Effective Board Decision Making.ppt

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1 EFFECTIVE BOARD DECISION MAKING Bret Wilson The Triangle Companies An Effective Board Decision Making Process • All board members contribute to the effectiveness of each and every board meeting • Chairman organizes the meeting to allow participation, debate and decision as well as manage conflict and problems • The board works with management to anticipate and provide the information needed for decisions • New members are oriented as to the processes used by the board • Multiple tools are used in choosing the best solution to a problem. The Top Function Of The Board Of Directors Is To Make Good Decisions That Are Best For The Cooperative And Its Members. 1

2 DIFFERENT TYPES OF DECISIONS Strategic • Tactical • • Operational STRATIGIC DECISIONS • Provide the cooperative with a general direction • - term goals and values Determines long • Includes the especially important or risky decisions • Decisions that involve large investments • These decisions tend to be more broad STRATEGIES: A board retreat is a good environment in which to • make strategic decisions and build consensus. TACTICAL DECISIONS • Planning decisions that support strategic decisions • Effective in a medium range time frame • Consequences and costs are less severe than those of strategic decisions, but more severe than operational STRATEGIES: • Knowledge is Power: Anticipate information needs and ask discerning questions before making a decision Make timely decisions and move on • 2

3 OPERATIONAL DECISIONS The detailed daily decisions that run the business • • Have an immediate impact on the business • Low cost, low risk • Consequences and costs are minimal STRATEGIES: Primarily the responsibility of management • Should support policies and goals of the • cooperative. • Can be set as a standard operating procedure Goldilocks and the Three Boards • One board is too weak • One board is too strong • This board is just right Strength in decision making determines a board ‘ s SUCCESS THE TOUGH ONES • Close an unprofitable facility. • Invest in major renovations. • Merge with another cooperative • Discontinue operations. 3

4 Questions to Ask Yourself in Making a Tough Decision What can we afford? • • ’ t make What will happen if we do or don this decision? • What will be the impact on members, employees, and the community. STRATEGIES WHEN MAKING TOUGH DECISONS • DISCUSS DISCUSS the issue with members and employees. • • CONSIDER CONSIDER you mission and long - range plans • • • REINFORCE REINFORCE the mission and goals • • TALK with other directors who have faced TALK similar situations and find out what they did • ACT ACT like a director, not a producer, and make the • best decision for the co - op PROBLEMS IN DECISION MAKING • “ THE PROBLEM CHILD ” • TIME USAGE CONFLICT AMONG THE BOARD • 4

5 “ THE PROBLEM CHILD ” BEHAVIOR PROBLEMS IN THE BOARD ROOM • Members dominating discussions Arguing just to have their own way • • Being disrespectful to other members Making “ below the belt ” comments • DEALING WITH PROBLEM BEHAVIOR Set ground rules for discussion and enforce these • rules Encourage full board participation • Separate the issues and address them one at a time • • Model good behavior in yourself • Take a “ time out ” from touchy topics if discussion gets heated When discussion resumes, summarize what was • said and note areas of agreement TIME USAGE Do Do • Encourage effective discussions • Make an agenda and stick to it Don Don ’ ’ t t • Allow discussion to veer off course • Deviate to far off of the agenda Spend too much time on one decision • 5

6 80/20 RULE “ ” Decisions Will THE TRIVIAL MANY Take Up 80% Of Your Time And Yield 20% Of The Results THE VITAL FEW ” Decisions Will Take Up “ 20% Of Your Time And Yield 80% Of The Results TIME EFFICIENCY TRAPS! • Opinion Trap! • Information Trap! • Committee Trap! • Policy Trap! DON ’ T GET TRAPPED IN YOUR BOARD MEETING! BOARD CONFLICT • Conflict is a normal part of team decision making • Dissent may be a sign that the board has drifted off course and must be brought back. • Disagreements have the potential to add information and perspective • Too much conflict can cripple board effectiveness 6

7 CAUSES OF CONFLICT • INFORMATION OR INTERPRETATION LACK OF INFORMATION • VALUES • • PROCESS PEOPLE • PERSONALITIES • • ACTIONS DEALING WITH CONFLICT IN DECISION MAKING • Distinguish between “ healthy dissent ” and “ ” crippling conflict • Start with an assumption of a common goal • Discuss broader issues • Identify areas of agreement • Clarify points of view • Consider the evidence of BOTH or ALL sides before committing yourself to a position. IMPROVING BOARD DECISIONS 7

8 TOOLS FOR BETTER DECISIONS - Con Chart Pro • • Matrix Assessment • Outside Consultant - CON CHART PRO • Ensures that all advantages and disadvantages are discussed • Encourages the board to consider both sides before committing themselves • Board works as collaborators summarizing information rather than competitive debaters. Example Pro - Con Chart RENOVATE THE OLD ELEVATOR INSTEAD OF BUILDING A NEW STEEL TANK CONS PROS Shorter time to Higher per/bushel costs completion Retain segregation Slower throughput speed potential Easier to monitor grain condition 8

9 MATRIX ASSESSMENT • Separates complex decisions into components • - offs Clarifies the trade MATRIX ASSESSMENT Build Rent Renovate Elevator New Tank seasonal COST - - ++ TIME - + -- LONG RUN + ++ - EFFICIENCY THIS IS YOUR PERSONAL ASSESSMENT OF THE DIFFERENT ASPECTS OF A SITUATION. WORKING WITH OUTSIDE CONSULTANTS • Consultants often identify options not previously considered. • The board still holds the responsibility for the final decision. • Consultants are a tool for better decisions not easier decisions. 9

10 Use of Consultants Today in Oklahoma Cooperatives Written Reports Submitted to the Board 7% 10% Board Sub-Committee Manger or Staff Outside Consult. 45% 38% No Written Reports Used WHEN TO BRING IN A CONSULTANT • WHEN the problem falls outside the company ’ s technology, experience and activity • WHEN the problem calls for impartiality and objectivity • WHEN the board needs information that is not readily available to them • WHEN a problem persists which management has tried to resolve and failed CRITERIA FOR SELECTING CONSULTANTS • Expertise • Training • Background • Style fits your culture • References Check with former clients • 10

11 WORKING WITH THE CONSULTANT Define The Goals • Define The Scope Of The Project • • Specify The On - site Work Specify Follow • up - • Specify Costs • Specify Deliverables • Provide A Contact Person • Provide Detailed Information • Provide Support Staff AFTER THE CONSULTANT LEAVES • Discuss the consultant ’ s recommendation • Discuss any new options or information uncovered by the consultant • Determine whether to implement the recommendation • If the recommendation is to be accepted, the sooner the better A STRONG BOARD AND A STRONG MANGAER: A WINNING TEAM! 11

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