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What are board committees?
- Board committees are smaller groups of people who advise the board on a specific area of operations.
- Board committees represent an essential part of the corporate governance process and should have clear reporting procedures and scope.
- Board committees must have more than simply vague objectives, and committee meetings should be well managed by an effective chairperson.
What are board committees?
The board can appoint committees based on what it wants to achieve for the year.
These committees then help the board achieve its objectives.
Keep in mind, the number of committees and who sits on them should be reviewed regularly to make sure there are no overlapping responsibilities.
There can be standing committees, which operate on a more permanent basis, and ad-hoc committees, which are in place for a particular time frame and can then be disbanded once an objective has been achieved.
Ad-hoc committees could also be called task forces.
Committee chairs should provide leadership to the committee and help translate the board’s goals into an agenda for committee meetings.
Some examples of the types of committees that are often set up include:
- finance committees,
- communications committees,
- audit committees,
- governance committees (that focus on recruitment and board management),
- and membership committees.
Why have board committees?
The board can accomplish a lot of its work through committees, and they are an effective way to delegate work.
Committees can focus specifically on areas such as governance, internal affairs, or external affairs.
A committee’s size will depend on the board’s needs, and it is helpful to recognise that the more committees you set up, the more meetings will need to take place.
Committee members should be selected based on their experience and skills.
Each board member should serve on at least one committee, but preferably no more than two.
Essentially, a committee provides expert advice and counselling to the board.
However, the committee’s suggestions still need to be approved by the board (they are not obligated to go with a committee’s advice).
What does an effective committee look like?
The main characteristics of an effective board committee should be that it:
- Has a clear purpose and goals
- Has a chairperson
- Is aligned with the board, and its members understand the time commitment involved
- Understands its role is an advisory one and that it doesn’t make decisions
- Has an evaluation process
Some organisations operate a zero-based committee structure which means that each year is started with a clean slate, and new committees are created only as needed.
This avoids stagnation and ensures that unnecessary committees are dissolved.
Some boards may find that no committees are necessary and that tasks can be effectively delegated to individual board members; however, this would take a lot of commitment from every board member.
What are the main benefits of having board committees?
Today, one of the most sensitive issues involves directors’ remuneration, and a committee focusing on this area would be considered an essential element of good governance.
In general, committees bring in different opinions and viewpoints, improve communication, and reduce the workload of the board.