The c factor and group effectiveness

Group dynamic can have significant value through the wisdom of crowds. A diverse group should reach better decisions and make better forecasts; however, it is also well-known that group dynamics can lead to herding and disfunction. Just because you place smart people in the same room does not mean that they are going to get better results. The interaction between groups members matters. There is name for this, the c factor, the collective intelligence of a group which is not the same as the individual intelligence of a group member. 

Thinking about the c factor is a form of positive psychology that focuses on how groups can function efficiently instead of focusing on the level of disfunction. Similar to intelligence, the c factor is the ability of a group to perform a wide variety of tasks. Group skill is more relevant to group success than the average or maximum individual intelligence. There is such a thing as group intelligence which is not just a combination of individual skills. The group skill is tied to experiential knowledge. For example, has the group worked on similar problems or have familiarity with the problems? 

Additionally, it has been found that three factors help with a high c factor, social sensitivity, gender composition, and equitable turn-taking. The social sensitivity can come in a few forms, but a good word may be empathy or a sense of understanding another person's point of view. Since social sensitivity is hard to measure, it has been found that a higher degree of gender differences will lead to more social sensitivity. The third factor is ensuring that there is not dominance by just a few members. The group benefits collapse when there is less cross communication or the allowance for everyone to speak and be heard. 

An investment committee can work more effectively if there is more open communication, increased willingness to listen to other opinions, and bringing in more diversity. Yes, this may sound obvious, yet it is often hard in practice. Regardless of the investment firm, there will always be group dynamics even if it is in the form of research meetings; consequently, every firm should work on improving group dynamics and intelligence.