Group dynamics exert a powerful influence when a retirement plan committee is making a decision. An industry expert recently offered his take on the consequences of that phenomenon.
At an Oct. 28 session of the meeting of the Plan Sponsor Council of America (PSCA) Leadership Council,Warren Cormier, CEO of Boston Research Technologies, noted that group dynamics have existed since more than one human came together to make a decision, and discussed how groups work and how to overcome some of the negative consequences of their dynamics.
Group Bias
“It’s inevitable that you’re going to have group decision bias,” Cormier said. Group bias is one of the ways groups reach suboptimal outcomes, he said, telling attendees “It not a question of whether there’s group bias. It’s a question of what kind and how much.”
But there are remedies for group bias, Cormier said:
- have committee members from diverse disciplines;
- control the size of the group;
- have a committee member who can serve as a devil’s advocate;
- employ a leadership style that ensures all committee members participate;
- have input from outside experts; and
- frame the questions the committee addresses in a way that encourages participation.
Committee Dynamics
The four most powerful cognitive forces affecting behavior when one is part of a committee, said Cormier, are:
- Trust
- Loss aversion
- Regret aversion
- Overconfidence
Cormier cited research showing people feel a loss twice as much as they feel success, and he suggested that it can apply to committee dynamics. “Is a committee trying to optimize its decision or minimize its losses?” he asked, remarking that in his experience, “it’s often the latter.”
Cormier cited other research that found that when like-minded people speak with one another, they tend to become more extreme, more confident and more unified. “Committees can assume, ‘we all know what we’re doing,’” he said.
And Cormier identified additional factors that may cause a committee member to modify their position and change their behavior:
- group harmony discourages dissent;
- people may vote differently if their vote is made public;
- staff members may defer to supervisors’ opinions; and
- committee members may defer to experts.
Cormier also observed that people resist being outliers and being a lone voice. But he said that such individuals are exactly who should be on a committee. “You want someone on the committee that is more of a free thinker,” he said.
