Board of Directors’ Duties: Tip 8 – Role of Committees
Boards often use committees to get work done that would seem rather onerous to be doing at board meetings. Committees can be very helpful to the board. A small group, 2 to 5 people, can research information on major issues with which the board has to deal. They can take the time to explore what’s happening with the competition, to see what leading edge techniques are being used in the industry, to look at the financial impact of a change, to consider pros and cons of alternative approaches, or to identify multiple options for moving forward on an issue. Often what happens next is the committee spends a lot of time deliberating about which option is best. They may consider four alternatives quickly narrow the field to A and B, and then spend hours trying to whether to recommend A or B to the board. When they finally decide B is the best choice, the committee reports at the next board meeting and gets bombarded with questions. “Well, why did you pick this, and have you considered that, and what about this?” And then maybe the majority of the board says “No, we’re not going to go with B”.
What the majority of committee members have told me when that happens is they get deflated. “Why did the board ask them to do a job if they didn’t want them to? I wasted my time. Here we are in a board meeting spending even more time on the issue. Our valuable hard work isn’t even valued.”
Another option is that the committee does the work and the rest of the board says “Yeah! The work’s been done!” “This is an issue that I really don’t want to get into, I don’t understand it so let’s ratify the committee recommendation”, and in 30 seconds the board has officially voted to accept the committee’s recommendation, making a binding decision for which all the board members are liable, and moved on.
I suggest that neither of those results are ideal. The reason the matter has to be brought back to the board is it’s considered of critical strategic importance and, therefore, the whole board needs to think about it. All the board members need to understand this topic. However, it’s very frustrating for committee members that may have spent days trying to decide between option A and option B to have a slap in the face, it seems, by their recommendation not being accepted.
We suggest an alternative. Assign the committee the job of researching, fleshing out options, considering the pros and cons of each option, and summarizing background information. Then, several days before the board meeting the committee sends the analysis they have done, and the research and thoughts that they’ve gathered, to the board members for review. There is no recommendation in the committee’s report. The board members now have to review the research that the committee has put together and, before the board meeting, consider which option serves the organization best.” Then at the meeting there can be a whole board dialogue regarding which option is best.
The committee has added great value to the governance process by doing due diligence and gathering background information, and all the board members fulfill their role of actively participating with diverse perspectives in decision making.
Consider giving your committee the job of gathering information that will equip the whole board to make an informed decision and you will be travelling your pathway to governance excellence.
To get a free training for your board, please visit: http://www.BoardofDirectorsTraining.com