Blind Spots, Biases and Other Pathologies in the Boardroom

In this book we show how seemingly ideal boards, those with best practice size, composition, and structure, can still fail to provide good governance simply because they fall victim to problems inherent in all groups. While having groups of board members provide corporate oversight is probably necessary, and even advantageous in some respects, groups have a dark side too. Tendencies that occur in group behavior can destroy or obscure the talents even of highly intelligent, energetic, and well-intended individuals, causing collective blind spots, biases, and inefficiencies that can render boards ineffective. Groups often perceive risks differently from the way individual group members do and collectively fail to see problems where they really exist.

Kenneth A. Merchant is with Deloitte & Touche, LLP Chair of Accountancy and former dean of the Leventhal School of Accounting, University of Southern California. His academic career includes 30 years of teaching experience at USC and Harvard. Earlier in his career, he was a department controller at Texas Instruments, Inc. and a senior consultant with Ernst & Ernst (now Ernst & Young). Over the years he has also worked as a freelance consultant/instructor for many organizations and has served on four corporate boards of directors. Katharina Pick is a Visiting Assistant Professor of Organizational Behavior at the Peter F. Drucker and Masatoshi Ito Graduate School of Management. Dr. Pick has been engaged in research on corporate boards since 1998, observing board meetings and interviewing over 100 directors. She has provided fieldwork for two books on boards (Back to the Drawing Board, Carter and Lorsch 2004; Building Better Boards, Nadler, Behan, and Nadler 2005), and conducted two original qualitative research studies on boards for her PhD work.