ACCA Strategic Professional · Strategic Business Leader · The board of directors
Brightwater Pharma's board comprises ten directors of similar age, all trained as scientists and all educated at the same university. The board repeatedly approves proposals quickly and without challenge, and failed to anticipate regulatory changes affecting a new market. Which approach to board composition would most directly address the problem?
Increasing diversity of background, experience, skills and perspective on the board is the best response. A homogeneous board is prone to groupthink, which explains the lack of challenge and missed regulatory change. Adding similar executives, shrinking the board or giving the CEO control would not widen challenge.
- AAppointing additional executive directors from the research department
- BIncreasing board diversity in background, experience, skills and perspective to reduce groupthink and widen challengeCorrect
- CReducing the board to five members to speed up decisions
- DReplacing the nomination committee with the chief executive's decisions
Explanation
The symptoms of quick approval, little challenge and missed external change point to groupthink from a homogeneous board. Diversity of background, skills and perspective improves debate and environmental scanning. More executives from research would add more of the same profile, and a smaller board or CEO-controlled appointments would reduce challenge further.
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