Lack of challenge to risk management and compliance decisions is a risk in its own right, with teams failing to challenge bad decisions if the setting it not conducive to this.
In response to this risk, a new paper from the Imperial College Business School’s Centre for Responsible Leadership has described an interesting experiment that led to the identification of ways to encourage teams to challenge decisions.
The paper, ‘Facilitating Constructive Challenge: Concrete ways leaders recruit (and repress) speaking up’ was a joint effort between researchers from the Centre for Responsible Leadership, the Financial Services Culture Board, and a financial institution.
A field experiment on team member challenge in a risk and compliance setting was conducted for the paper. To do this team leaders chaired a risk management team meeting which had the objective of choosing the best of the team members’ ideas and reporting this to the central risk committee. However the twist was that the team leader actually proposed the idea that they believed to be the worst of those suggested during the meeting and then attempted to encourage their team to assess and challenge the decision.
This situation allowed the researchers to assess whether, when, and how members of real teams reacted to their leader’s ‘bad’ idea, whether they challenged or agreed with them, and whether that ultimately led to the leader’s suggested bad idea being overturned or simply passed on as proposed to the risk committee.
The report describes five key ways that challenge can be improved, as identified from the research.
Overall, the study suggests that leaders are often unaware of how to best solicit challenge from their team members and that the most common or intuitive ideas for how to illicit challenge might actually be among the least effective.
The data suggest that fostering a culture of challenge requires leaders to reduce uncertainty among their team members. The wording of questions is also crucial and can yield large differences in employee responses. Framing questions precisely and emphasising accountability among team members might require more cognitive effort, but it will encourage employees to take stronger positions in discussions.
