Directors’ Decision-making: Working Between a Quandary and a Dilemma

The buck stops here!. In modern companies, the buck stops in the Boardroom. Boards of Directors don’t have the luxury of saying, ‘this is too hard, give it to the Chief Executive to fix!’. Of course, Boards do have the questionable (some would say honourable!) option of procrastination. They can refer a proposed venture that seems a little complex to a Board subcommittee for evaluation, they can refer the proposed venture to one or more members of the senior management team for further evaluation, or they can refer the proposed venture to their external advisers for further evaluation (their accountants and solicitors for example). Sooner or later however, the Board will have to face the music, consider and decide what to do with the venture proposal. This is the point where Directors’ Decision-making: Working Between a Quandary and a Dilemma becomes a serious reality.

Beware the paper war! Executive staff will have submitted copious reports, statistics, graphs, photographs and even videos about the proposed venture for Directors to look at. Directors naturally feel overwhelmed by the sheer volume of information, and often feel inadequate in dealing with such complex matters when their experience is, for example, high level business management, not the detailed minutiae of marketing, engineering or production. In my experience, one of the biggest concerns of Directors is that when they are given vast quantities of documents and supporting information, it simply rings an alarm bell that causes withdrawal into a shell.

Is this a ‘snow’ job? This alarm bell is often considered a signal that this great volume of material contains an ulterior motive and is therefore designed to ‘snow’ the Board into a sense of ‘fait accompli‘ acceptance so that the venture will be approved. The ulterior motive being that the senior management team want this venture approved for their own purposes, whatever those purposes are. Whether that is true or not, many Directors placed in situations of this nature do feel threatened. So the question Directors need an answer to is this: how to cope, sort the wood from the chaff and search for a logical decision-making process.

When I have been placed in this situation, and I have, I try to reduce the issues surrounding the proposed venture to four essential elements, which are:

  • Opportunity: Is there or is there not an unmet community need that can be transformed into a market need where customers will pay money to satisfy the need?
  • Resources: Do we presently have the resources (financial, personnel and materiel) to satisfy that need?
  • Methods: How will our resources (financial, personnel and materiel) be applied to fill the need?
  • Results: How is the profit forecast calculated?

This reduces the vast compendium of information down to its’ essential components, thereby creating a much more amenable environment in which to make an important decision.

What methods or strategies do you use to control your decision-making in an increasingly complex business environment and time-deprived boardroom? I’m sure I could learn some tricks of the trade from your experience. Why not spend a minute or two and give me a heads-up on your ways and means of coping with difficult decisions.

Comments are closed.