Board Management Decision Making

It doesn’t matter if it’s strategic, finance, governance, or HR related, board management decisions require careful analysis of a range of information. This is particularly true of the more complex issues that a board may be faced with, such as M&A or strategic decisions.

In order to understand the risks and form an opinion regarding the potential risks, these issues require a lot of qualitative input. It is important that this level of detail is carefully managed to ensure that the decision-making process isn’t become a burden or too lengthy. Often these decisions can be addressed in more focused board meetings or a dedicated workshop, which can help reduce time and energy needed for other discussions of strategic importance that boards need to engage in.

A key factor in making a sound decision is to ensure that the right individuals are present when board members discuss an issue. The tendency of groupthink and boards to rubber stamp decisions could be disastrous. The best way to prevent this is for boards to make a habit of analyzing every decision presented to them to determine whether it should be considered a decision at that level.

It is important that boards look at the different options for decision-making. They vary in terms of complexity, however they all have strengths and weaknesses. It is recommended for a board to talk with its management team the advantages and disadvantages of each framework in order to determine which additional reading one is suitable for a particular situation.