As board work becomes more intense, technical, and specialized, the burden is increasingly shifting to boards' committees. But are your committee structures, makeup, and leadership up to the task?
- Start with a fresh, professional take on what each committee is supposed to do, beginning with the committee charters. Board pro John Fletcher, of Delta Consulting Group, sees charter rewrites focusing on "criteria for membership, composition, self-assessment, and evaluation; putting their agenda together; what red flags they should be looking for; and how they get their information. Boards are taking a much more professional attitude about getting the right people and defining their roles."
Try this: take your charter descriptions for audit, compensation, nomination, and other committees, and ask if they would be detailed enough to fill comparable jobs in corporate staff.
- Who actually writes the committee charters? While the committee itself often drafts these (subject to approval by the full board), it may be wiser if the entire board writes the charters, allowing better specializing and coordination of the committee's role. "I don't think the committee itself should handle its charter," says J. Richard, a California-based board consultant. "These committees are working committees of the whole board, so they shouldn't have autonomy. Everything needs to go back to the full board."
- Take a far tougher look at committee assignments and leadership. "It's bad practice just to rotate people from committee to committee" says Ron Zall of the Corporate Directors' Institute in Denver. Though smaller boards means there will likely be committee overlap, pulling a savvy finance pro off your audit committee just for the sake of variety doesn't make sense today. Leadership is even more crucial. "A good chair helps to focus and frame issues for the committee" says Zall, "so pick your best. If they're good, your committee will be good. Don't just tell someone that they're chair this year because it's their turn."
- With the work of these committees growing so technical and serious, don't demand that committee members do everything themselves. Boards are budgeting extra funds so committees can contract for needed outside consulting help. John Fletcher observes that "committees are looking for more outside expertise on things like compensation, audit, and legal issues. Some consultants are starting to work exclusively with boards on these needs," which helps avoid conflicts with what management may want to hear.
Copyright © 2000 Ralph Ward's Boardroom INSIDER