Boards need a variety of information to make informed decisions. This includes both qualitative data (e.g. the impact an action could affect the company’s culture or the stakeholder affected) and quantitative data (e.g. legal due diligence, return on investment analysis). Management’s responsibility is to ensure that appropriate people are gathering strategically analyzing and putting together the data for board decision making.
It is also crucial for the board to have a clear understanding of what the company is currently doing in order to make informed decisions about strategic issues. This will allow them to better understand the future potential risks and opportunities for the company. This can be accomplished by using an internal monitoring of board performance system or through a post-completion review of major projects and initiatives.
When making a major decision it is essential that the board has an awareness of https://boardmeetingtool.net/board-chair-responsibilities/ its own limitations and is able to delegate certain decisions to committees. This is especially important in cases of conflicts of interest, community benefit as well as CEO evaluation and compensation.
The board must also be prepared to accept the uncertainty. This will let the board utilize its collective knowledge, expertise and abilities while remaining patient and active rather than reacting. This can be accomplished in a variety of ways, including asking management to develop an impression or mental model around the decision, creating an « red team/blue-team » procedure, which involves a panel of experts with different perspectives, or dedicating time to discuss a complicated issue.