Board Management Decision Making
Board Management Decision Making

Decision making by the Board is among the most crucial, complex processes in governance. Boards must make a decision regarding the kind of risk that they will accept, and the level of expertise needed to manage it. They also need to decide on the best method for communicating and make decisions.

Effective boards avoid the use of binary decision-making and invest significant time in the multiplication of possibilities, and challenging assumptions. They also ensure that their decisions are recorded in a way that allows them to evaluate and review the effectiveness of their decisions.

Leigh Weiss: For high-consequence, or what I call black elephant decisions, the most crucial aspect is to involve an array of stakeholders in the formulation of the ultimate binary issue and in the debate that surrounds it. Weiss is referring to bringing in experts to help the board comprehend the implications and the complexity of the decisions. It involves the board participating in the debate instead of simply letting management make an announcement and then vote on it.

To ensure that the right person is the one to make a decision it is beneficial to create a chart that identifies which executive directors, committees, and/or the board as a whole should make specific kinds of decisions. This can be particularly useful when the board is considering the implications of a decision that could affect the future of the business. Boards should also consider which voting process to use (supermajority or simple majority unanimous) for specific decisions.

Leave a Reply

Your email address will not be published. Required fields are marked *