Decision-Making in the Visionary Boardroom
Boards frequently face tough choices as they confront short-term pressures while seeking to guide their companies for the long term. Directors are well-served by processes that enhance the quality of information, the discussion around the issues at hand, and the decisions themselves. Yet a strong decision-making process is, for many directors, an area ripe for improvement. In our fast-paced business world, maintaining a board environment that enables directors to hone in on the right information, avoid barriers to decision such as groupthink and overconfidence, and continuously improve their decision-making processes is not only beneficial as a competitive advantage – it is essential.
The WCD Thought Leadership Commission – composed of 21 directors and advisors of top global companies – has taken on board decision-making in its new report, Decision-Making in the Visionary Boardroom. Developed in collaboration with KPMG, this year’s report taps the Commissioners’ deep experience in boardrooms across the world and provides strategies for boards to sharpen their decision-making capabilities. The mission of the WCD Thought Leadership Commission is to advance key boardroom issues beyond theoretical discussion to practical, actionable recommendations – ones directors can use right away in their next boardroom discussions.
How Can Boards Make Better Decisions?
- Be aware of cognitive biases and mental shortcuts – recognize the widespread influence of innate tendencies that lead to overconfidence, groupthink, and blind spots
- Counter their influence through processes that add breadth and depth to the boardroom discussion
- Don’t get so invested in the status quo that you can’t act quickly
- Go where the facts lead, even if they lead in a different direction than your desired result
- Set high expectations on management for a company data strategy that provides meaningful analytics to inform business decisions
- Take a “clean sheet” approach to optimize the quality and relevance of materials provided to the board
- Prioritize time on the board agenda to allow for forward-looking strategy discussion
- When evaluating significant business proposals, probe management’s consideration of contrary views, alternative options, and critical risks
- Exercise emotional intelligence and cultural sensitivity to elicit a broad range of perspectives
- Drive assessment and continuous improvement of the board, committees, and individual directors
- Continuously improve the board evaluation process itself
- After a major decision, evaluate the decision-making process as well as the results
- Communicate to investors the board’s commitment to high-quality decision-making