Lewin’s Equation in the Boardroom

May 26, 2009 at 4:43 pm

Search For SolutionKurt Zadek Lewin was a German born psychologist and a pioneer in the study of group dynamics. He is considered one of the 10 most influential psychologists along with Sigmund Freud and B.F. Skinner.

Lewin is known as the father of modern social psychology because of his pioneering work that utilized scientific methods and experimentation to look at social behavior. Lewin’s work on group dynamics led him to propose the following formula: B = f (P,E). This formula known as Lewin’s Theory states that behavior is a function of the person and his or her environment. In other words, one can only understand behavior by looking at both the personality AND the environment. Applying this simple equation to the modern corporate boardroom might help shed light on some of its plaguing issues.

Activist investors are making the news these days with their criticisms of board directors and their proposals of new and seemingly improved directors for various boards. While I wholeheartedly agree with this in principle, one cannot simply expect to improve governance by replacing one director with another. According to Lewin’s theory, the total environment in which the individual directors are functioning must be taken into account if any improvements or true changes are to be made. Each director (both new and replacement) behaves according to their own personality but the environment in the boardroom (or the culture of the board) will influence their behavior as well.

Thus, the other hot button issue these days, the elimination of staggered director elections is as important as the replacement of directors if change and improvement is to be the goal. If board directors are to be newly elected each year than the environment in which the board functions has a true chance to transform significantly

A good deal of the corporate boardroom dilemma these days can be understood and ultimately resolved by going back to basic principles of human behavior. These doctrines are recognized and well accepted in the fields of psychology, sociology and the like. They are even taught in many management classes in business schools. Perhaps then it would be wise for the business world to do with a little more elemental understanding of the human condition and an accompanying appreciation of the insights this can provide.

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