Decision making by the Board is one of the most important, complex processes of governance. Boards must decide what type of risk they’re willing to take and the level of expertise required to manage that risk. They also need to determine the best methods to communicate with one another and determine how they will make their decisions.
Effective boards avoid binary decision making and put in significant time in the multiplication of possibilities, and challenging assumptions. They also ensure that their decisions are documented in a way that permits them to assess and review the effectiveness.
Leigh Weiss: For high-consequence decisions, also known as black elephant decisions, the most crucial factor is to engage diverse groups of people in the formulation of the ultimate binary question as well as in the discussion surrounding it. Weiss suggests bringing in experts to help the board comprehend the implications and the magnitude of the decisions. It involves the board participating in the debate rather than just letting management make an informed decision, and then voting on it.
It is beneficial to have a system that indicates which committees executives and/or the whole board are required to make certain types of decisions. This is https://boardmeetingtool.net especially helpful when the board is weighing a decision that could have an impact on the future of the organization. Boards should also think about determining the kind of voting process (simple majority, supermajority or unanimous) to apply for specific decisions.