To make effective decisions in a boardroom, you must have a mix of open discussion, strategic analysis, and technology. These strategies, if implemented well, can significantly improve the board’s ability to make decisions, and lead to the long-term sustainability of an business.
The first step is collecting all information available and making sure that it is complete, accurate trustworthy, relevant, and complete. This is management’s responsibility and involves gathering data from both internal and external sources, conducting research, and making sure that the board receives accurate, timely information.
Once the data is gathered, the next step is to determine the possibilities of solutions to solve the issue. This can be a lengthy process, particularly when trying to find consensus. Some boards employ methods like the Six Thinking Hats or Disney Planning Method to avoid groupthink and to allow a full range of alternatives to be taken into consideration.
The board will then have to decide on the best option to consider. This usually involves a variety of factors such as cost and the impact. Scope can also be measured by the number of affected people (e.g. employees or clients). It is useful to have a framework which ties these criteria with the overall governing principles for the company.
The board should explain the reasons for its decision in the minutes. This will include the rationale for the decision along with a list outlining the alternatives considered the advice sought, the criteria that were in place or not.
