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A key challenge for charity boards is to ensure their decisions have the desired impact. Trustees must make decisions that will ensure their charities realise their charitable objectives. The hard part is to have a process in place that promotes follow-through once a decision is made.

 

Many trustees are dissatisfied with follow-through

Following through on decisions clearly remains a challenge for many charity boards. Several chief executives interviewed for this research shared examples where boards made similar suggestions twice yet were oblivious to their duplication. Nobody had logged what decisions had already been made, and new board members, in their enthusiasm, did not take the time to find out what initiatives had already been tried. We also spoke to chairs who felt that executive teams were wilfully ignoring board decisions in the hope that the board would not notice.

39% of the trustees we surveyed said the follow-through to ensure that decisions lead to real-world change was moderate or poor. 38% said they would make creating better follow-through their priority if they could change just one thing about board meetings.

What’s stopping effective decision-making?

1. Cognitive biases

Research on decision-making has revealed many cognitive biases – mental shortcuts and assumptions to reduce complexity – that can derail the decision-making process by skewing how the board evaluates information and judge proposals. (Kahneman, D., Lovallo, D., & Sibony, O. (2011, Juni 1). The big idea: Before you make that big decision…. Harvard Business Review, June 2011.)

John Hammond, Ralph Keeney, and Howard Raiffa put it well when they wrote that “When it comes to business decisions, there’s rarely such a thing as a no-brainer. Our brains are always at work, sometimes, unfortunately, in ways that hinder rather than help us.”

 


Common Cognitive Biases

Affect Heuristics: We tend to decide what we want to do before we decide why we want to do it. This leads us to exaggerating benefits or downsides based on whether we like it or not.

Anchoring bias: We tend to give disproportionate weight to the first bit of information we receive. Past events, trends, initial estimates, or seemingly unrelated statistics can anchor subsequent thoughts and judgments.

Confirmation bias: We tend to seek out, and be more receptive to, information that confirms pre-existing beliefs than to information that contradicts our beliefs.

Halo effect: Once an individual or company is branded by experts as ‘excellent’, we tend to assume that all their practices must be exemplary.

Loss aversion: When contemplating risk, we’re more scared of loss than hopeful for gain.

Saliency bias: Salient or memorable analogies to the problem at hand can disproportionately shape problem assessment. We tend to assign an overly high probability to dramatic but highly unlikely events – because they are memorable.

Sunk-cost fallacy: We tend to make decisions in ways that justify old choices, sometimes literally ‘throwing good money after bad’, risking “escalation of commitment” to poor decisions.

What you see is all there is (WYSIATI): We tend to overlook what is missing; our minds automatically fill the gaps to create a coherent narrative.


 

2. The executive not buying-in to the board’s decision

Beyond our own cognitive biases, what limits effective decision-making is often closely related to relations between the executive and the board.

  • Risk-appetite: Many chairs and chief executives we interviewed highlighted different appetites for risk as a key obstacle to gaining wide-reaching support for decisions. While many trustees reported the executive to be relatively open to risk-taking in the current climate and eager to try out new forms of programme delivery or ways of working, boards were generally perceived as more averse to risk.
  • Buy-in: If boards do not involve the staff tasked with implementing a decision then they will often find that their decisions will be implemented half-heartedly, delayed, or even discarded when employees leave the charity.

 

3. The board interfering with implementing decisions

In a climate of uncertainty, some charity boards are uncomfortable with the fact that they are responsible for the effectiveness of the organisation but not in control of how their charity responds to the crisis on a day-to-day basis. This can tempt boards to become significantly more involved in the operational activities of the organisation, beyond their governance role.

One chief executive told us the distinction between oversight and operations had become blurry throughout the pandemic. To cope with the onslaught of critical decisions required at the start of the pandemic, he wanted to join the executive team and a couple of trustees in a newly created crisis working group. This group quickly and unintendedly morphed into a sub-committee of five trustees who, meeting with three executives, were getting deeply involved with the day-to-day running of the organisation. “The dynamic of this group is very different from what was envisaged”, reflected the chief executive. “It now feels like we are under constant scrutiny in our day-to-day response to the pandemic.”

