Board Management Decision Making

Board management decision making is one of the most crucial, complex processes of governance. Boards must determine what kind of risk they will accept and the amount of expertise required to manage that risk. They must also decide on the best method to communicate and make decisions.

Effective boards avoid binary decision-making and spend an enormous amount of time in the multiplicity of options, and in challenging assumptions. They also ensure that their decisions are documented in a way that enables them to assess and review the effectiveness of their decisions.

Leigh Weiss: For high-consequence or what I refer to as black elephant decisions, the most important aspect is to involve diverse groups of people in the framing of the ultimate binary question and in the debate that surrounds it. Weiss is referring to bringing in experts to help the board better comprehend the implications and complexity of the decisions. It involves the board participating in the discussion instead of simply letting the management make the decision and then approve it.

To ensure that the right person is deciding, it is beneficial to have a chart that identifies which executive directors, committees, or the entire board must make specific kinds of decisions. This is especially useful when the board is considering an important and crucial decision that could impact the organization’s future. Boards should also consider establishing which type of voting process (simple majority, supermajority or unanimous) to apply for specific decisions.

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