Abstract

The article proposes a format for an information system geared to the needs of directors making decisions. An important step in the design of such a system is the identification and quantification of the external variables that make up the state of the environment. The choice of an external variable is conditioned by the explanatory power it has with respect to the outcome of the corporate operations, and its independence from the actions of the boards of directors and any other level of management within the company. The alternative to top management's developing an effective board, for its own needs and those of the enterprise, is the imposition by society of the wrong kind of board especially on the large corporation. Whether out of fear of an imposed board or of greater numbers of lawsuits, boards of directors will become increasingly involved in the internal affairs of the company. Four Ps for board members relative to internal affairs are suggested. These are policy, procedures, performance, and personnel. The information system suggested in the article aims at providing decision-relevant information for the planning and performance evaluation phase of the directors' job, with emphasis on key external variables.