Board Management Decision Making

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Board management decisions are determined by a variety facts, including governance, financial, HR, or strategic. This is particularly relevant to the more intricate issues that a board might be faced with including M&A and strategy-related decisions.

These types of issues often require a substantial amount of qualitative input from both management and experts to formulate an opinion and understand all the dangers that are involved. This level of detail needs to be carefully controlled to prevent the decision-making process being slowed down or taking too long. These decisions can often be discussed in more specific meetings of the board, or in a workshop that is specifically designed for the purpose. This can free up time and energy to engage in other strategic-level discussions.

One of the key elements in good decision-making is making sure that the right individuals are present when board members debate the subject. The emergence of groupthink and a tendency for boards to accept whatever decisions are presented to them could lead to serious consequences. It is recommended that boards make it a habit to scrutinize every formal decision they get to determine whether the decision is suitable for the level at which it is.

To do this it is beneficial for boards to take a look at the various models of decision-making that are available. They vary in terms of complexity, however they all have their strengths and weaknesses. A helpful exercise for a board is to discuss the pros and pros of these frameworks with their management teams to decide which one is the most appropriate for a particular situation.