The decision-making process for board management is one of the most critical, complex processes in governance. Boards must make decisions about the type of risk they’ll take on, and the level of expertise required to manage it. They also have to decide on the best way to communicate and make decisions.

Effective boards avoid binary decision making and put in an enormous amount of time in the multiplicity of options, and in challenging assumptions. They also ensure that their decisions are documented in a manner that allows them to revisit their decisions and evaluate the effectiveness of implementation.

Leigh Weiss says that for high-consequence decisions or what I call black elephants, it’s important to involve a diverse group in defining the ultimate binary issue and in the discussion surrounding it. Weiss says this includes bringing in outside experts to assist the board in understanding the complexity and ramifications of the decisions. It involves the board participating in the debate instead of simply letting management take an informed decision, and then voting on it.

It is beneficial to have a system that defines which committees, executives and/or the whole board should make certain types of decisions. This is particularly useful when the board has to weigh the possibility of a decision that could have an impact on the future direction of the organization. Boards should also determine which voting process to use (supermajority, simple majority or unanimous) for specific decisions.

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