Board management decisions are dependent on a variety data, whether it’s finance, HR, governance or even strategic. This is particularly true for the more complex issues that a board might confront including M&A and strategy decisions.
To understand the dangers and to form an opinion about the risks, these kinds of issues require a great deal of qualitative input. This level of detail needs to be managed with care to avoid the decision-making process becoming slowed down or taking too long. The majority of these decisions can be discussed in more focused board meetings or even in a dedicated workshop, which can reduce time and energy needed for other discussions at a strategic level that a board must participate in.
The right people should be present when the board is discussing the subject. The emergence of groupthink as well as a tendency for boards to stamp their approval on any decision that is brought to them could lead to grave consequences. The best way to prevent this is for boards to develop the habit of looking at every decision brought to them to determine whether it should be considered a decision at that level.
It is vital that boards look at the different models of decision-making available. They differ in their complexity, but each has strengths and weaknesses. It is a good idea for a board to discuss with its management team the pros and cons of each one in order to determine which one is the best fit for a particular situation.