Boards need a variety of information to make informed decisions. This includes both qualitative data (e.g. the impact the decision could have on an organization’s culture, or the stakeholders affected) and quantitative data (e.g. legal due diligence, return on investment analysis). It is the job of management to ensure that the appropriate individuals are collecting this information and strategically analyzing it, as well as packaging it to aid in decision-making by the board.
It is also essential for the board to have a solid understanding of what the company is currently doing to be able to make informed decisions on strategic issues. This will enable them to better comprehend the future risks and opportunities of the business. This can be accomplished by implementing an internal performance monitoring system or by conducting a post-completion review of major projects and initiatives.
When making a decision on a strategic plan it is essential that the board is aware of its own limitations and is able to delegate certain decisions to its committees. This is especially important for issues like conflicts of interest and community benefits, CEO evaluation and executive compensation.
The board should be ready to accept the uncertainty. This will let the board’s collective experience, expertise, and skills to be used while remaining active and patient rather than reacting. This can be accomplished through many ways, like asking management to develop an impression or mental model of the decision, or creating the “red team/blue-team” process, which involves an expert panel with different perspectives, or by committing time to talk about a difficult issue.
