Putting Your Board Committees to Work

Putting Your Board Committees to Work (from Boardroom INSIDER, 1/23)

In my research and speaking on boards and governance, I’ve seen one worldwide shift that is large and transformational, but still flies under the radar. This is a slow-moving, but foundational change in how corporate boards function, a shift away from work at the full board level, to more and more functional boardwork in committees.

 As with many big, tactical aspects of governance, the growing role of committees is so basic that it tends to be overlooked. Yet consider how much more of your personal board time today is for committee meetings, rather than the full board. Boards of directors have taken on (or been dumped with) ever-more tactical tasks over the past couple of decades. These are not top-down, strategic discussions, but rather procedural nuts and bolts – compliance, disclosure, dealing with far tighter regulation of financials, compensation, legal demands, filings, and so on.

 In short, boardwork has gone from an amateurish pastime to become ever-more professionalized. As business management has taught us over the past century, if you want jobs done more professionally, you specialize talent and processes. In global corporate governance, this means reshaping oversight from a group of generalists in the boardroom into separate committees able to craft processes and structures for better monitoring and fulfillment on targeted tasks. You’ve all seen how the heavy lifting of governance now takes place at the committee stage, with audit, compensation, nominating/governance, risk and other designated panels actually digging in at a functional level that only company managers handled a generation ago.

  Unfortunately, most boards are still left to make this restructuring work on their own. Auditors, comp consultants, legal firms, and company staff can provide data, medians and advice the committees need. But the committees are left to themselves to sort out their own work flow, training, structures, leadership, information flow and professional standards. The well-meaning, part-time amateurs who make up independent boards are not suited for the tactical role of working committees.

 Of course, this gets into a troubling split on the roles corporate boards should play. Board members are best as mentors and strategic counselors, advising and keeping a check on management. The new board role pushes them further into the tactical, hand’s on monitor role that directors (as well as mangers) dislike. That’s why, as you follow the best-practice links in the following articles, you’ll notice that most encourage committees to focus not just on numbers and compliance, but to also leave time for executive sessions and general discussion. Committees should never let strategic insight get lost in tactical detail.