Boards require a variety information to make informed decisions. This includes qualitative input (e.g. the impact that a decision might have on the organization’s culture or which stakeholders it would affect) and also quantitative information (e.g., legal due diligence and a return on investment analysis). It is the responsibility of management to ensure that the proper individuals are collecting this information and strategically analyzing it, as well as making it https://boardmeetingtool.net/what-is-a-strategy-and-why-it-is-important-for-any-field available for board decision-making.
To make strategic decisions, it’s essential that the board of directors has a clear understanding of the present activities of the business. This will enable them to better understand the future opportunities and risks of the organization. This can be accomplished through an internal board performance monitoring system or by conducting a post-completion evaluation of major projects and initiatives.
It is crucial that when making a strategic decision, the board is aware of its own limitations. It should be prepared to delegate certain decisions to its committees. This is particularly important for issues like conflicts of interest and community benefits, CEO evaluation, and executive compensation.
The board must be prepared to sit in a place of uncertainty. This will allow the board’s collective knowledge as well as expertise to be used while remaining attentive and patient instead of reacting. There are many ways to get this achieved, including asking management to develop an impression or “mental model” around the decision being presented, creating a red team/blue team process, using an external panel of experts with varying views or committing time in retreat to discuss a difficult issue.