Boards of Directors must be vigilant in terms of detecting hidden agendas that members of management teams harbor when they present strategic plans. So too must members of senior management actively ferret out hidden agendas concealed by directors.
Below are a few signs of hidden agendas. The probability of a hidden agenda rises in concert with the number of following factors present:
- An individual does not agree with the consensus on what the company’s goals should be.
- One locks on to a solution prematurely–before trying to understand the problem, failing to seek the history of the problem, and not looking into related case studies. Another cause for concern is the unwillingness to listen to different descriptions of the problem.
- Decisions are based on questionable data from potentially biased sources rather than on authoritative and objective data.
- The suspect tries to form coalitions too soon.
- Overly defensive of his proposal, often illustrated by attacking those who disagree.
- Premature contacts with providers of their preferred solutions.
- Time, energy and emotional involvement committed to the proffered solution are significantly greater than that of other decision makers and disproportionate to the issues at hand.
- Exaggerating the extent of the problem and demanding immediate attention.
Methods for reducing the impact of potentially damaging hidden agendas include:
- Conducting due diligence before elevating an individual to the management suite. Candidates’ business histories and financial interests should be disclosed and reviewed. In instances where the avoidance of the appearance of impropriety is more important than subject matter expertise, a manager should be assigned responsibilities outside of the area marked as a potential conflict zone.
- Appreciation of the Fundamental Attribution Error. This tenet of behavioral economics holds that we too often project one’s behavior solely as a function of the subject’s past behavior and moral consistency. The Fundamental Attribution Error contends that we too typically make judgment errors when we disregard how the situational circumstances that one finds himself in will influence that person’s behavior. Thus, we should never assume that just because an individual has consistently acted honorably in the past that they will be able to resist temptation in the future. The implication for managing the relationship between management and directors is that people with agendas should be siloed into areas apart from those with which they have mixed allegiances.
- When holding meetings there is a sagacious practice to learn from the US Supreme Court. The highest court in the land has a rule that when the nine justices meet in private chambers, no justice speaks twice before every justice speaks once. This rule is designed to prevent premature opinion formation before everyone has an opportunity to voice their views. Applying this rule would make it more difficult for someone with a hidden agenda to assert undue influence in the decision making process.
- Utilizing multi-voting techniques. In multi-voting, members of the group are given a limited number of votes to cast in favor of specific alternatives. This means that they do not have to advocate for a single alternative at this point, but rather can support their top few choices. Once the votes are counted, the least supported alternatives can be eliminated, and debate can continue.
- Be aware of moral- or self-licensing. Research has demonstrated that once an individual discloses his potential conflicts or unveils a hidden agenda, he is likely to push the envelope even further. For instance, suppose a Board member that owns a construction company wants his company to build a warehouse that the subject company needs. He may believe that his construction company can build the warehouse for 5% below competitor bids. If he discloses his ownership of the construction company, he is more likely to claim that his construction firm can build the warehouse for 10% below competitors’ bids. One reason is that he knows divulging a potential conflict will result in the other board members discounting any claim he makes.
While any untoward conflicts that a Board member has should be disclosed, we cannot expect–and should not even desire–that directors be stripped of their industry relationships as a condition for accepting Board nominations. Just because a director has an agenda does not mean that his recommended course of action is detrimental to the company that he serves. Sometimes one’s personal agenda and passion–especially when it converges with management’s vision–is the overarching reason for courting such executive to a Board. Operating under the premise that directors are recruited for their experience and expertise relative to the demands of the company, one would expect that directors would bring with them the relationships that are crucial for growth and success of the companies on whose boards they serve.
This featured guest post is written by David Wanetick, Managing Director at IncreMental Advantage, a strategic advisory firm. He leads all of the firm’s Devil’s Advocacy Audits. He teaches courses on Negotiations, Behavioral Economics and Decision Making at The Business Development Academy. He can be reached at [email protected].
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