In order to make informed decisions, boards require various sources of information. This includes qualitative information (e.g., the impact a decision could affect the company’s culture or the stakeholders it will affect) as well as quantitative data (e.g., legal due diligence or a return-on-investment analysis). It is the job of management to ensure that the appropriate people are collecting this information while strategically analyzing and making it available to be used in board-level decision-making.
It is also important for the board to have a solid knowledge of what the company is currently doing in order to make informed decisions about strategic issues. This will enable them to better understand the upcoming risks and opportunities of the company. This can be achieved by using an internal board performance monitoring system or through a post-completion review of major projects and initiatives.
When making a strategic decision it is crucial that the board is aware of its own limitations and is prepared to delegate certain decisions to committees. This is particularly important for issues such as conflicts of interest, community benefit, CEO evaluation and executive compensation.
The board should be prepared to stand in a state of uncertainty. This will enable the board to draw on its collective wisdom, experience and skills while remaining patient and engaged, instead of reacting. This can be achieved in many methods, including asking management to construct an image or mental model around the decision, creating a « red team/blue-team » process that involves experts from different perspectives, or dedicating time to talk about a difficult issue.
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