Board Management Decision Making
Board management decision making is one of the most complex, critical processes of governance. Boards must make decisions about the type of risk they’ll take on, and the level of expertise required to manage it. They also need to decide on the best method of communication and make decisions.
Effective boards avoid binary decisions and focus their attention on the multiplicity of options and challenging assumptions. They also ensure that their decisions are documented in a way that allows them to assess and review the effectiveness.
Leigh Weiss: For high-consequence decisions, also known as black elephant decisions, the most important element is to involve many different people in the framing of the ultimate binary question and in the discussion that surrounds it. Weiss says this includes having outside experts assist the board in understanding the implications and complexity of the decisions. The board must be actually participating in the debate instead of waiting for management to https://boardmeetingtool.net/ make a pre-made decision, and then allowing the board to vote on it.
To ensure that the right person is deciding, it is helpful to establish an outline of the executive directors, committees, and/or the board as a whole should make specific types of decisions. This is especially helpful when the board is weighing a decision that could have an impact on the future of the business. Boards should also consider establishing which type of voting process (simple majority, supermajority or unanimous) to use in particular decisions.
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