Board Management Decision Making

Board management decision making is among the most crucial, complex procedures in governance. Boards must decide what type of risk they’re willing to take and how much expertise is required to manage that risk. They also need to decide on the best method for communicating and make decisions.

Effective boards avoid binary decision-making and spend large amounts of https://boardmeetingtool.net/board-chair-responsibilities time in the multiplication of options, and in challenging assumptions. They also make sure that their decisions are documented in a manner which allows them to analyze their decisions and evaluate the effectiveness of implementation.

Leigh Weiss: For high-consequence decisions, also known as black elephant decisions, the most important factor is to involve an array of stakeholders in the formulation of the ultimate binary issue and in the debate that surrounds it. Weiss suggests bringing in experts to help the board better comprehend the implications and the complicated nature of the decisions. It also involves the board taking part in the debate instead of simply letting the management make an informed decision, and then voting on it.

To ensure that the right person makes a decision, it is beneficial to create a list of which executive directors, committees, or the entire board must make specific decisions. This is especially useful when the board is weighing a decision that could have significant implications for the future of the company. Boards should also think about determining the type of vote (simple majority, supermajority or unanimous) to use for specific decisions.