Leading Boards N°1 Basics on Boards of Directors | Page 7
The structure of the Board of Directors is a key issue for good everyday governance. This involves the establishment of committees for managing the work load especially for large Boards. An important part of the decision making process and of the Boards work is done through these committees. Often committees are formed when the issues treated by the Board are too numerous or require special skills such as supervision on financial statements or compensation plans.
What is a committee supposed to do?
A Board committee can deal with a specific matter or general issues and make recommendations to the Board for diligent decision making. Active committees meet regularly and make better Boards. Reporting necessary information and recommendations to the Board allows the Board to spend more time on strategic discussions.
How to establish a committee?
The decision of forming a committee should be part of the agenda of a Board meeting. Discussed by the members, they must define a clear purpose and goals for each committee.
There are two sorts of Board committees:
• Standing committees: used for ongoing work such as an Audit committee, reviews the finances of the organization and relations with auditors; a Governance committee, finds new directors and manages the organization of the Board; and Compensation, studying the human resources, remuneration of the CEO or succession planning.
Board committees why, when and who?
The structure of the Board of Directors is a key issue for good everyday governance. This involves the establishment of committees for managing the work load especially for large Boards. An important part of the decision making process and of the Boards work is done through these committees. Often committees are formed when the issues treated by the Board are too numerous or require special skills such as supervision on financial statements or compensation plans.
What is a committee supposed to do?
A Board committee can deal with a specific matter or general issues and make recommendations to the Board for diligent decision making. Active committees meet regularly and make better Boards. Reporting necessary information and recommendations to the Board allows the Board to spend more time on strategic discussions.
How to establish a committee?
The decision of forming a committee should be part of the agenda of a Board meeting. Discussed by the members, they must define a clear purpose and goals for each committee.
There are two sorts of Board committees:
• Standing committees: used for ongoing work such as an Audit committee, reviews the finances of the organization and relations with auditors; a Governance committee, finds new directors and manages the organization of the Board; and Compensation, studying the human resources, remuneration of the CEO or succession planning.