Effective Board Management Decision Making

In order to make the right decisions, boards require an array of information. This includes qualitative information (e.g., the impact a particular decision could have on the organization’s culture or the stakeholders it will affect) and also quantitative data (e.g. legal due diligence, a return on investment analysis). It is the responsibility of management to ensure that the appropriate people are collecting this information and strategically analyzing it, as well as the information is properly packaged for board decision-making.

It is also important for the board to have a clear understanding of what the business is currently doing in order to make informed decisions about strategic issues. This will help them better understand the future risks and opportunities of the organization. This can be accomplished by using an internal board performance monitoring system or by conducting a post-completion review of major projects and initiatives.

It is important that when making a strategic decision, the board is aware of its own limitations. It should be prepared to delegate certain decisions to its committees. This is especially important for issues like conflicts of interest, community benefits, CEO evaluation and executive compensation.

The board should be prepared to stand in a state of uncertainty. This will allow the board to utilize its collective knowledge, expertise and abilities while remaining patient and engaged, instead of reacting. This can be achieved in different ways, including asking management to construct a mental model or impression about the decision, establishing a “red team/blue-team” process that involves experts from different perspectives, or dedicating time to discuss a complicated issue.

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