Having been on a number of Boards of different sizes and facing many different types and scale of problem over the years, I think that one of the things that really defines a Board is how it goes about making and documenting its decisions.
The Typical Way
The typical approach when something comes up that a Board must deal with is to add it to the agenda, have a discussion about it, propose a number of possible solutions and, after more discussion, put a motion for the most agreeable one and vote on it. This is fine and usually works out pretty well most of the time. If it doesn’t, the Board consoles itself that it had to make a hard decision in the interest of the organisation, and did its best in trying circumstances.
But did it?
If anyone goes back to look at the problem and potentially learn something about it, there will likely be very little record of what happened. The minutes will note that the problem was presented and discussed, and that a resolution to implement the chosen solution was passed and actions assigned. But what about all the other alternative solutions discussed? What were they, why were they rejected, on what criteria were they rejected? For that matter, on what criteria was the chosen solution not rejected? Did it actually fulfil those criteria when it was implemented? If not, why not?
Nope. The Board just intuited the solution and no-one will ever know why they voted the way they did. In fact, it is likely that each Board member had a slightly different understanding of exactly what the problem was, so may have chosen the same solution for entirely different and even opposing reasons to those of other members. But no-one will ever know so no-one, including the Board members themselves, will ever be able to learn from the process in order to avoid the same thing happening again in the future.
Another Way
An alternate way for a Board to approach decision-making takes a little bit more effort, but solves pretty well all of these issues. The first step when something comes up is for the Board to spend a bit of time working out exactly what the problem is. This is done by workshopping a dot-point list of specific things that need to be dealt with and what the most desirable outcomes are. In that process, each Board member has the opportunity for input and a much more consistent shared understanding of the actual problem is formed by the Board as a whole. That list is then minuted.
The next step is to turn that dot-point list of problems into a dot-point list of criteria that any solution has to meet. Again, more discussion with more input and shared understanding of what actually needs to be achieved. That list is then also minuted.
Next the Board starts discussing the range of possible solutions and judging them against those criteria. At this point it may be that someone has to look things up or do a little research but, with the internet now on everyone’s phone or tablet, this can often be done right there and then. This discussion is then whittled down into a list of possible solutions that meet the criteria. Again, that list is agreed and minuted.
Then comes the vote or votes. But now there is a real record of what problem each vote was trying to solve, what the desired outcomes were and the criteria against which some potential solutions were rejected and some accepted. Moreover, those criteria provide the Board with a set of objective measures against which to judge the actual outcomes of the chosen solution, both during and after its implementation.
Real Benefits
Now, here comes the real benefit of this approach. Whilst some Boards know everything, others sometimes don’t. But by having everything laid out in the minutes, other members of the organisation that may know something the Board doesn’t can tell them after the minutes go out or start preparing a representation for the next meeting. If the information is relevant and there are important issues that weren’t originally considered, the Board can easily amend its decision or tweak some of the actions it assigned. No problems, nothing is set in stone and ordinary members can help the Board make better decisions and keep everthing on track.
If the solution begins to fail at any point, there is always a record of what other options were discussed and, with hindsight and more up-to-date information, it may become clear that one of those was actually more appropriate. Again, lesson learned and the Board is now off with a head start if it needs to pivot at any point.
Probably most importantly though, there is now meaningful and useful documentation about that decision to add to the corporate knowledgebase. Anyone tasked with implementing that decision can easily go back and see what the Board was trying to achieve and use that information to better inform all the smaller decisions that have to be made along the way to actually get it done. Also, the information is there for future Boards to reference, and for shareholders or ordinary members to read at any time if they are interested.
Once a Board has gone through this process a couple of times, I would argue that it really doesn’t take that much extra time or effort. In fact, once a Board comes to expect it, a lot of this is better done prior to the meeting and documented in a briefing paper to provide a more comprehensive record. In the long run it may end up saving time as the Board can access that information during subsequent meetings without having to rely on people’s memories or contacting members who are away or may have since left the Board. The result is that both current and future Boards can make quicker, better and more informed decisions as the organisation’s knowledgebase accumulates.
Doing something like this is how a Board really does its best in trying circumstances, and works in the long-term best interests of the organisation.
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