How well does your board manage the risk of decision fatigue
Earlier this year I was involved in the governance of a project addressing a possible merger. Those of us who were responsible for steering the project found that evening teleconferences were often the only way we could connect. I was heavily committed throughout that period as were my colleagues. There were a variety of challenging, high-stakes issues we had to deal with but, on one call, I was so tired I found myself tempted to agree to just about anything to get the meeting over. The next morning I heard a passing reference in a radio interview to a phenomenon referred to as 'decision fatigue' (1). I immediately recognised the symptoms!
What is decision fatigue?
Decision fatigue is responsible for increasingly poor choices, indecision and even complete decision avoidance as the day progresses. Experimentally it has been demonstrated that we start the day with a store of mental energy and self-control that is progressively used up by the decisions and choices we have to make. Even if we are not consciously fatigued, as we go through the day it becomes harder for our brain to continue to make decisions. Apparently, our ego and self-control are like 'muscles'. They become increasing tired or depleted just like our physical muscles during a workout at the gym (2). This process of depletion decreases our ability to handle subsequent decisions.
One of the consequences of decision fatigue is a reduction in our ability to resist impulses. We become increasingly vulnerable to sales and marketing strategies designed to take advantage of this kind of fatigue. For example, new car purchasers can become overwhelmed by the choices they have to make between various model and upgrade possibilities and different financing and warranty options. Consequently, they find it difficult to resist the dealer's last minute suggestion to add further (probably unnecessary) options. The deliberate placement of items to tempt us at the supermarket checkout counter is a similar example. It takes advantage of reduced energy and self-control, particularly if a limited budget has forced us to make difficult trade-offs while traversing the aisles. Fatigue from the burden of day-to-day decision making may also explain the occasional spectacular failure of men in high office unable to control impulses in their private lives (3).
Professional decision makers are as vulnerable to decision fatigue as anyone. Psychologists examined the factors that affected whether or not a judge would approve applications for parole (4). They hypothesised that judges would focus on the type of crime committed or the particular laws broken. The most significant explanatory variable turned out to be the time during the day when the hearing took place. At the beginning of the day, judges were likely to give favourable rulings in more than 60 percent of cases. As the judges became progressively more tired from making decisions, the possibility of a potential parolee getting a favourable ruling steadily dropped to zero. After a lunch break, judges would return to their hearing rooms refreshed. The likelihood of them making decisions favourable to applicants returned to more than 60 percent. Then the morning pattern would repeat itself. By the end of the day, the percentage of favourable rulings would have fallen back to zero.
This trend held true for more than 1,100 cases over a ten month period. Regardless of the nature of their crime, applicants were far more likely to get a favourable decision if their parole hearing was scheduled early in the morning or immediately after the lunch break. Their chances of parole were slim if the judge heard their case near the end of a long session.
This research showed that cases with similar legal characteristics resulted in different outcomes due to factors that were legally irrelevant - in this case when a judge took a food break. This research also supports the theory that the cause of decision fatigue may be physiological - that reducing glucose levels may be responsible for increasingly poor decision-making.
What might this mean for the way we manage our boards?
There are many other professional decision-making environments where vulnerability to poor or inconsistent decision making is likely to hold true - including in the boardroom. The research into decision fatigue points to variables we can control that will help our boards be less vulnerable.
- The timing of meetings
Board decisions can have far-reaching consequences. The increasing vulnerability to decision fatigue (and fatigue from other sources) suggests that boards should meet earlier in the day rather than later. By meeting in the morning, a board is likely to have better access to its members' attention, energy, and concentration.
- The content of the agenda
Most boards will find that they deal with some matters simply out of habit or because of a lack of planning how they will most productively spend their time. Also, board agendas typically contain more items than the board can process in a considered way. Items to which the board cannot add value consume valuable time as well as energy. Few boards that take a hard look at how they spend their time do not find opportunities to apply some 3-D thinking: 'defer, delegate or ditch.' Wherever possible boards should decide ahead of time (say for the next 6-12 month period) on the topics that most deserve their attention.
- The structure of the agenda
Decision fatigue or not, the most important items on the agenda should be dealt with first. The normal pressure to close board meetings at an agreed time makes boards particularly vulnerable to the danger of making poor judgments towards the end of the meeting. Many smart operators (directors and executives alike) have manoeuvred their board into a decision which the board would never have agreed to had it been proposed earlier in the meeting.
- The quality of information
Boards rely heavily on the quality of information they receive. Directors consume too much board meeting time floundering around because their papers do not clearly explain what is proposed or because performance monitoring reports do not highlight what is significant. Directors should not need to go 'mining' for the information that is central to their responsibilities. Fatigue can set in even before the board meeting starts because directors have been forced to deal with lengthy and unduly dense preparatory material.
- Meeting process management
An increased awareness of the board's vulnerability to decision fatigue is particularly important for the chair. The chair must pay particular attention to directors' energy and attention levels - even at the start of the meeting - and be ready to defer important decisions if these seem low. Decisions are better not made if there is a high probability they will be poorly considered and subsequently vulnerable to a lack of commitment and possible relitigation.
- Access to food and refreshments
It is not always possible for boards to schedule their meetings early in the day. The parole judges referred to above became better decision makers after their lunch break. When boards build access to food into the meeting process, it can have other benefits as well. For example, sharing food before a meeting creates an opportunity for board members to re-engage with each other before getting down to business. This action acknowledges the importance of board as a social organism.
Decision fatigue is likely to be something all of us experience from time to time. However, there is a variety of ways to reduce this risk to board performance.
(1) My research on decision fatigue initially took me to a widely cited - and lengthy - article published in the New York Times (John Tierney, 'Do you suffer from decision fatigue', New York Times, 17 August 2011). It is a good starting point for further reading on this topic. Wikipedia references to decision fatigue and ego depletion were also useful and provided the links to the following references.
(2) Baumeister, Roy F. (2002). Ego Depletion and Self-Control Failure: An Energy Model of the Self's Executive Function. Self and Identity, 1 (2): 129-136.
(3) Loewenstein, George (2003). Time And Decision: Economic And Psychological Perspectives on Intertemporal Choice, p.208
(4) Shai Danzigera, Jonathan Levavb and Liora Avnaim-Pessoa (2011). Extraneous factors in judicial decisions. Proceedings of the National Academy of Science, Vol. 108, No. 17, pp. 6889-6892