Boards require a variety information to make informed decisions. This includes qualitative information (e.g. the impact a particular decision could have on the culture of the company or on the stakeholders it could have an impact on) and also quantitative information (e.g., legal due diligence, a return on investment analysis). It is the responsibility of management to ensure that the proper people are collecting strategically analyzing and putting together the information to aid in board decision-making.
It is also essential for the board to have a solid knowledge of what the company is currently doing in order to make informed decisions on strategic issues. This will help them understand the risks and opportunities that are present in the organization’s future. This can be accomplished by implementing an internal board performance monitoring system or through a post-completion review of major initiatives and projects.
It is crucial to ensure that when making a strategic decision the board is aware of its own limitations. It should also be prepared to delegate certain decisions to its committees. This is particularly crucial for issues such as conflicts of interest, community benefits as well as CEO evaluation and compensation.
The board must be prepared to face a moment of uncertainty. This will allow the board to utilize its collective knowledge, expertise and expertise, while remaining patient and active instead of reacting. This can be accomplished in different ways, such as asking management to create a mental model or impression around the decision, creating the “red team/blue-team” procedure, which involves experts with different perspectives, or by committing time to discuss a complex issue.