Make better quality board decisions | Psychology of the Boardroom

Effective decision making is vital in the boardroom – but how can we improve boardroom engagement, collective decision making and overall effectiveness through addressing our individual and collective behaviours?

This is the subject tackled by a new programme offered by the Institute of Directors (IoD) Ireland. An in-person short programme run over two days, Psychology of the Boardroom is designed for all board directors, from Chairs to Executive Directors, Non-Executive Directors, and Independent Non-Executive Directors.

Behavioural risk management

This programme will address how to effectively manage group dynamics and behaviours, a form of behavioural risk management, to help lead to more effective oversight and decision making.

Much like implementing a cyber-security strategy to prevent a cyber-attack, behavioural risk management is an essential component of an effective board and, in turn, organisation. This is not a ‘nice to do’, it’s an essential for any board.

The programme is led by Dr Wieke Scholten, a social and organisational psychologist who is working in financial services on the topic, including at NatWest group and the Dutch Central Bank; she has also lectured on cultural change and ethical behaviour for the Institute of Banking since 2018.

“This new programme aims to get a better understanding of behavioural patterns and behaviours at the boardroom table,” explained Dr Scholten. “It will give participants the opportunity to address and improve those behavioural patterns and drivers. This can lead to better-quality decision-making in the boardroom.

The Institute of Directors Ireland are hosting the psychology of the boardroom programme in April

“It’s not about toxic or dysfunctional board situations; there are improvement opportunities in every boardroom, no matter how experienced you are. You don’t need to have a problem; this is preventative work, or behavioural risk management.”

The four modules of the programme

The programme is divided into four modules: behavioural patterns in the boardroom, social drivers of behaviours, individual drivers of behaviours in the boardroom, and finally, enhancing board effectiveness.

By the end of the course, participants will have gained an enhanced understanding of key behaviours that impact the quality of board decision making, as well as an understanding of the key root causes that drive these hindering and helping behaviours. This is all backed up by the underlying psychological theory – but Dr Scholten is keen to emphasise that this is about practical results.

“This is designed as a practical course,” continued Dr Scholten. “There will be discussion about what we know from experimental research, but this will be connected up with participants’ own realities. There’s also a chance to learn from each other’s experiences – all taking place in a highly confidential and safe environment.”

“Historically, looking at group dynamics and behaviours in the boardroom has been a blind spot. We tend to think we will have good decision-making when we have good governance design, and great experience and capability at the table. But in every group of people, you develop your own specific behaviours: how you challenge each other, how you communicate and how you tackle difficult topics. We do that implicitly, but we can improve this if we know more about group effectiveness.”

Part of the new programme looks at the drivers of typical behaviours in the boardroom. “There are social drivers, such as how we communicate and how we care about certain topics, and individual drivers, an opportunity to reflect on our own strengths and opportunities for improvement,” explained Dr Scholten. “A lot of people might assume that psychology is all about the individual, but this is only part of the course’s focus. It is mainly about the group dynamics and how these impact outcomes, and how better to manage these for more effective results in the boardroom and for the organisation.”

Underlining the practical nature of the course, the final module looks at creating an improvement plan to help enhance effectiveness of your board, including how to strengthen responses to regulatory attention on board effectiveness. “The programme ends with a practical plan to implement what you have considered over the two days into your own boardroom. Primarily the course is about getting insights about how you do things, and what aspects you want to address to improve what you do – which is complex decision-making. This requires understanding what aspects are relevant, then reflecting on how you can apply this to your own board.”

IoD Ireland CPD Framework

As the foremost voice in the debate on improving governance standards, IoD Ireland is dedicated to developing and improving the effectiveness and performance of directors and boards throughout Ireland. In October 2023, the organisation launched a new CPD framework for directors, c-suite and senior executives, and boards to drive higher standards in corporate governance in response to the ever-evolving policy, regulatory, macro-economic and governance environment in Ireland. The CPD framework includes four key dimensions: Governance Framework, Technical Knowledge and Skills, Creative Strategy Formulation, and Psychology of the Boardroom.

Psychology of the Boardroom is a two-day in-person short programme run by IoD Ireland.