A Guide to Board Decision Papers

Decision papers are vital in contributing to an organisation’s success. Why? Well these reports arm board directors with the information they need to interpret, shape and make the choices that mould the company’s future. In this white paper, the BoardPro team will explore what good decision papers look like, and how you can create them.

The questions we will address in this guide include: 

1. Why are decision papers so crucial? 
2. Where do organisations generally go wrong? 
3. What do good decision papers look like? 
4. What is needed to implement and scale an effective decision-making process? 

Key takeaways 

1. Research shows that effective decision-making at higher levels within the organisation is actually powered by high-quality processes rather than data. Done well, decision papers can really help improve and provide evidence for this process, in turn enabling directors to challenge, shape and make higher-quality decisions.
2. Too many decision papers concentrate heavily on data and its analysis. While they are thorough and well-researched, they do not demonstrate a consistent, robust decision-making process. This makes it more difficult for the management team to delineate its case, and for board and committee members to make decisions with confidence.
3. Good decision papers lay out a robust decision-making process, but without pouring unnecessary details to the reader. They: 
   • State clearly what is being asked of the board. 
   • Provide context for decisions, such as why this opportunity, why now, etc. • Outline the proposal succinctly, while anticipating and responding to the questions in the reader’s mind. 
   • Share insight on the other options considered. 
   • Lay out a clear plan for making the decision happen.
4. A consistent framework is a great starting point. Our straightforward checklist will help you communicate a robust decision-making process to your board or committee. With our framework, you will be able to scale this process throughout your organisation in no time.

What drives good decision-making at board level? 

While managers who possess strong analytical skills and good judgement may seem to possess the ingredients needed for good decision-making, those traits alone aren’t actually enough. Often neglected, the third ingredient – a solid decision making process – also plays a crucial role in good decision-making.

A study carried out by McKinsey found that, surprisingly, it is not the volume of research we conduct or how much time we spend on conducting the research that determines whether a decision will be a good or bad one. Instead, what actually matters most is the quality of the process we follow to reach the decision.

But it doesn’t just matter a little more – it matters a lot more.

According to the research, “process mattered more than analysis – by a factor of six.” Despite these results, thousands of board packs across the world, confirmed by hundreds of board and committee members, indicate that only a small portion of decision papers properly demonstrate a robust and effective decision-making process.

Yes, these reports and papers are thoroughly researched and all-inclusive, but do they offer enough insight into the process behind the decision-making process to instil the confidence needed by directors to make good decisions? Not usually.

But on the bright side, adding a robust process to your decision papers is simple, and it is one of the easiest ways to enhance your organisation’s decision-making. Continue reading to discover how you can follow the right structure and step up your decision-making

What do good decision papers look like? 

So how should you structure your decision papers and take your readers through your decision-making process? And how should you organise and record information cogently and build confidence in your readers?

Well, we recommend you answer the following five questions while writing your decision papers. 

1. What am I asking of you?

Anyone familiar with the decision-making process knows that decisions are rarely made within the span of one conversation or meeting. Usually, they are discussed several times and over several stages, so it’s easy to lose your readers.

Therefore, being explicit about exactly what you need from the readers and why you are sharing the information can really help keep your readers engaged over the course of the decision-making process.

For example, you may choose to discuss whether this paper is a:

• A “visibility” paper – are you sharing information to prepare your board or committee for a future discussion or decision?
• An “input” paper – do you want them to have a discussion?
• A “decision” paper – do you want them to make a decision?

Clearly stating what kind of report you are presenting can really simplify the discussion process for your board or committee, so be sure to include what you are asking of your readers.

2. What is the need or opportunity, and why now? 

Once you have informed your readers what you need of them, begin by explaining why this decision is important and required in the first place. Be sure to also explain why it needs to be approved now rather than in six months or in a year’s time.

A great way to put the decision into context is to fit it within the organisation’s overall strategy. This will help your readers, particularly the non-executive directors, understand the importance of your proposal, while also showing that you all are on the same page.

3. What do we propose to do and why? 

Next, introduce your proposal. It is crucial that you show that you have followed a logical and consistent rationale. You can do so by outlining the important aspects of the business, such as forecast costs and benefits, and demonstrating that you have considered the risks and how to mitigate them. You must also indicate that you have thought carefully about the consequences of the decision on all relevant stakeholders over the long run.

There are a number of considerations that board members generally expect to see, so be sure to check that your papers include the following:

Assumptions: 

Where are your predictions coming from? What makes them credible? While there is no need to get too deep into the details, it is important to share your assumptions and reasoning so that your readers can see if they reach the same conclusions.

As a board member, you are not there to challenge the numbers. Instead, you are there to challenge the drivers behind the numbers. Your board directors want to know and discuss the underlying assumptions behind a proposal, not dive into a spreadsheet.

Risks: 

Rarely any decisions are completely risk-free, so what does your board need to worry about and consider before making a decision? What can be done about the risks?

So as you present the risks and potential struggles of the decision, you are painting a clearer picture of the potential consequences of the decision. Be sure to also discuss the mitigation processes, likely outcomes and potential upsides and downsides. It is all about giving the board a good idea of what else could come with the decision.

People: 

If the board decides to go ahead with the decision, who will be responsible for making it happen? And why should directors trust them to deliver? Very few papers remember to cover the human capital side of things, but it is important to consider the dynamics of culture and people that may make or break your plans.

Competition: 

Last but not least, you must also consider what others in your industry are doing. As with anything in the business world, there will always be competition. With this, you will always need to remain competitive. So how are your competitors’ decisions influencing the choices you need to make? Organisations have a natural tendency to focus on themselves only, but good decisions cannot and should not be made in a vacuum.

4. What options did we consider? 

Just as you have to be detailed with your assumptions and risks, you also have to be detailed in stating the other options you have considered. Board and committee members need to know what other options there are in order to ensure they are making the right decision.

While it may feel risky or counterproductive to mention the possibility of doing nothing, rejecting the proposal or postponing it, it is important to show the directors that you have considered these other options head-on. This will help make them feel more confident about the decision they are making. That said, don’t dedicate too much of the report to alternatives. All you need to do is set the scene.

5. What do we need to do next to progress? 

Finally, suggest the next steps after the decision will be made. List the steps involved as well as the financial and human resources required to implement them.

What about length? 

Remember that you want to demonstrate to the board or committee the quality of your thinking. How did you reach your proposed option and why? So rather than dwelling on the quantity of research and data that support your proposal, keep the paper brief, concise and to the point.

An effective decision paper should be no more than four pages long, excluding a one-page executive summary. 

So What? 

When it comes to decision papers, there is no one-size-fits-all. Nonetheless, a consistent framework is the key to providing a good starting point. This will encourage your organisation to think more deeply about the choices they are asking their board and committees to shape and make, and in turn, help your organisation succeed.

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