Decision making by the Board is among the most complex, critical procedures in governance. Boards have to make decisions about the type of risk they’ll accept, and the level of expertise required to manage it. They also need to determine the best ways to communicate with each other and determine the best way to make decisions.
Effective boards avoid the use of binary decision-making and invest large amounts of time in the multiplication of possibilities, and challenging assumptions. They also ensure that their decisions are documented in a way that enables them to assess and review the effectiveness.
Leigh Weiss says that for high-consequence decision making, or what I refer to as black elephants, it’s essential to involve a diverse group in framing the ultimate binary issue and in the discussions surrounding it. Weiss: This includes bringing in outside experts to help the board understand the complexities and implications of the decisions. And it involves the board actually participating in the debate instead of letting management make a pre-baked decision and then let the board vote on it.
To ensure that the right person is the one to make a decision it is beneficial to create a chart that identifies which executive directors, committees and/or the entire board are required to make specific types of decisions. This can be especially helpful when the board is https://boardmeetingtool.net considering an important and significant decision that could have a significant impact on the future of the organization. Boards should also decide the type of vote (simple majority, supermajority or unanimous) to use for specific decisions.
