How to Avoid Bad Board Management Decision Making

Board management decision-making is a complex process that involves balancing executive tasks and responsibilities against the overall perspective needed to determine which strategies the company should pursue and the oversight necessary to enforce the new strategic direction. The decision-making process is prone to a number of factors that result in poor decisions. These problems are typically caused by a combination of poor performance over a long period and a need to increase risks to make up for the shortfall. The board may have a number of faulty evaluations and poor decisions which can have negative consequences for the company.

The first step is to ensure that every member of the board have access information upon which they are able to base their decisions. This requires a comprehensive strategy that involves the gradual development by the board, of a mental or impression models of the subject matter and the investigation and analysis of this information to reveal any biases or assumptions that could affect the decisions made later.

Another crucial aspect is to determine when an issue is appropriate for the board’s consideration. This depends on the overall governance process of the business and the board chair’s ability to facilitate the right discussions at the appropriate time to avoid last-minute unexpected decisions or those that rely on a „gut check” and aren’t supported by facts. It also depends on the internal procedures of the board for example, the way they organize and evaluate their agenda, determining which items require their attention and determine if an open-ended discussion or a committee is more appropriate.

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