The Art of Decision-Making: Strategies for Boards in Turbulent Times

Navigating turbulent times requires boards to refine their decision-making processes. Any board, regardless of size, may face critical moments that necessitate strong governance and strategic thinking. For instance, earlier this year New Zealand’s agricultural sector had been confronted with severe weather events and evolving climate policies, pushing many boards to re-evaluate their sustainability and risk management strategies (Treasury). Similarly, the debate over the Treaty Principles Bill in February created significant political and social turbulence, testing the decision-making abilities of boards across various sectors as they navigated the implications of potential legislative changes (RNZ). Even small to medium-sized enterprises (SMEs) globally must make decisions that best suit their organizations amidst changing circumstances. 

At Grounded Governance, we believe that effective governance should be straightforward yet profound, making even the toughest decisions feel manageable. Here, we explore practical strategies to enhance board decision-making, ensuring resilience and effectiveness for when the waters get choppy. 

  1. The Importance of Structured Decision-Making:
    Implementing structured decision-making processes is essential for clarity and efficiency. Boards should establish a Delegation of Authority (DOA) matrix to define decision-making responsibilities. This ensures that strategic and high-risk decisions are made at the appropriate levels, preventing both delays and impulsive actions. Regularly reviewing and updating the DOA matrix can help maintain its relevance and effectiveness.

  2. Leveraging External Expertise:
    Complex issues often require specialised knowledge that may not be present within the board. Engaging external experts can provide the necessary insights to make well-informed decisions. For instance, consulting with financial advisors, legal experts, or industry specialists can bring new perspectives and mitigate risks. Boards should have a process for identifying when external expertise is needed and for selecting the right consultants and advisors to ensure the best outcomes.
“The board is essentially the ultimate decision-making body of an organisation, the quality of which defines its very effectiveness. The boardroom ought to be the furnace that heats up robust debate and constructive diverse conversations, ultimately refining the best decisions for the good of the body corporate.” - Institute of Directors
  1. Encouraging Diverse Perspectives:

    Diversity in the boardroom leads to richer discussions and more innovative solutions. Boards should actively seek diverse members in terms of background, expertise, and viewpoints. Creating an inclusive environment where all members feel valued and heard is crucial. Practical steps include setting up diversity and inclusion committees, offering training on unconscious bias, and ensuring diverse voices are part of every discussion. This approach not only enhances decision-making but also reflects a commitment to broader social and governance goals.

  2. Regular Evaluations and Continuous Improvement:

    Regular evaluations are key to maintaining a high-performing board. These evaluations should assess the board’s overall effectiveness and the individual contributions of its members. Grounded Governance’s Board Healthcheck, developed by Future Directors, offers a comprehensive tool for this purpose, available exclusively through Grounded Governance in New Zealand. Evaluations should lead to actionable insights and be followed by tailored development plans to address identified areas for improvement.

  3. Building Trust and Collaboration:
    Effective decision-making is built on trust and collaboration between board members and management. Boards should foster a culture of openness where constructive feedback is encouraged. Regular, transparent communication helps build trust. Practical measures include holding regular strategy sessions, team-building activities, and creating mechanisms for conflict resolution. By strengthening these relationships, boards can improve their collective decision-making capabilities. 

Adopting structured, informed, and inclusive decision-making strategies is crucial for boards, especially in challenging times. By leveraging external expertise, fostering diversity, conducting regular evaluations, and building strong relationships, boards can navigate uncertainty and drive their organisations toward success. Grounded Governance is here to support boards in achieving these goals with tailored solutions and expert guidance. 

For more insights and support on improving your board’s decision-making processes, contact Grounded Governance today.