Board Management Decision Making

Board management decision making is among the most critical, complex processes of governance. Boards must determine what kind of risk they are willing to accept and how much knowledge is required to manage the risk. They must also determine the best method to communicate and make decisions.

Effective boards avoid binary choices and spend a lot of time pondering the myriad of options and challenging assumptions. They also make sure that their decisions are documented in a way that enables them to software to improve board management decision making review the decisions and evaluate the effectiveness of implementation.

Leigh Weiss says that for high-consequence decision making, or what I call black elephants, it’s essential to involve a diverse group in defining the ultimate binary issue and in the discussions surrounding it. Weiss is referring to inviting outside experts to assist the board in understanding the complexity and ramifications of the decisions. The board is required to participate in the discussion instead of simply letting management take the decision and then approve it.

It is helpful to have a chart that defines which committees, executives and/or the board must make certain kinds of decisions. This is especially useful when the board is contemplating an important and significant decision that could affect the future of the company. Boards should also decide the type of vote (simple majority, supermajority, or unanimous) to use for specific decisions.

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