To make the right decisions, boards require the right information. This includes both qualitative information (e.g. the impact that the decision could impact the culture of an organization or the stakeholders that are affected) and quantitative data (e.g. legal due diligence or return on investment analysis). Management is responsible to ensure that the right people are collecting the information, strategically analyzing it and packaging the information for board decision making.
It is also essential for the board to have a thorough knowledge of what the company is currently doing in order to make informed decisions about strategic issues. This will allow them to better understand the challenges and opportunities of the business. This can be accomplished by using an internal monitoring of board performance system or by conducting a post-completion evaluation of major projects and initiatives.
When making a decision on a strategic plan, it is important that the board is aware of its own limitations and is prepared to delegate certain decisions to its committees. This is particularly crucial in cases of conflicts of interest, community benefits CEO evaluation, and executive compensation.
The board should also be prepared to accept the uncertainty. This will allow the board to use its collective expertise, knowledge and abilities while remaining patient and engaged, instead of reacting. This can be accomplished in many ways, including asking management to create an image or mental model about the decision, establishing the “red team/blue-team” process that involves a panel of experts with different perspectives, or by committing time to talk about a difficult issue.
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