Boards require a variety of information to make informed decisions. This includes both qualitative data (e.g. the impact that an action could impact the culture of an organization, or the stakeholders affected) and quantitative information (e.g. legal due diligence and return on investment analysis). Management is responsible to ensure that the proper people are collecting, strategically analyzing and packaging this data for board decision making.
It is also essential for the board to have a clear understanding of what the business is currently doing in order to make informed decisions on strategic issues. This will allow them to better comprehend the future opportunities and risks of the organization. This can be done with the use of an internal board performance tracking system or through post-completion review reviews of major initiatives and projects.
When making a strategic choice it is essential that the board has an awareness of its own limitations and is able to delegate certain decisions to committees. This is particularly important in cases of conflicts of interest, community benefit, CEO evaluation and executive compensation.
The board should be prepared to face a moment of uncertainty. This will let the board’s collective experience, expertise, and skills to be used while remaining attentive and patient rather than reacting. There are many ways that this can be accomplished, including asking management to develop an impression or “mental model” of the decision additional reading about Financing Mergers being made by establishing a red/blue team process, employing a panel of external experts with varying perspectives or committing time in retreats to discuss a complicated issue.
