The process of decision-making for board management is among governance’s most intricate and critical processes. Boards must decide what type of risk they are willing to accept and the level of expertise required to manage the risk. They must also decide on the best method for communicating and make decisions.
Effective boards steer clear of the use of binary decision-making and invest considerable time in the multiplication of choices, as well as challenging assumptions. They also make sure that their decisions are documented in a way that allows them to revisit the decisions and assess the effectiveness of their implementation.
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 framing of the ultimate binary question as well as in the debate that surrounds it. Weiss: This involves having experts on hand to help the board understand the implications and complexity of the decisions. It also involves the board taking part in the debate instead of just letting management make the decision and then approve it.
To ensure that the correct person is the one to make a decision it is helpful to establish an outline of board chair responsibilities the committees, executive directors and/or the board as a whole should make specific decisions. This is particularly useful when the board is weighing an option that could have a significant impact on the future direction of the organization. Boards should also be thinking about the type of vote (simple majority, supermajority or unanimous) to use for particular decisions.
