Richard Butcher explains the importance of making a decision correctly.

I've been involved with trustees and trustee boards for 27 years, but the other day, I experienced a first.

Most trustee decisions are routine and nothing much to get excited about.

Whilst different people may have different views, generally they coalesce around a consensus position. Occasionally, and not unreasonably, there may be a benign disagreement where subjective judgement differs, but these instances pass by in reasonable compromise or with the quorum.

Very occasionally (perhaps half a dozen times in my 27 years) I've seen less benign disagreements, where a properly constructed decision was carried by a majority but one or two trustees were distinctly unhappy.

In these cases, frankly, they either have to put up with it or resign – it comes with the turf (and, incidentally, it is completely pointless minuting "I disagree with that decision" as trustee boards are collectively responsible).

The other day however, I not only had a split decision, but, for the first time, I had to use the Chair's casting vote.

Most scheme rules permit decisions to be made by a majority (perhaps qualified in some way) of the board of trustees, a few require unanimity. In a scheme that makes decisions by majority, it is common for the Chair of the board to have a second or casting vote to be used in a tie-break situation – the key to unlocking an evenly split decision.

It was this power that I had to deploy.

It was a tough call. Ultimately, the two sides of the board had different subjective and irreconcilable views of the argument – but the key was that it was a subjective difference. Whichever way we went, the decision had been properly constructed.

A properly constructed decision contains a number of components:

1. Your scheme rules should tell you in what forum you can make a decision. They will allow decisions at meetings or often, between meetings by written resolution or conference call. They will also set out what quorum and majority is needed. You must follow the formula provided by the rules.

2. The rules may say that some decisions can only be taken if you meet certain conditions, for example, that you take advice first. You must comply with these conditions. Failure to do so may invalidate your decision.

3. Ask yourself if you need to take advice. Some decisions require you to but many don't. Generally, you are not compelled to follow advice.

4. Decisions should be a team effort and can be made after considering the views of other parties, for example the employer.

5. Before making a decision, get your facts straight and have sufficient information to make your decision.

6. The law provides a framework for your decisions:

a. You must direct yourself correctly in accordance with the law and your trust deed and rules
b. You must consider all relevant factors
c. You must disregard irrelevant factors
d. You must come to a reasonable decision.

Although not a legal requirement, the prevailing wisdom is that you should also be able to justify your decision.

7. Make sure you document your decisions. This will usually be as a minute or as a written resolution. There are rules on what you need to record.

8. Make sure those affected by the decision are made aware of it in good time, and that any consequential changes required to scheme practice are implemented.

Finally, while decisions can be tough, it is an iron rule that they have to be taken. Inaction or delay can often be as damaging as a poor decision – so make sure you do take decisions and make sure you do so at the appropriate times.

Exercising my casting vote was tough.

I don't like to leave co-trustees behind on a decision, but it was necessary. The saving grace for them, was to be safe in the knowledge that the decision, even though they disagreed with it, was valid.

Richard Butcher, Managing Director, PTL