Board Management Decision Making

The decision-making process for board management is among the most complex, critical processes in governance. Boards need to decide what kind of risk they will accept and how much expertise is required to manage the risk. They also need to decide on https://boardmeetingtool.net/what-is-a-strategy-and-why-it-is-important-for-any-field the best method for communicating and make decisions.

Effective boards steer clear of binary decision making and put in considerable time in the multiplication of options, as well as challenging assumptions. They also ensure that their decisions are documented in a way that enables them to review their decisions and evaluate the effectiveness of their implementation.

Leigh Weiss says that for high-risk decisions, also known as what I call black elephants, it is essential to involve a diverse group in defining the most fundamental binary question as well as in the discussion around it. Weiss is referring to hiring experts to help the board understand the implications and complexity of the decisions. It also involves the board actively participating in the discussion, rather than simply letting management make a pre-baked decision and then allow the board to vote on it.

It is helpful to have a chart that defines which committees, executives, and/or the entire board should take certain kinds of decisions. This is particularly useful when the board has to weigh an issue that could have an impact on the future direction of the organization. Boards should also think about determining which type of voting process (simple majority, supermajority or unanimous) to use in particular decisions.