Business people brainstorming

The way groups of people interact effects their decisions. (Photo Credit: Shutterstock)

How group dynamics affect decisions

Groups of people make better or worse decisions depending on the composition of the group and experience of the leader.

When groups of people work together, the decisions they make result from more than just the decision-making prowess of the individuals. Group dynamics play a critical role in the quality and creativity of their decisions. Of those dynamics, the one that most intrigues Lindred Greer, assistant professor of organizational behavior at the Graduate School of Business, is power.

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Video Courtesy of Worldview Stanford

In this video from Worldview Stanford, Lindred Greer, assistant professor of organizational behavior, discusses the way power alters how groups of people makes decisions

"If you put people with high power together, it's a clash of egos like no other," Greer said. "They are busier maintaining power than in making good decisions."

By contrast, Greer has found that teams with a strong hierarchy, as in the military, are most efficient in their decisions – though not necessarily very creative. If a decision requires creativity, teams should include members of equal status and be well-managed so that all members contribute to the eventual decision.

The kind of power Greer studies, however, has to do with more than just position on an organizational chart. It could also take the form of personal attributes like dominance, attractiveness or charisma. "Formal or informal differences in power all lead to the same sort of tension, dissatisfaction, conflict and clashing of egos that gets in the way of effective group decisions," Greer said.

In her work, Greer has found that the group's leader has a key role in diffusing tensions and allowing for diverse opinions. Unfortunately – though probably not surprisingly – her work has also revealed that the way people choose a leader doesn't necessarily result in the right person for the job. When asked to choose a leader to facilitate a conversation, almost half the time people chose a leader based not on experience but on factors like dominance and charisma. Those groups made worse decisions than groups with no leader at all.

What's more, whoever becomes the leader the first time stays the leader. "It becomes self-reinforcing no matter how poorly they perform," Greer said. In one study, she found that groups ultimately made the best decisions when they chose a leader with experiences relevant to the decision at hand. However, the groups only selected an experienced leader a little more than half the time, revealing the strong influence of superficial factors.

"We romanticize charismatic leaders too much, when to make good decisions we need a leader who understands the subject and the different perspectives in the group," Greer said. "The leader really does have the onus to be the most competent person in the room and we always forget that."

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