How to build a better board
April 20, 2023
Can directors be better at helping steer a company and is there a way to counter the risks of groupthink? Yes, but it really depends on who is sitting on the board.
In the latest episode of Rotman's Executive Summary, associate professor Aida Sijamic Wahid sheds light on an often overlooked aspect of organizations: boards of directors.
With challenges including continued upheaval from the pandemic, political and global instability, a changing workforce, new technology, and more, the makeup of the board of directors — and its ability to shape and influence organizational responses when things go wrong — is more important than ever. And it's crucial to ask: do boards have the right talent at the table, and what it will take to build a better board?
In this episode, Wahid explores the main roles of a corporate board — monitoring management and advising it on key issues — as well as the impact of director composition on overall organizational decision-making. Inspired by the Enron scandal and later economic downturn of 2008, Wahid has spend most of her academic career exploring the issue of groupthink and a lack of critical questioning of executive decisions and she's extensively studied the impact diversity, particularly gender diversity, has on the way boards operate.
"When you have the majority of any given board composed of men from the same ethnic background around the same vintage, who socialize in the same circles, it's really no surprise that there's not much pushback in the boardroom," she says. "The idea behind diversity is that it improves board effectiveness by increasing perspective diversity, which in turn counters that groupthink mentality and complacency and hopefully leads to better deliberations and decision making."
This marks the end of the first season of the Rotman Executive Summary. From how to be an organization that cares, to what happens when we give brands human traits, to the future of Uber – catch up on the entire first season here.
Would you rather read than listen? You can find the transcript here.