Effective Board Management Decision Making

To make effective decisions, boards require an array of information. This includes qualitative input (e.g., the impact a decision could affect the company’s culture or the stakeholders it will affect) as well as quantitative data (e.g. legal due diligence or a return on investment analysis). It is the responsibility of management to ensure that the appropriate people are collecting this data and strategically analyzing it, as well as making it available to be used in board-level decision-making.

In order to make strategic decisions, it is vital that the board has a good understanding of the current operations of the company. This will help them better understand the upcoming risks and opportunities of the business. This can be achieved through an internal monitoring of board performance system or through a post-completion review of major initiatives and projects.

When making a strategic decision, it is important that the board is aware of its own limitations and is able to delegate certain decisions to committees. This is particularly important for issues such as conflicts of interest as well as community benefits, CEO evaluation and executive compensation.

The board should be ready to accept the possibility of uncertainty. This will enable the board to draw on its collective knowledge, expertise and expertise, while remaining patient and active, rather than reacting. There are a variety of ways to get this achieved, including asking management to develop an impression or “mental model” about my link the decision being discussed by establishing a red/blue group process, utilizing an outside panel of experts with varying opinions or committing time in retreat to discussing a complex issue.