The decision-making process for board management is one of governance’s most complex and critical processes. Boards have to decide on the type of risk they’re willing to take and the amount of expertise required to manage that risk. They also need to decide on the best method for communicating and make decisions.

Effective boards steer clear of binary decision-making and spend considerable time in the multiplication of choices, as well as challenging assumptions. They also ensure that their decisions are recorded in a way that allows them to examine and assess the effectiveness of their decisions.

Leigh Weiss says that for high-consequence decisions or what I refer to as black elephants, it’s important to involve a broad group in defining the ultimate binary question and in the discussion surrounding it. Weiss suggests having outside experts help the board understand the complexity and ramifications of the decisions. It involves the board being involved in the debate instead of simply letting the management make the decision and then approve it.

To ensure that the correct person makes a decision, it is beneficial to create a matrix identifying which executive directors, committees, and/or the board as a whole should make specific kinds of decisions. This can be particularly useful when the board is considering an important and significant decision that could impact the future of the business. Boards should also think about determining which type of voting process (simple majority, supermajority or unanimous) to use for specific decisions.

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