Whether it is strategic, human resources, financial or governance related, board decisions require careful evaluation of a variety of data. This is especially relevant for the more complicated problems that boards confront in, such as M&A and strategic decisions.
These kinds of issues usually require a significant amount of qualitative input from the management team and external experts to form an opinion and comprehend all the risks associated. It is important that this degree of detail is well managed in order to ensure that the decision-making process does’t get bogged down or excessively time-consuming. Most of the time, these decisions can be addressed in more specific board meetings or a specific workshop, which could help reduce time my link and energy spent on other discussions at a strategic level which a board has to engage in.
The right people should be present at the table when the board considers a certain issue. Groupthink and the tendency of boards to rely on rubber stamps for decisions can result in serious consequences. The best way to prevent this is for boards to make a habit of analyzing every decision that is formally presented to them in order to determine if it truly should be considered a decision at that level.
It is essential that boards look at the different models of decision-making available. They differ in their complexity, however, they all have strengths and weaknesses. A good exercise for a board of directors is to discuss the pros and pros of these frameworks with their management teams in order to decide which one is the best for a particular decision.