Too often, for-profit and nonprofit boards are passive, deferential, or both. Their failures to engage their critical faculties have resulted in serious harms as diverse as Boeing planes crashing and the NRA squandering millions of dollars. Boeing’s massive safety failures resulted in nearly 350 deaths, catastrophic legal liabilities, and a huge reputational hit. The egregious self-dealing the NRA and NRA Foundation boards countenanced left them in severe financial distress, with a plummeting membership and much diminished ability to pursue their advocacy and recreational goals. In our recent article, we propose a simple mechanism to stimulate critical thinking by individual directors and improve overall board dynamics: a designated contrarian position that rotates among members of the board.

Directors are supposed to be engaged, independent monitors of the corporation and its operations, but too often they fall short. We analyze the reasons why. Psychological mechanisms such as motivated cognition, seeing what one wants to see, and motivated reasoning, coming to the desired conclusions because they are desired, affect people generally – and directors are no exception. These mechanisms complement forces, such as the familiar “structural bias,” where group members see the world from the same perspective because they come from a similar milieu. Until fairly recently, too many boards were homogenous, and many remain so.

Group dynamics are at play as well, notably including deference to a group consensus or a dominating personality on the board. Indeed, lengthy (and in for-profits, remunerative) service on boards together can breed casual acceptance of their fellow board members’ views of the world. The specter of groupthink, where “the desire for group unity” eclipses the board’s attention to monitoring and advising the organization it ostensibly serves, looms large. Self-interest may also lead directors to defer. Insofar as most directors are still chosen by management, a director who has a reputation as an “agreer” is likely to be chosen and retained more often.

Sector-specific dynamics also engender passivity and deference. Many directors of for-profit corporations are also managers of other for-profit corporations. Because they are also managers, they probably think they benefit from promoting a norm of board deference to management in general, and deference as to particular matters such as executive compensation, a phenomenon one of us and a co-author have called “the pernicious golden rule.” In the nonprofit context, where directors serve without compensation and clear metrics for success are hard to find, and the chance of enforcement by regulators or anyone else is virtually nil, passivity will often be the path of least resistance. Deference to a charismatic founder or powerful donor is all the more easily justified in a nonprofit, where directors can convince themselves that their colleagues’ charitable intentions reduce the risk of poor decisions. While some level of deference to management is sensible on both for-profit and non-profit boards given that management has more access to information, deference can, and does, go too far, especially when combined with discomfort with conflict and a desire to get along.

We propose that boards have  a designated contrarian position that rotates among members of the board. When in that role, contrarians would marshal and present arguments against any proposal on which the board plans to vote and would advocate alternatives. Contrarians would offer critical questions and feedback on reports provided by executives and officers. They would also be on the alert for moments of quick consensus and be ready to challenge that consensus if it seemed too easily reached. At the end of their terms, contrarians’ formal obligation to dissent and challenge would cease until their next turns in the rotation. Those obligations would then be taken up by the next occupant of the contrarian role, and so on.

A rotating contrarian would promote the ultimate goal of enriching board decision-making.  We recognize that “a real, rather than a pretend, dissenter on the board” would be even more powerful than a rotating contrarian. But our proposal would advance that goal.  It would  encourage individual directors to dissent and critique – to become more willing to do so, and give them practice in doing so – yielding, we hope, a shift in the  board’s dynamics toward more active engagement.

Putting a time limit on the contrarian role would, we hope, prevent its occupants from being ignored as always negative. Nobody would be singled out for contrarian status, and over time many sitting directors would have taken a turn. This would encourage directors to take the contrarian’s views seriously and be more inclined to heed his or her suggestions, or at least justify not doing so.

Contrarians would not, of course, have a monopoly on dissent. Indeed, boards adopting a rotating contrarian policy should be careful not to allow it to reinforce passivity and deference by other directors – who should also be encouraged to raise challenges and concerns. The contrarian role is a generalist’s role. While contrarians may raise technical concerns about, for instance, how safety, regulatory, or reputation risks are being downplayed, boards should not look to the contrarian to supply technical-expert input. The rotating contrarian role is intended to serve as a floor for active engagement and critique and to inculcate a wider culture of dissent.

Interestingly, the same approach can improve both -profit and nonprofit boards, notwithstanding the different perils the two types of boards face and the different accountability mechanisms available in the two contexts. Of course, our  proposal is not intended to be a universal, one-size-fits-all approach or a governance panacea. Rather, it is intended to highlight the need for a contrarian perspective and show how such a perspective can be incorporated as part of a broader push to strengthen corporate governance. .

Dana Brakman Reiser is the Centennial Professor of Law at Brooklyn Law School, and Claire A. Hill is the James L. Krusemark Chair in Law at the University of Minnesota Law School. This post is based on their recent article, “Why Boards Should Have Rotating Contrarians,” available here.