2019

Issue 20

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BoardWorks International
Issue 20, 2019

Nine Questionable Reasons for Setting Up Board Committees

Many governing boards make extensive use of committees; others have few, if any. There is no doubt board committees can help to enhance a board’s effectiveness. Too often, however, boards have an uncritical acceptance of their committee structures and are hard pressed to justify their existence. In this article, I note some of the usual rationalisations and why they often fall short.

1. Because of the amount of work the board needs to do

Boards are ultimately responsible for everything that goes on in an organisation. It is easy, therefore, for boards to convince themselves they have so much work to do that they need to farm some of that out to committees. Well, perhaps, but first the board should be clear about the real governance work that needs to be done. Only when the board’s role and what can be justified as essential governance work is clarified can it decide if it needs help from committees. It may just need to be clearer about what it is that only the board can and should do, and what can be safely delegated to the chief executive.

2. Because of the board’s size

Larger boards (say 10 or more members) tend to have greater difficulty addressing difficult issues and being decisive than smaller ones. However, delegating decisions for which the full board is accountable to subgroups of the board (i.e. committees), may create other problems. A common problem with ‘executive committees’, for example, is the creation of a ‘board within a board’.

3. Because we need committees to monitor and assist staff work

One of the most common mistakes made in the design of board committee structures is to match them to the functions performed by the chief executive’s organisational structure (e.g. marketing committee, finance committee, operations committee, etc.). This almost always leads to committees becoming ‘mini’ boards with divisional managers subject to committee direction. This confuses staff about where their operational direction is coming from and undermines the board’s ability to hold the chief executive accountable for organisational (or at least divisional) performance. Perhaps even worse, this practice draws the board, through its committees, down into the detail of operational matters – usually at the expense of neglecting its own job.

Boards need to monitor organisation-wide outcomes and hold their chief executives accountable for achieving agreed results. If any discreet part of an organisation is underperforming that is the chief executive’s problem. It is not the board’s job, whether through committees or not, to supervise and help staff do their work.

4. Because we have no choice

It is true that a requirement for one or more named committees may be prescribed by law or regulation. (1) However, notwithstanding a requirement imposed by those prescriptions, a governing board always remains responsible for the value and application of the product of its committees. A board required to have a specific committee in its structure may have quite some choice about the degree of practical compliance with that requirement.

5. Because we are under pressure to follow ‘best practice’

It is easy to confuse ‘common practice’ with ‘best practice’. Best practice is often advocated in a ‘one size fits all’ manner by professional bodies and other authorities. Regardless of what other organisations do, committees can only be justified by the extent to which they assist a specific board to be more effective. Simply following the practice adopted elsewhere, no matter how widely recommended, is to delegate (abrogate?) the board’s thinking to others.

6. Because committees reduce our governance costs

Committees are sometimes used as device to avoid the cost of bringing all directors together to meet on a regular basis. This argument is particularly raised when some directors live ‘out of town’. The problem here (as with ‘executive committees’) is that it tends to exclude some board members from a substantive engagement with – and influence over - matters for which they are jointly responsible.

7. Because we need to give board members the kind of work they like doing

This rationale is often proposed in nonprofit organisations in which board members are both unpaid and mostly drawn from the volunteer (i.e. unpaid staff) base. The thought is that those already committed to the organisation should be allowed to continue their interest in the activity that drew them to the organisation in the first place - albeit elevated to the board level.

Well no - working in the business is quite different from working, as a board should, on the business. Board members cannot pick and choose. They share the totality of the board’s responsibilities for everything the organisation does, not just what they are interested in.

Chief executives and their management teams are often complicit in this rationale, advocating for the idea that committees give board members ‘work’ to do that keeps them busy and ‘out of harm’s way’. Ironically, this ‘idle hands’ theory often backfires when committee members start to interfere with assumed management prerogatives.

8. Because our board doesn’t function well enough

While seldom explicitly acknowledged, the formation of committees is promoted as a way of ‘getting on with the job’ when there are board or director performance issues. For example, when board meetings are unproductive because they are poorly run by an ineffective chair. Another common situation is when some board members are considered disruptive or dysfunctional and other board members feel they need to be sidelined in some way.

There are some situations in which a board has limited, if any, ability to influence its membership. However, in many cases the creation of a committee ‘work around’ simply avoids dealing directly with the real issues of board (and director) performance. Grafting a new branch onto the tree is never going to remedy the disease in the trunk. It is likely to eventually affect the graft as well.

9. Because committees provide opportunities to confer privilege or influence

This rationale is another that is seldom explicitly acknowledged. It arises in some organisations because, for example, appointment to a committee may bring additional remuneration. That, in turn, may also represent an opportunity for the board chair, for example, or a ‘dominant coalition’ (2) within the board, to reward supporters. Appointment to a committee may also be perceived to increase an individual’s influence and thus be attractive to someone wanting to advance a personal agenda.

Conclusion

These rationalisations explain why some committees continue to exist even when their true value to the board’s governance effectiveness is questionable. Contrary to the idea that committees are formed to help boards be more effective, the establishment and retention of committees for the wrong reasons can easily compromise board performance.

A closer look may suggest one or more of your board’s committees have outlived their usefulness. You might find others that are potentially useful but need rethinking, for example, to clarify the division of responsibilities between board and staff. You might also find new challenges facing the board for which a new committee might be a useful creation.

In the next issue of Board Works, I will examine some of the ways a board can increase its confidence in the decisions it has made about the use (or not) of committees.

Notes:
(1) For example, in New Zealand every District Health Board (DHB) must establish three Advisory Committees under ss.34-36 of the New Zealand Public Health and Disability Act 2000: these are the Community and Public Health, Disability Support, and Hospitals Advisory Committees. These committees are usually referred to as ‘statutory’ committees. In addition, DHB s are required to have two ‘non-statutory’ committees (a Finance, Risk and Audit Committee and a Remuneration Committee).
(2) Fredrik O. Andersson and David O. Renz. ‘Who Really Governs and How: Considering the Impact of the Dominant Coalition.’ Nonprofit Quarterly, Fall edition 2019.

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