This excerpt was originally sourced from member Damian Mitsch's blog here. 

Today, I’m musing about what makes some directors operate like supreme court justices that go charging into management territory like a Kardashian at a fame fest. We are mostly all aware that Board can make all the decisions in an organisation if they want to. We also know that doing so is highly ineffective and at times destructive. However, so often directors either individually or collectively will have an issue come up, often through management reporting, and instantly they want to make a ‘decision’. Anyone who’s worked in management for a board will hear the words ‘why did the board get involved’ in their head, because that’s the question they’ll often get from staff. So why did the board get involved?

Let’s take a look at some tips for boards wondering if they’re making the right types of decisions.

1. Is the decision a matter of strategy?

Yes, we understand that EVERYTHING can be argued as a matter of strategy these days, but will the board be looking to amend the strategic plan as a result of a decision? How often does a director argue something is a ‘matter of strategy’ but then can’t articulate what needs to change in the strategic plan. If there’s no change to the strategic plan or its relating measures, chances are the board is getting involved in directing the ‘how’ rather than the ‘what’.

Tip 1. Ask yourself what changes might need to be made to the strategic plan before arguing an issue is a matter of strategy.

2. Is it a matter of board level policy?

What’s ‘board level policy’ you ask? Board level policy should to set parameters for risk and management activity. For example, if you want management to maintain cash flow at a certain level, then set a policy outlining the control measures. If funds need to be invested in certain asset classes with particular ratings, then specify that and let management get on with it. If there’s a reporting policy that’s needed to give the board confidence that governance parameters are being met, then establish one. That’s board level policy. I’m always perplexed when I hear management talking about boards wanting to make decisions about the most mundane things. Eg. which Australian AAA rated bank should our term deposit be invested with. I can’t imagine how a board in most cases adds any value to that decision once a policy is in place to invest surplus cash within set parameters in a secured account in an Australian AAA rated bank. Why is it a board decision then? Usually because the board has determined it to be so! The same organisations rarely find good management wanting to work with them for any length of time.

Tip 2. Ask which board level policy needs amending as a result of a decision. If there’s no board level policy that needs amending, then why is the board involved.

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