Boards require a variety of information to make informed decisions. This includes both qualitative information (e.g. the impact a decision may affect the company’s culture or https://boardmeetingtool.net/board-chair-responsibilities/ the stakeholders affected) as well as quantitative information (e.g. legal due diligence, return on investment analysis). It is the duty of management to ensure that the proper people are gathering this information and strategically analyzing it before packaging it to be used in board-level decision-making.
It is also essential for the board to have a thorough understanding of what the company is doing now in order to make informed decisions about strategic issues. This will allow them to understand the risks and opportunities that are present in the company’s future. This can be achieved by implementing an internal board performance monitoring system or by conducting a post-completion analysis of major projects and initiatives.
When making a major decision it is crucial that the board is aware of its own limitations and is prepared to delegate certain decisions to its committees. This is especially important for issues like conflicts of interest, community benefits as well as CEO evaluation and compensation.
The board must also be ready to be in a position of uncertainty. This will let the board’s collective experience as well as expertise to be used while remaining attentive and patient rather than reacting. This can be achieved through many ways, such as asking management to create an impression or mental model of the decision, or creating an “red team/blue-team” process, which involves an expert panel with diverse perspectives, or committing time to discuss a complex issue.