Board Management Decision Making
Board management decision making is one of the most complex, critical processes of governance. Boards must determine what kind of risk they’re willing to take and the amount of expertise required to manage that risk. They also have to decide on the best method for communicating and make decisions.
Effective boards steer clear of binary decision-making and spend significant time in the multiplication of options, as well as challenging assumptions. They make sure that their decisions are recorded in a way that enables them to examine and assess the effectiveness.
Leigh Weiss: For high-consequence or what I call black elephant decisions, the most important factor is to involve diverse groups of people in the formulation of the ultimate binary decision and in the discussion that surrounds it. Weiss: This includes having outside experts assist the board in understanding the complexities and implications of the decisions. And it involves the board actively participating in the discussion instead of waiting for management to make a pre-made decision and then allow the board to vote on it.
It is helpful to have a system that defines which committees, executives, or the entire board should take certain kinds of decisions. This is especially useful when the board is contemplating an important and significant decision that could impact the future of the organization. Boards should also be thinking about the type of voting procedure (simple majority, supermajority or unanimous) to use in particular decisions.
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