  • Interfering in implementation risks straining relations and derailing effective follow-through.
  • Once a decision has been made, implementation becomes unsustainable if the executive needs to return to the board for every detail.
  • Clear division between oversight and execution is essential for successful follow-through.

It is important that Boards understand their responsibility to provide oversight, not to take charge of execution. Especially under pressure, you need to be very careful not to overstep the mark.

Chair

4. Poor record-keeping and limited board memory

Where record-keeping was poor, board members reported repeating their own work and finding it difficult to hold the executive accountable. We heard examples where the board suggested an initiative that turned out to be strikingly similar to a previous proposal – which was already in the process of being implemented but then derailed by the board’s duplicate intervention.

Sometimes board meetings feel like ground-hog day, and you need to remind trustees what you have already agreed on. That gets a bit frustrating.

Chief Executive

Tips for more effective decision-making

The Covid-19 pandemic has shown many boards that how they make decisions can be flexed, can be adaptable. Now it’s time to ask: What are other times where we could adapt decision-making processes, but we don’t?

Board Development Expert

1. Take a systematic approach to your decisions

Chairs and board development experts we interviewed recommended taking a systematic approach to decisions. This can help reduce uncertainty and free-up decision-making capacities.

  • Area of governance: Is the decision related to laws and compliance, policy and strategy, or people and human issues? Clarity on the area of decision-making can help your board discover whether it is allocating appropriate time to different areas of governance and which criteria may be appropriate to make good decisions.
  • Evaluation criteria: What criteria are you basing decision on? Are you comparing options against their impact on staff morale, what your supporters think, or how well they align with your funders’ goals? Rating different options against criteria can be helpful.
  • Type of problem: Leapwise uses the Cynefin Framework, developed by Dave Snowden for IBM, to help organisations think about the situations they are confronting. It distinguishes between simple, complicated, complex, and chaotic decision-making contexts that warrant different types of responses. (Snowden, D. J., & Boone, M. E. (2007, November 1). A leader’s framework for decision making. Harvard Business Review, November 2007.)

2. Create a decision timeline

For the executive to effectively implement a decision, trustees need to consider it within the context of a longer timeline that includes the necessary research and consultation which will often precede an effective decision, as well as decisions and actions that build on it.

  • Importance and urgency. Create a 2×2 matrix to rate the decisions facing the board in terms of importance and urgency. One board development expert we spoke to said that classifying future decisions along these lines not only helps boards prioritise, it also increases the likelihood that important decisions are handed over during staff turnover.
  • Be clear on what is important and when it must be done by. Create a decision timeline to sequence actions and the necessary decisions preceding them in a way that serves your charity’s wider strategic aims. The executive and board together may want to outline the decisions to be taken over the next 3-6 months in detail and to preview the year ahead as well as your 3-5-year plan in increasingly broad terms.

 

3. Allocate decision roles

Decision-making involves not just ‘the decider’ but also others with clearly outlined roles in the process. For charity boards, they will involve both trustees and members of the executive.

Use the RAPID framework to create role clarity. Make sure each decision-item has a designated person in charge whose expertise match the decision being taken.

Rapid. Recommend: Recommends a decision or action. Agree: Formally agrees to the decision. Their views must be reflected in final proposal (could be no one or several people but clear rationale needed). Perform: Is accountable for executing the decision once made, so needs to buy in (ideally clear, but may be more than one person). Input: Provides input but views may or may not be reflected in final proposal (many people can have this role). Decide: Makes the decision and commits the charity to action (one person only). Rapid.

