Independence, objectivity and the exercise of independent judgement are valuable qualities in both board and committee members.
By Prof Colin Coulson-Thomas
Enhancing board committee performance can increase the effectiveness of a board. Board committees enable more consideration to be given to certain board responsibilities.
Corporate governance codes of practice recommend certain committees such as an audit, remuneration and nomination committee. For many companies committees are vital for undertaking the work of a board and enabling directors to collectively fulfil their duties and responsibilities.
Committees can free up board time to allow focus upon areas that cannot be easily delegated to a particular committee, individual or function. They can also help with the review of certain policies, the monitoring of particular areas of performance and assurance and compliance in areas in which they have special expertise.
Committees can enable directors to play to their strengths in areas of particular interest. They can also widen the range of inputs board members collectively receive and of people they engage.
Through those invited to attend their meetings or be present at them, committees can also allow a wider range of executives and other parties to advise, report to and interact with board members. This can help to increase board and management mutual understanding and alignment.
Committees are not a panacea. Boards should not abrogate their own responsibility for delegated matters. Duplication of committee responsibilities and responsibility gaps should also be avoided.
Getting the relationship right between board and committees is important. This includes committee reports to the board. Periodically, these could also include an overview of issues and trends.
Committee terms of reference should be periodically reviewed by both committees and boards. Committees like boards should also regularly review their own performance and their performance should be reviewed by a board.
Searches for new board members and their selection should take account of committee requirements. Certain competences and qualities may be sought by particular committees. For example, an audit committee might seek members with recent financial experience.
As with boards, how a committee is chaired can be a significant determinant of its contribution, influence and impact. Relationships between board and committee chairs are particularly important.
Certain other relationships may also be significant. For an audit committee, this includes relationships with internal and external auditors. Both should have open access to the committee chair if there are matters they might wish to raise.
More boards could beneficially explore the value of ad hoc committees and/or advisory committees for particular purposes. Inputs to boards can be enriched by appointing people who are not directors to the memberships of certain committees.
Independence, objectivity and the exercise of independent judgement are valuable qualities in both board and committee members. So too are curiosity, the ability to resist groupthink and observe confidentiality and the courage to speak up.
Integrity and the ability to engender trust are especially important. Potential board members might be identified as a result of their committee contribution.
Board and committee members should work for the best long-term interests of a company and its stakeholders. The latter should include the environment, communities and societies impacted by a company’s operations and activities, and future generations.
The governance architecture of a company and its board and committee structure should not become overly complex or cause unnecessary delay. It should be appropriate for what a board is seeking to achieve, the scale and nature of its activities and its stage of development.
Committees like boards need appropriate support and this requires time, commitment and expenditure.
While questioning and monitoring and providing challenge, members of committees and the members of boards should not stray into areas that ought to be the province of executives.
There are many opportunities to serve on committees and so contribute to the governance of an organisation. Governing bodies in local and national Government, academic and educational institutions, the professions, voluntary organisations, and public and other bodies also have committees.
Service on committees generally comes with governance involvement and appointments. Aspiring company directors should seek to obtain committee experience where and whenever they can in preparation for board role and a future career as a company director.
