Whether it is strategic, governance, financial or HR related, board management decision making involves the careful evaluation of a variety of information. This is especially true of the more complex issues that a board may have to deal with, like M&A or strategy decisions.
To comprehend the risks and form an opinion on the risk, these types of problems require a lot of qualitative input. This level of detail has to be managed with care to avoid the decision-making process being slowed down or taking too long. Often these decisions can be addressed in more specific board meetings, or perhaps in a workshop specifically designed for the purpose, which can help save time and energy for other discussions of strategic importance that a board must participate in.
One of the key elements in making a sound decision is to ensure that the right people are present when board members debate an issue. The rise of groupthink and the tendency for boards to rubber-stamp whatever decisions are brought to them can lead to serious consequences. The best way to stop this is for boards to develop an effort to analyze every decision brought to them in order to determine if it truly is appropriate at the level it is.
To accomplish this, it is useful for boards to look at the different models of decision-making that are available. They differ in terms of extent, but they all have strengths and weaknesses. It is an ideal idea for a board to discuss with its management team the pros and cons of each one in order to decide which one is best suited for a particular situation.
