The Savvy Director blog usually focuses on the director role as it relates to the board as a whole. But in the past few weeks, I’ve found myself spending far more time on my role as a committee member. And that’s not unusual.
With committee work on my mind, it seems like a good time to write about board committees.
I like to include quotations in these blog posts, so I did a quick Google search on ‘Quotes about Committees’. It pains me to say it, but apparently nobody has ever had anything good to say about committees. Here's a sample of what I found:
“If you want to kill any idea in the world, get a committee working on it.”
“A committee is a group of the unprepared, appointed by the unwilling to do the unnecessary.”
“A committee is a group that keeps minutes and loses hours.”
And so on. You get the picture.
If committees are so universally deplored, why would you want to be on one?
First of all, committee work is an expected part of a director’s role. At the most basic level, board committees exist to help the board fulfill its responsibilities. For that reason, most boards have at least a couple of committees. As a director, you’ll probably be expected to serve on at least one committee in addition to your other board responsibilities.
Committee expectations are an important consideration when you’re thinking about whether or not to serve on a board. At your board interview, you would be wise to ask directly about the time commitments for both board and committee work. You might think six board meetings a year would be quite manageable, and then be dismayed to find out you are expected to serve on three committees, each of which holds four meetings a year. Not to mention PREP time!
Committee work is really rewarding if you like to sink your teeth into the details. It gives you an opportunity to work with management folks whom you wouldn’t otherwise have an opportunity to interact with. So, if you do have the time to invest, by all means get involved. You’ll find yourself learning about the organization more quickly and more thoroughly than you ever will by serving only on the full board.
There are board committees and operations committees, and they differ significantly in where their accountability lies. Board committees are accountable to the full board, whereas operations committees are accountable to the CEO. As a director, you can serve on an operations committee if you wish, but be aware that you are doing so at the invitation of the CEO, to offer expertise rather than give direction.
Having said that, let’s focus on board committees.
Basically, committees allow the board to split up its tasks and get all its work accomplished. As a rule, they are not decision-making bodies – they make recommendations to the board, and the board makes the final decision. In some circumstances, the board may specifically delegate the authority to make decisions about certain items.
Committees serve all sorts of purposes, including:
To get all this work done, the board establishes both standing committees and ad-hoc committees.
Standing committees are more or less permanent in nature, and they perform work that tends to recur on a regular basis, such as the annual audit, board recruitment, CEO compensation, etc. Sometimes certain committees are required under governing legislation, or specified in the organization’s by-laws, but others are left to the board’s discretion. Typical standing committees include Audit, Finance, Governance, Compensation, and Risk – these can be combined in many different ways.
Ad-hoc committees exist temporarily for a specific purpose, and are dissolved once that purpose is achieved. For example, an ad-hoc committee might be set up to conduct a CEO search, amend the by-laws, or oversee strategic planning. Your board might prefer to call this kind of committee a special committee, or set up a task force or working group instead – these are all similar structures established to handle specific time-bounded tasks.
So, having board committees clearly makes a lot of sense.
Still, having too many committees can bog down the work of the board and lead to director fatigue. To get the best value from committees, boards should form as few committees as they need to address critical issues.
I’ve seen boards get a little too complacent about their committees. Sometimes they just go along with the same number and type of committees that they’ve always had, without questioning whether it still makes sense.
Board committee structure isn’t set in stone (except, as mentioned above, where they are required by legislation or by-laws.) The board needs to play close attention to its changing needs and the needs of the organization, making sure that its committees continue to meet those needs. Ironically, this work – determining the best committee structure – is often delegated to a committee, namely the governance committee.
The governance committee should periodically ask questions such as:
Board committees – whether standing or ad hoc – also need to be very clear in their directives and scope of work. These are usually formally documented in Terms of Reference that set out the following details:
Clear and accurate Terms of Reference are extremely important in guiding committee work – as long as the committee pays attention!
Recently, I’ve seen a board provide even more clarity by using an idea borrowed from government – mandate letters.
Mandate letters have recently become popular with federal and provincial governments. They outline the policy objectives that each cabinet minister will work on, as well as the pressing challenges they will need to address. These letters are not meant to be an exhaustive list of all the files that cabinet minister will work on. Rather they provide the minister with a constant reminder of the government’s priorities and expectations for their term of office.
When used by a board of directors, a mandate letter provides the opportunity to give clear direction to its committees about its priorities for that term. This approach would be especially valuable if the board wants to assign specific, time-bounded tasks to its standing committees.- beyond what is outlined in their Terms of Reference - instead of establishing ad hoc committees.
Just as every board benefits from conducting regular evaluations, so do committees. Such evaluations can be formal or informal – one practice I like is to alternate between an informal discussion one year and a formal written evaluation the next. When you’re asked to participate, make sure your voice is heard!
And if you’re on a committee that hasn’t performed a recent evaluation, why not suggest one? We’re happy to provide you with a DirectorPrep Sample Committee Evaluation. Just click here.
Evaluations serve no purpose unless they are acted on. Your committee should analyze the results and put together an action plan to address any improvements needed. If changes to the Terms of Reference are involved, keep in mind that these must be approved by the full board.
Leave a comment below to get in on the conversation.
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.
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