As corporate governance becomes increasingly important, shareholders, beneficiaries and owners want to see that a decision made on their behalf has been well thought through and is ultimately beneficial. Other stakeholders, such as funders, local communities and the media may also take a major interest in a particular board decision. It is therefore essential that all processes around board decisions are seen to be effective, efficient and ethical.

The Board needs to be objective in its decision making process, act independently, manage their own conflicts and put in place suitable corporate governance frameworks to guide it in its dealings.

Take for example the well read case of governance failure in the Enron Corporation in the USA, which we governance professionals all reference as the unfortunate poster-child of what could go wrong, and where the failure to act as a Board can lead to criminal charges and financial penalties. In this instance, the Enron directors were fined and settled at USD 168 Million, and which amount was said not to be completely covered by the company or its insurance. The corporate governance failure also led to the state increasing its regulation of the financial services space – the Sarbanes- Oaxley act in 2002.

Decision-making is both an art and a science, drawing on intuition and experience as well as facts and reasoned analysis. By having a robust approach to decision-making, a board will enhance its credibility and strengthen its transparency and accountability. Unfortunately, no one can ever know if the ‘right’ decision has been made until the outcomes are finally known, and this may take a long time.

A quick process flow that Boards can use in making decisions is included in the steps below:

i. Accept the issue – that there is a decision that needs to be made
ii. Identify the type of issue- what area of the business does it affect
iii. Define the problem- articulate the issue
iv. Understand and get context- ask all the questions
v. Gather information, facts and advice- both internally and externally
vi. Analyse the facts- this is where good judgement and expertise comes in
vii. Make the decision- decisions do not become easier with time
viii. Record the decision- minute it and extract the necessary resolutions
ix. Communicate and take action- guide management, set expectations for the execution plan

Seems easy, right? There are other tools that you can employ especially when analysing the facts and options. They include the WRAP framework, the cost-benefit analysis, the SWOT analysis, decision matrix, Pareto principle, Ishikawa diagram, the Buridens donkey and many other tools.

Call on Akira Consult Limited for a training on decision making processes and tools to see what works best for your Board, depending on its structure, diversity and industry. we promise an interactive and engaging experience.

For more insights, read on at www.akiraconsult.ke