The Basics of Board Committees
Boards are the captain of their proverbial ship when it comes to running an organization. However, the board can’t steer its vessel strategically without the help of committees. Board committees help directors accomplish important work with the help of a subset of smaller groups tailored to an organization’s needs. All organizations are unique and so are their board committee structure. However, some best practices are in place for committees including structure and leadership.
Standing and Ad Hoc Board Committees
Organizations usually use a variety of smaller groups to help delegate governance matters, new releases, or tackle concerns. Standing and ad hoc board committees are part of that process. Standing committees sometimes referred to as operating committees, are used on a continual basis. In essence, these committees are a permanent fixture for the board. They can be formed by clauses in the board’s bylaws or in the operation manual.
Ad hoc committees are formed for a limited time period to address a specific need. After the task is completed by ad hoc committee, the committee is dissolved. They function solely to complete their goals, so the time period they function is unique to its purpose. Ad hoc committees are formed to amend a board’s bylaws, recruit new talent to develop a strategic plan, or launch a new division or product.
The majority of a board’s work is done through permanent standing committees. “Only ongoing board activities warrant a standing committee,” says BoardSource. “Other activities are best addressed by time-limited task forces, which are efficient and utilize board members’ time, interest, and expertise in a meaningful manner.” Boards also have the option to use task forces and advisory counsels in addition to ad hoc committees.
Board committees are structured with a chair and vice chair to provide strong leadership for the members. The committee chair and vice chair require reporting goals and progress to the board. They also have to schedule meetings, create agendas, record meeting minutes, and any other duties to keep the committee on track for deadlines and maintain compliance.
Board members themselves usually sit on more than one committee depending on the size of the board and prior commitments. Committees should be structured with enough participants to conduct the work required. Some best practices allow board members to rotate through a variety of committees to gain insight and understanding of the processes. However, to avoid burnout, some boards only require members to sit on one committee which gives its members the ability to develop and expertise in that area.
Board Portal Software Can Help Lessen the Workload of Board Committees
If serving on a board and serving on a few committees sounds disorganized, stressful, and overall time-consuming- you’re right. Choosing to add your industry expertise to help further an organization is an honor and a full-time job. But board portal software, like BoardBookit, makes serving on committees organized and easy.
For starters, BoardBookit is one easy to access application that houses all committee documents securely. Committees can easily keep all documentation stored, organized, and accessible. With any time, anywhere access on mobile and web apps, committee chairs and members can view documents on the go, send proposed meeting times, RSVP to meetings, and sync to their personal calendars with one click.
Committee members can easily annotate, sign off on documents, vote on decisions, and collaborate through secure discussions functionality. However, the most important feature BoardBookit offers is unlimited users and committees. So whether an organization needs access for standing committees or newly formed ad hoc committees, the ability to add multiple users without additional cost is always available.
Board Committees Designed for Optimal Performance
Having the perfect balance of committees is also about the perfect balance of board members. Boards can be too big or too small. Boards that are too large often find themselves struggling with engagement, decision making, and executive committees too powerful to function properly.
Small boards may not have enough diversity to provide meaningful insight or lacking the power needed to move business and the organization forward. Learning when and how to appoint committees also falls under this umbrella. “Just because it’s important doesn’t mean you need a committee for it,” says Board Source. The following committee structure is best suited for a mid-sized board.
Executive Committee: The executive committee is comprised of members with the same affirmative action as the board itself, but is able to meet outside of regular board meetings to make important decisions. The executive committee also advises the CEO and acts as a liaison between the board and executive leadership.
Audit Committee: Audit committees work during the fiscal year and enlist the help of outside auditors to work with the organization to receive the audit report and management letter. They also discuss these documents with the board. The audit committee also audits the expenses of the board and CEO. It’s imperative that members of the audit committee have experience and competencies in financial matters.
Governance Committee: The governance committee’s duties are related to the board itself. This committee is responsible for board recruitment, orientation, self-assessment, continuing education, and board management.
Finance Committee: The finance committee often overlaps with the audit committee. Finance committee members oversee the preparation of the annual budget. They also keep track of the performance of the organization and its budgeted revenues and expenses.
These standing committees are a best practice for boards in every industry. By creating structured committees, organizations are better able to delegate key tasks to groups of experienced individuals and make business happen faster and more efficiently. Board portal software also helps to organize and streamline board committees.
Ready to get started?
Schedule a live demo and discover the BoardBookit Difference.
Interested in Learning More?
Read the latest board governance resources from our blog.