The cubicle culture column in today's WSJ($) has a great take on group decision making:
Some Ideas Are So Bad That Only Team Efforts Can Account for Them Years ago, when a civilian worker at one of the nation's largest Air Force bases was working for a general, she watched as a team was formed to come up with a better system to handle the mail.
Mail to the base included letters from multi-starred generals and directives that had deadlines. The "process improvement team," also known as a PIT, had a roster of middle managers, mostly civilians, who spent the better part of a month coming up with a plan.
But instead of streamlining the process, they complicated it. "I was horrified," says the woman. "There used to be eight steps; now there were 19." Each piece of official mail was viewed by a greater number of managers before getting to its intended recipient, she says, enabling the mail to be lost at home or in the bathroom, or covered with spills from someone's breakfast. And ponies could have delivered it faster. The lag between the first manager who saw a piece of mail and the person who had to act on it was two weeks, she says.
Questioning the team would have amounted to heresy, so she kept quiet until a year later, when her general emerged from his office and bellowed, "What the hell is happening to my mail?" Once enlightened, he changed everything on the spot.
The columnist's mostly negative view of team production is a salutary reminder that teams are not the panacea many managers believe them to be. Yet, I think it overstates the disadvantages of team production.
I spent a tremendous amount of time working through the literature on team decision making for my article Why a Board? Group Decisionmaking in Corporate Governance:
ABSTRACT The default statutory model of corporate governance contemplates not a single hierarch but rather a multi-member body that acts collegially. Why? This article reviews evidence that group decisionmaking is often preferable to that of individuals, focusing on evidence that groups are particularly likely to be more effective decisionmakers in settings analogous to those in which boards operate. Most of this evidence comes not from neo-classical economics, but from the behavioral sciences. In particular, cognitive psychology has a long-standing tradition of studying individual versus group decisionmaking. This article contends that behavioral research, taken together with various strands of new institutional economics, sheds considerable light on the role of the board of directors. In addition, the analysis has implications for several sub-regimes within corporate law. Are those sub-regimes well-designed to encourage optimal board behavior? Two such sub-regimes are surveyed here: First, the seemingly formalistic rules governing board decisionmaking processes turn out to make considerable sense in light of the experimental data on group decisionmaking. Second, the adverse consequences of judicial review for effective team functioning turns out to be a partial explanation for the business judgment rule.
In brief, the old joke about the camel being a horse designed by a committee captures the valid empirical observation that individuals are often superior to groups when it comes to matters requiring creativity. In addition, teams are subject to unique cognitive biases, such as groupthink, and unique sources of agency costs, such as social loafing. Even so, however, the empirical evidence I review in my article shows that groups are better at tasks requiring the exercise of critical evaluative judgment. Not only do groups clearly outperform average individuals at such tasks, there is considerable (albeit contested) evidence that the process of group interaction has synergistic effects allowing groups to outperform even the best decision makers in the given sample.
Hence, I would never ask a committee to design a new mail system. I would, however, ask a committee to evaluate whether the new mail system is working properly.
