Consensus in a professional environment can be a hugely positive thing. Working towards the same goals, using an agreed strategy, can see a workforce become more cohesive and efficient. However, a common mindset is not always desirable. ‘Groupthink’ is defined as the practice of thinking or making decisions as a group, resulting typically in unchallenged, poor-quality decision-making. A famous example of this phenomenon is the botched Bay of Pigs invasion in 1961. While planned by the Eisenhower administration, the invasion tactics were also accepted by President Kennedy’s administration. They collectively failed to raise questions on the intelligence presented, leading to one of the most famous military failures in US history.
This article was originally published in the September print edition of The Review. The print edition is available to all members who opt in to receive it, except student members. All eligible members who would like to receive future editions in the post should log in to MyCISI, click on My Account/Communications and set their preference to 'Yes'.
The boost to gainBut can this collective single-mindedness be avoided? One possible way is through diversity. Diversity matters, a 2015 study from McKinsey & Company, finds that businesses in the top quartile for gender diversity are 15% more likely to have above industry median financial returns. Companies in the top quartile for racial diversity are 35% more likely. When focused on the UK, the benefits of gender diversity become even more apparent.
The study says: “The correlated benefit is an increase of 3.5% in earnings before interest and tax for every 10% increase in gender diversity in the senior executive team (and 1.4% for the board). That is, UK companies experience more than ten times the impact for their efforts in gender diversity than US companies do, even after reaching the 22% tipping point.”
Sandra Kerr, Race Equality Director at Business in the Community, says that this is because the more diversity in a company, the wider the insights that can be accessed. “There’s less risk of blind spots because you have a wider range of perspectives and reduced costs associated with groupthink decisions,” she says. “Bad groupthink decisions are very costly if they’re made. You can make a groupthink decision in minutes, but it will not reflect the different perspectives that need to be considered for the diverse stakeholders.”
The moral argument for a diverse workforce is clear – the majority of leaders know that no one should be discriminated against because of their gender, race, sexuality, disability or any other reason. And with the improvements being seen, it is clear that more organisations have taken steps to build a more inclusive workforce. However, many are failing to grasp that there is an equally strong business case to boost inclusion.
The challenges facedPaul Cowan is an independent global executive coach. He has spent more than 20 years in the global talent development space working with senior leaders from renowned brands like Dell, Amazon and Standard Life. He says while diversity is of course desirable, this alone will not provide new ideas. “It’s really about inclusivity. For example, one of the challenges we have in financial planning is that we need to get more female talent into senior positions. But if the female talent that reaches these higher positions think in the same way then that’s not inclusive either.”
The dangers of groupthink
In a 1972 study, social psychologist Irving Janis identified eight symptoms of groupthink. They are:
Illusion of invulnerability
Creates excessive optimism that encourages taking extreme risks.
Members discount warnings and do not reconsider their assumptions.
Belief in inherent morality
Members believe in the rightness of their cause and therefore ignore the ethical or moral consequences of their decisions.
Stereotyped views of out-groups Negative views of the ‘enemy’ make effective responses to conflict seem unnecessary.
Direct pressure on dissenters
Members are under pressure not to express arguments against any of the group’s views.
Doubts and deviations from the perceived group consensus are not expressed.
Illusion of unanimity
The majority view and judgments are assumed to be unanimous.
Members protect the group and the leader from information that is problematic or contradictory to the group’s cohesiveness, view, and/or decisions.
Cowan suggests that there are steps to be taken around talent development and acquisition. Organisations must seek to encourage different ways of thinking while identifying whether they are looking for too many employees from the same pools of talent, such as universities or competitors. “The more diverse the workforce, the greater the opportunity you have to drive performance in the business. The challenges we have in financial services are around innovative thinking. Many organisations recruit the same type of people in an industry that is long tenured. That breeds a certain mindset. A workforce with different appearances, different backgrounds, different life experiences will bring different thinking into your organisation.”
In finance, Cowan says recruiting staff from less obvious talent pools has become even more difficult, due to changes in regulation. For example, the FCA’s Approved Persons Regime requires firms to assess the fitness and propriety of those being placed in certain controlled functions. The aim of the regime is to remove liability from the FCA or functions that carry potential risk for UK customers, placing responsibility back on the businesses themselves. This has narrowed where firms are able to look for candidates. Those that are suitable will often come from similar professional backgrounds, such as other more junior regulatory positions.
Steps to takeSo what steps can businesses take to fight groupthink? Luckily for an industry that revolves around numbers and analysis, data is a great starting point. Finding out the levels of representation within your organisation, as well as in your interview processes, can reveal where the gaps are and why they are not being filled. If certain groups are failing to make it past certain interview stages, or beyond certain levels in the organisation, development opportunities can be put in place to correct this. Helping colleagues identify unconscious biases through training can often see a boost in representation throughout an organisation. However, an open approach is required. If boards are transparent with data and commit to diversity objectives, they are more likely to see improvements.
Another good option, particularly for larger organisations, is to put in place employee network groups. Many organisations have these to help minorities identify and support each other, but they are also a great opportunity to involve more diverse thought processes in business decisions. “Engage them with your strategy. Our benchmarking shows that employees who do that have a greater uplift in representation of ethnic minorities throughout the workplace and in management positions. These groups add a different perspective to your strategy. You can tap into their additional insight into changing demographics,” says Kerr.
Another alternative is to form a shadow board, made up of a diverse selection of members of your organisation, reflective of your customer base. “They challenge certain approaches you are taking. They can also help future-proof the business, looking at products and services to ensure they are fit for the future and that they will land well with different demographics.”
Companies can go further still, opening up business issues to colleagues across the organisation, from CEO to graduates. Staff that are lower down the organisation may not be as blinkered as those in leadership, says Cowan. “They might not be as constrained. At the top end of organisations, other considerations can get in the way of good ideas. Avoid hierarchical structures in favour of a flatter approach, that will help avoid groupthink. When your organisation is a hierarchy, all you’re doing is creating a culture where people won’t challenge the status quo.”