The ability to make decisions in the boardroom requires a mix of open discussion with strategic analysis and the use of technology. When implemented effectively, can greatly enhance the ability of boards to make a decision and lead to the long-term sustainability of an business.
The first step is gathering all the information available and ensure that it is accurate, complete, credible and comprehensive. Management’s responsibility involves gathering data from internal and external sources, conducting research, and ensuring that the board is receiving accurate, timely information.
After the information has been gathered, the next stage is to determine the possible options to solve the issue. This can be a lengthy process, especially when trying to come to a consensus. Some boards use methods like the Six Thinking Hats Method or Disney Planning Method in order to avoid groupthink and encourage an array of ideas of ideas to be taken into consideration.
The board has to decide on the best option to pursue. This typically involves a number of elements, including cost, impact and scope. Scope can also be determined by the number of affected individuals (e.g. employees or clients). It is useful to have a list of delegated authority that ties these standards to the general guidelines for governance of the board for the organization.
The board should explain the reasoning behind its decision in the minutes. This should include the reason for the decision along with a list outlining the alternatives considered as well as any advice sought, and what criteria were in place or not met.
