“That’s a big decision. I’m going to sleep on it.”
What kinds of decisions require additional time to consider?
In situations like these, where your decision will have major consequences, you’ll probably take some reflection time to consider your options . By contrast, the choice of a restaurant for tonight’s home delivery doesn’t have the same weight. The consequences are just not that great if you end up disappointed with your meal!
Usually - but not always - we allow enough time to discuss these personal matters with the home team before making a decision.
Should it be any different on the board?
Recently, I was moderating a virtual panel discussion that included Patricia McLeod, Q.C., ICD.D, MBA as one of the participants. Patty is an experienced corporate director, lawyer and compliance officer. She is currently board chair for a number of Calgary-based organizations, director on several other boards in Alberta, and is a member of the Calgary Chapter Executive of the Institute of Corporate Directors (ICD). See Patty’s LinkedIn profile here.
During the panel discussion, Patty used the phrase ‘soak time’ to refer to the process of allowing the details and analysis of a complex decision to sink in before casting her vote. I had never heard that expression before. Those two words just made so much sense. I had a vivid image of soak time being like a sponge or paper towel absorbing it all, before the decision gets squeezed out.
“Just for context setting, soak time can range from having a discussion earlier in a meeting and having the vote called later in the meeting, or it can mean socializing an opportunity or issue at one meeting, seeking perspective and questions and then coming back to the issue at a following meeting.” – Patricia McLeod
So, with this week’s blog post, I wanted to share the phrase ‘soak time’. It really rang true for me when thinking about what we as directors often do before making a big decision. Do we reflect on our information and decision criteria long enough?
I asked Patty a couple of questions about soak time, and she was kind enough to reply. Thank you, Patty! You can read her responses below.
Q. On what type of subjects or topics do you find it most beneficial to pause for reflection and come back to make a decision?
Patty. I find having soak time to be helpful for the following:
Q. As a board chair, what have you noticed from your board members when you carry a topic forward to the next meeting? Do hardened positions soften up? Or vice versa?
Patty: I think soak time is best used tactically if a decision has a high level of emotion or risk involved. Most times, I think directors are not softening their decisions but, perhaps more importantly, they feel that the decision has not been hasty or rushed, which results in a better sense of comfort and buy in.
When considering several options, taking some time to think about which option is right for the board is really all about risk management, with a focus on mitigating risk and preventing loss. We will likely not know all the details of each option or the full range of consequences of the decision. But we can help mitigate the risk of a poor decision by both considering the decision criteria and doing a gut check to confirm how we’re thinking about what’s best for the organization.
For individual directors, the decision comes down to how you will vote on an issue. But, before it comes to a vote, board chairs want to ensure all directors feel that they’ve been heard and can live with the board’s decision. Boards often prefer consensus decisions, but it doesn’t always turn out that way.
That said, when consensus is lacking, the board might benefit from more soak time. A good board chair would likely suggest further discussion to reduce the risk of a divided board on a key decision.
“Good leaders … are curious. They engage in what I call a “soak period” before they reach a conclusion about what the input means for their company and how to act on it.” – Jeffrey Immelt, former CEO of GE
As Patricia McLeod mentioned, key elements of a strategic plan such as core purpose, the central idea, mission, vision, values, etc. – these all benefit from a period of reflection before final approval.
I recall a particularly complex planning session where the CEO did a fantastic job of getting buy in on the new mission, vision, and values statements – the higher level of strategic direction – by slow walking the process over multiple board meetings while continuing external consultations with key stakeholders whose support was essential.
Each time the board came back together to review the next iteration, they saw their previous input reflected back to them, and they were then open to considering another tweak that might have been suggested by a key stakeholder. Rinse and repeat.
This went on for a few meetings until approval. Since then, no one has questioned the final version or wanted to revisit where they landed. Soak time for all was truly beneficial toward gaining consensus.
When it comes to making sound decisions, the savvy director has an opportunity to support the board chair by considering whether the group has had sufficient time - especially if one or two board members have been silent on the matter and reluctant to speak up.
Many of these decisions are supported by the due diligence of a board committee. For those of us who were not part of the in-depth committee discussions, we still have the right to pose questions that might not have been considered and that could add a relevant dimension to the decision.
The savvy director will also keep an eye out for Groupthink and cognitive biases in the decision-making process. (Check out our previous blog posts 'Banish Groupthink from the Boardroom' and 'Biases ‘R’ Us' for more on those topics.) The soak time needed to deal with Groupthink and unconscious biases may be just a few extra minutes of discussion, taking care to ensure the risks have been identified, mitigated, or accepted.
Here’s an illustration from my own experience. I was once part of a committee discussion to help determine a CEO’s bonus during a difficult year. After the meeting, I came across information suggesting that employee bonuses had been set aside due to the organization’s financial situation. Before reacting, I allowed myself some personal soak time to think about the potential impact and how to bring it forward to my colleagues on the board. Fortunately, it was not too late to have a follow-up discussion. It was the right thing to do to ensure we were all aware of the potential risks in making our decision - I had to consider that maybe I was the only one out of the loop!
By the way, are you wondering how the bonus issue was resolved? It turns out the board was contractually obligated to pay the CEO bonus, but all the other employees didn’t have that benefit. The board authorized the bonus, and the board chair engaged the CEO in an honest discussion of the board’s concerns about optics. The soak time had done its job.
The CEO accepted the bonus and proceeded to divide it among the eligible staff.
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Scott Baldwin is a certified corporate director (ICD.D) and co-founder of DirectorPrep.com – an online hub with hundreds of guideline questions and resources to help prepare for your next board meeting.
Share Your Insight: Can you think of past board situations that benefited from extra time to reflect on the decision being made?