How Does a Board of Directors Come to a Decision?

In the business world, a board of directors is comprised of various people appointed or elected to represent the stockholders. In government, the board members represent the interest of the people for which the board was designed. The park board of directors, for example, represents the interest of park goers, donors and volunteers who make the park run. Every decision that the board of directors make must be in the best interests of the people it represents. To accomplish this, the board of directors comes to a decision in a careful, structured manner.

Introducing the Issue

First, the issue must be brought to the board's attention. Anyone can do so, especially shareholders and others represented by the board members. The person or group must go to a meeting of the board of directors, which are publicly advertised. All board meetings are open to the public, except those in which confidential matters are discussed. This includes personnel, real estate and ethics proceedings. At each meeting, there is time established for addressing the public. This is when new issues are brought to the board's attention.

Investigating the Issue

The board almost never makes an immediate decision on an issue brought by the public address. There may be a short discussion to get more information on the issue. Then, it is either sent to a special committee for investigation, or the board's president will set the issue on the agenda for review at a future meeting. Sometimes special committees and commissions are created, based on the issue's severity.

Committee Hearings

During investigation, board members hear from individuals on both sides of the issue. The company or agency's attorney may be brought in to check facts. This usually happens in committee. After finding a solution, the committee votes to recommend a decision to the rest of the board.

Making the Decision

At the next regular board meeting, a report is given on the committee, commission or board findings on the issue. The entire board discusses the issue, including the new information. After that discussion, one of the board members will "move" or recommend to take some action on the issue. Another board member must "second" or agree with the recommendation to trigger a vote. If there is no second, then the issue is dead, but can be brought up again. If there is a second, the board votes. Those in favor of the "motion" or recommendation will vote "aye" or yes. Those opposed to the motion will vote "nay" or no. The board has reached a decision.