The ability to make decisions in the boardroom requires a combination of open discussion and strategic analysis as well as the use of technology. When executed correctly these strategies can significantly improve a board’s decision-making capacity and create long-term sustainability for an organization.
The first step is to gather all information available and making sure that it is in-depth, accurate, credible, relevant and complete. This is management’s responsibility and involves gathering data from both internal and external sources, conducting research and ensuring that the board receives timely, comprehensive information.
Once the data has been gathered, the next stage is to find the potential alternatives that can solve the problem. This can be a lengthy process, especially when attempting to reach consensus. Some boards employ techniques like the Six Thinking Hats Method or Disney Planning Method in order to avoid groupthink and encourage all options of opinions to be thought about.
The board must then decide which option it will pursue. This usually involves a variety of factors including cost, impact and the scope. Scope can be measured in terms of dollars, years or the number of people affected (e.g. clients, customers or staff). It is useful to have a matrix of delegated authority that connects these requirements to the board’s overall governing guidelines for the organization.
When the decision has been made the board must clearly announce it in the minutes. It should also detail how the decision was reached. The document should include a rationale for the decision and a list of the choices that were examined, any advice that was sought, and whether or not the criteria were satisfied.
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