Role clarity is essential, especially where speed and agility matter. Coordination improves and response times become quicker when role assignment becomes routine. (Rogers, P., & Blenko, M. W. (2006, Januar 1). Who has the d? : How clear decision roles enhance organizational performance. Harvard Business Review, January 2006.) Conversely, when there is ambiguity over who is accountable for which aspect of the process, decision-making can stall.

Chief executives should have very clear limits in their decision-making power. The more you learn about running an organisation, even though you don’t want to feel constrained on a day-to-day basis, the more you realise that, for the protection of the organisation, you need constrains.

Chief Executive

Extra tip: Get input from those who implement

Defining decision-making roles can help with implementing decisions. Within the RAPID framework, those who provide input are typically also involved in decision implementation. Involving staff charged with implementing a decision in the decision-making process makes it more likely they will buy into, own, and ultimately execute the decision.

If you are not able to consult with those who will implement a decision, show you are building your decisions on previously developed strategy, pre-existing data or other metrics that show how the board’s decisions align with your charity’s objectives!


 

4. Clarify risk appetite

One of the risks is that you could have done something great and you didn’t.

Chief Executive

Charities will have different appetites for risk around different areas of operation. Several board development experts we interviewed recommended that developing an awareness of risk appetite across the board and the executive team can help charities identify more opportunities for impactful decision-making.

  • Establish a risk register. Highlight areas where there is considerable risk appetite and areas where the charity is more risk averse (and maybe rightly so). Identify risk owners, mitigation strategies and leading indicators of risks materialising, as well as areas where the executive team and the board disagree.
  • Assess your meeting agendas for risk appetite. Do your meeting agendas focus solely on resource management (e.g. finance) or do they also involve creating and seizing opportunities, such as collaboration within the sector and other ways to increase impact?
  • Recruit for diversity in risk appetite. One chair we interviewed had deliberately recruited an entrepreneur with a considerable risk appetite and found it improved decision-making dynamics on his board. In general, chairs who reflect on board decision-making in relation to risk appetite told us they found it helpful if their boards included people with different appetites for risk.

Focussing on harnessing opportunities as much as managing risk will make for much more impactful organisations. There is more risk to manage now, but UK charities have shown that they are really good at seizing opportunities.

Charlotte Lamb, Strategy Principal at NPC

5. Check for cognitive biases

When evaluating a proposal, check for well-known biases that influence what options are proposed and how people around you react to them.

  • Remember that simply being aware of the cognitive biases does not eliminate them! We cannot eliminate biases at our own volition. However, we can move from interrogating ourselves as individual decision-makers to interrogating the influence of biases within our teams. In the words of the psychologist and economist Daniel Kahneman and his colleagues, “We can apply rational thought to detect others’ faulty intuition.” (Kahneman, D., Lovallo, D., & Sibony, O. (2011, Juni 1). The big idea: Before you make that big decision…. Harvard Business Review, June 2011. https://hbr.org/2011/06/the-big-idea-before-you-make-that-big-decision)
  • Use a checklist of questions to ask about any proposed decision to check for common biases. Use this checklist systematically and in full. The Harvard Business Review have produced a good checklist of quality-control questions.

Interrogating proposals for cognitive biases that commonly affect decision-making may not be appropriate for routine decisions. However, formalised quality control could be essential for decisions that are important or recurring.

Using checklists is a matter of discipline, not genius. Partial adherence may be a recipe for total failure.

Prof. Daniel Kahneman

6. Keep a decision-log

Sometimes, I am spending a lot of time reminding people about what they have decided and done before.

Chief Executive

To avoid duplicating decisions, and to keep chief executives accountable, keep a logbook of decisions that have been made by the board. A decision log also serves as a useful hand-over document for new trustees.

The decision-log could include information on:

  • Decision-roles
  • Timelines
  • Implementation – to help you establish whether decisions are being implemented and test the effect of any intervention you may take to improve follow-through.

Decision-making is not a one-off transaction. It is about organisational culture.

Chief Executive

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