Overcoming Confirmation Bias in the Boardroom

When private company directors think about the numerous challenges facing their boards, one challenge probably never comes to mind: confirmation bias. Confirmation bias is the tendency to seek or only acknowledge evidence that supports one’s preexisting beliefs. In practice, it is a silent and persistent enemy of sound decision-making in the boardroom because it causes directors to overlook or reject contradictory information and perspectives, fail to vet different perspectives thoroughly, and limit one’s ability to see issues or opportunities.

Confirmation bias is troublesome for all boards, whether public or private, because the attributes that make one valuable as a director (i.e., tenure in an industry or role and a track record of success) are the very attributes that make one most susceptible to confirmation bias. However, confirmation bias can be particularly troublesome for private or family-owned company boards, as they more often lack the governance expertise and external pressure to establish and maintain a decision-making rigor that roots out and neutralizes confirmation bias. For all boards, when personal attributes most susceptible to confirmation bias are combined with continuous pressure to increase the efficiency of board meetings, the stage is set perfectly for confirmation bias to impact decision-making negatively.

Is Your Board’s Decision-Making Process Infected?

Confirmation bias can be difficult to detect as it is often associated with inflated egos and “know-it-all” types. However, a few of the less obvious symptoms that your decision-making may be infected by confirmation bias are:

• There are more anecdotes and analogies of prior experiences or beliefs than facts, data, and insights to justify opinions and choices.

• A similar thinking process is visible among the directors.

• There are frequent side conversations about agenda items during or outside of meetings.

• Directors frequently interrupt each other.

• An unspoken requirement for a “case to be made” exists only for opposing or unconventional viewpoints.

The reality is that confirmation bias isn’t always about arrogance or overconfidence in one’s choices. It can be an efficient way to process information. We are all bombarded with information, and it seems impossible to process each piece thoroughly. Confirmation bias provides a shortcut that our time-crunched schedules welcome. This is why directors, especially private company directors who don’t have the three attributes mentioned in a later section of this article, must be vigilant in their efforts to identify and address confirmation bias in their decisions.

What Can You Do to Address Confirmation Bias?

Having a diverse board is one way to reduce the effects of confirmation bias. However, board diversity is only a starting point. Confirmation bias requires intentional, proactive, and relentless effort to uncover and address by directors individually and the board as a whole. Suggested actions by directors individually include:

• Recognize Your Own Susceptibility. No one is immune from confirmation bias. It’s helpful to remember that the more confident you are of an opinion, the more likely confirmation bias influences your decision.

• Help Fellow Directors Understand. Explain what confirmation bias is, why directors are particularly susceptible to it, and its effects on decision-making.

• Emphasize the Value of Learning Something New. One’s desire to be a “life-long learner” and value fresh perspectives can take second place to efficiency, especially if the new learning or perspective suggests that we are wrong about something we strongly believe. Emphasizing the value of learning something new and expanding the vision for the company can make considering alternatives more palatable.

Becoming more self-aware of one’s propensity for confirmation bias goes a long way. However, it takes commitment from the entire board to prevent confirmation bias from negatively impacting the group decision-making process. Boards may find the following specific actions helpful to address confirmation bias:

• Make It Blind. Use a survey tool that displays real-time responses. When a decision is needed on a key issue or opportunity, have each director submit at least one of their suggested options. Allow additional submissions only after all directors have submitted at least one option. Once all responses have been recorded, anonymously display all submitted options at one time. Create a shortlist after discussing each option. If desired, the author of each submission can be revealed. This tactic has worked especially well where engagement or contribution from specific directors has been an issue.

• Have a Permanent Agenda Item. Instead of being the elephant in the room, confirmation bias is more like a grub living beneath the surface, destroying the roots of effective decision-making and culture. You must be consistently looking, or rather digging, to uncover and treat it before it causes irreparable damage. At every meeting, a discussion on biases, especially confirmation bias, keeps boards alert for signs of bias in current decisions and effects from prior decisions.

• Appoint a Contrarian. Empower one person or a triad if the board is large enough to intentionally search for perspectives and evidence that challenge the conventional ideologies and views of the board on a specific issue, opportunity, or in general. Contrarians can provide new perspectives and considerations for discussion that may change options considered and final decisions.

• Intentionally Look from the Perspective of All Stakeholders. Systematically looking at each decision through the lens of all stakeholders, not just the obvious stakeholders, as part of the decision-making process can uncover gaps that could otherwise slip under the radar.

• Don’t Rush the Process. Shallow engagement with certain forms of data can lead to relying on biased intuitions instead of analytical reasoning. Making a decision too soon in discussions negates the benefits that come from the process of gathering facts, seeking different explanations, interpreting results differently, and checking back regularly to assess the integrity of the whole process.

• Productively Challenge Management. Directors should be routinely assessing the measures management takes to ensure that confirmation bias and other forms of bias aren’t negatively impacting their decisions and results.

The Imperative for Private Company Boards

Thriving in a post-COVID world will require both private and public boards to increase the frequency with which they assess all aspects of their strategic oversight for signs of confirmation bias or other hidden detractors of sound decision-making. Confirmation bias can negatively impact decisions made about a company’s business model, growth strategies, and other key business areas. However, the rigor needed for this kind of oversight requires a discipline and level of accountability that most private company boards may find challenging to develop and maintain because they don’t have the demands from external scrutiny forcing the issue in the same way public company directors do.

In addition to the suggestions in the prior section for addressing confirmation bias, it is imperative for private boards that want to increase their ability to uncover and effectively address confirmation bias to ensure these three attributes are present within their ranks:

1. Expertise in Corporate Governance: Specific training like that received by those who have gone through the NACD Fellowship^® and NACD Directorship Certification^® programs should be table stakes.

2. True Independence: The only financial stake in the company is their director compensation.

3. Outside of the Company Industry: They come with a truly fresh lens through which they observe and assess the company’s operations and strategies.

The Final Word

There are many reasons why accomplished directors on private and public company boards overlook or ignore certain types of information and make decisions that negatively affect the company and stakeholders. One often-overlooked reason is confirmation bias. Both private and public directors are particularly susceptible to confirmation bias because of their experiences and the time pressures at board meetings. However, private company directors may have the added challenge of lacking the discipline and accountability to ensure a consistent decision-making rigor to combat confirmation bias. Without intervention, confirmation bias preserves the status quo long past any usefulness, blinds directors to problems that require their attention, and limits awareness of available options to address issues and leverage opportunities. Therefore, consistent, proactive, and intentional efforts are needed by directors individually and at the board level to effectively uncover and address confirmation bias.

Sherrin Ingram, CEO of the International Center for Strategic Planning, currently serves on DHA Management and Dupage Housing Authority boards. She is known for stimulating fresh thinking and approaches to problem-solving and has a history of award-winning performance as a visionary leader for strategy execution, risk management, company culture, and spearheading profitable growth as high as 43 percent annually. Sherrin has been recognized as a Top 100 Under 50 Executive Leaders and one of the Top 100 Women of Influence.

Sherrin Ingram, CEO of the International Center for Strategic Planning, currently serves on DHA Management and Dupage Housing Authority boards. She is known for stimulating fresh thinking and approaches to problem-solving and has a history of award-winning performance as a visionary leader for strategy execution, risk management, company culture, and spearheading profitable growth as high as 43% annually. Sherrin has been recognized as a Top 100 under 50 Executive Leaders and a Top 100 Women of Influence.