely agree with, and vote in favor of, every decision the board makes. But there is an important distinction between a decision that an individual judges to be suboptimal and a decision that the board member believes is totally wrong.

Boards should therefore operate on the principle of qualified consensus. By qualified consensus I mean a state in which a majority are in favor, and no one believes the decision is fundamentally wrong. Board chairs should be giving every member the opportunity to explain a dissenting point of view, to which the others listen and respond. You might think that this already happens as a matter of course. Yet I often hear about cases where the board literally hears the dissent, but does not recognize the distinction between a suboptimal decision and one that is seen as truly wrong. Giving a dissenting member the opportunity to speak up is just not on the board’s radar screen often enough… Unfortunately, open and frank discussion that arrives at consensual and informed decisions — and thus incorporates understanding of the point above — is too often lacking among boards. For example, in another global study of board directors by the London Business School, scheduled to be published in late 2018, 64 percent reported misunderstandings in the boardroom to be commonplace, and one-third reported the need to revisit decisions.
Source:  Harvard Business Review

While Peterson writes here about boards of directors, one might apply his thinking to the top management team and other senior teams as well.   These teams have to think carefully about how they handle the specialist who dissents.  How do you treat that person's voice, and do different types of dissent matter?  I personally like the distinction between an undesirable decision and one that is fundamentally wrong.   Teams at the top definitely need to think about how to build psychological safety, and how to handle dissenting voices once candor is encouraged.    

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