The process of decision-making for board management is one of governance’s most complex and critical processes. Boards have to make decisions regarding the kind of risk they’ll accept, as well as the level of expertise required to manage it. They also need to determine the best ways to communicate with one another and decide the best way to make decisions.
Effective boards steer clear of binary decisions and spend significant time on the myriad of options and challenging assumptions. They make sure that their decisions are recorded in a way https://boardmeetingtool.net that permits them to assess and review the effectiveness of their decisions.
Leigh Weiss says that for high-risk decisions, or what I refer to as black elephants, it is important to involve a diverse group in defining the ultimate binary question, and in the discussion surrounding it. Weiss: This involves hiring experts to help the board understand the ramifications and complicated nature of the decisions. And it involves the board actually engaging in the debate, rather than simply leaving management to make a decision and then allow the board to vote on it.
To ensure that the correct person is the one to make a decision it is beneficial to have a chart that identifies which executive directors, committees, and/or the entire board are required to make specific kinds of decisions. This is particularly helpful when the board is considering an important and significant decision that could affect the organization’s future. Boards must also decide on the voting procedure to choose (supermajority, simple majority or unanimous) for specific decisions.