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The HiPPO Effect
When Jeff Rose meets with his management team, he never wants to be the first to offer an opinion — despite being the CEO at American Bank & Trust Co., the $520 million subsidiary of Ambank Holdings in Davenport, Iowa.
Due to his position, he says, his opinion carries “double or triple the weight.”
Rose is referencing a psychological concept called the “HiPPO” effect, a form of authority bias where a group defers to the highest paid person’s opinion — the HiPPO. This form of bias isn’t necessarily about who has the biggest paycheck, but who has the most influence. Maybe it’s the CEO. But it could also be a board member with extensive tenure, or a founder or shareholder with a heavy investment in an organization. Once that person speaks, it can shut the conversation down.
What looks like agreement could be deference to the most powerful person in the room.
“Board members need to understand, especially if they’re the large shareholder or if they’re just the outspoken voice, that they need to let other folks express their opinions before they express theirs,” Rose says.
Psychologist and author Adam Grant once called the HiPPO “the most dangerous voice in a meeting,” adding: “Status disparities can fuel conformity and groupthink. When you need diversity of thought, ask everyone else to share their views before turning to the HiPPO.” That’s where chairs and lead directors, who are charged with facilitating board meetings and setting the meeting agenda, can play an important role — by ensuring everyone has an opportunity to weigh in.
The business and community leaders who typically serve on bank boards are unlikely wallflowers. Fully two-thirds of the directors and CEOs responding to Bank Director’s 2024 Governance Best Practices Survey said they speak more than the average person in the boardroom.
A good chair or lead director seeks consensus, and a collegial board can be a positive sign of a productive working relationship. But that person should also engender courage among other directors, even when their opinions seem to contradict the HiPPO.
James McAlpin Jr. has been in many boardrooms as a partner at the law firm Bryan Cave Leighton Paisner; he also serves on Bank Director’s board and on several bank boards. “If, from time to time, you aren’t sure whether you’re about to be fired from a board for bringing up an issue, then you’re not doing your job,” he says in an upcoming issue of Bank Director magazine.
• Emily McCormick, vice president of editorial & research for Bank Director
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