Series Volume 9: Why Build an Effective Board For Your Company?

FEB
3
2017
FEB 3, 2017

Series Volume 9: The Importance of Board Committees

Congratulations, you have made it to Series 9, the final article in the 'Board Build' series! Glad to have you with us throughout the journey and we truly hope you were able to apply these principles to your Board or, at the very least, get you thinking about the possibility of building a Board for your company or organization. Before we move to the topic of Board governance in future articles, we first need to address the importance of committees on your Board.

The Board Committee structure as well as the Committee Chairs
"make or break" the effectiveness of the entire Board

The general word committee has taken on an interesting and sometimes joke-like perception in recent years, used to mock how slowly groups make decisions and what the mangled outcome will likely be once a mass of people all incorporate their absolutely critical ideas. Dating back to 1952, the saying that, "a camel is a horse designed by a committee" even has its own Wiktionary page with the explanation: "[this is] an expression critical of committees - or by analogy, group decision-making - by emphasizing the ineffectiveness of incorporating too many conflicting opinions into a single project. In this figure of speech, the distinguishing features of a camel, such as its humps and poor temperament, are taken to be deformities that resulted from its poor design."

Funny, yes... but there is more than meets the eye with this explanation - supportive of the reasoning for creating smaller groups to more effectively and efficiently work through challenges. To have the entire board work through every challenge creates a free-for-all environment and actually undermines the purpose of the Board by making it a tactical instead of strategic group. We advocate for Board Committees to take on challenges that fit into their specific expertise and experience areas for offline discussion and solutioning with a) a report of findings, outcomes and recommendations b) sent out well in advance of the Board meeting c) to be voted on during a Board meeting. Order reigns once again in the boardroom! Having the proper Board Committees with proper Chairs or leads ensures that each challenge gets the laser focus and guidance it deserves. (remember that you can properly evaluate candidates who would be successful in committee chair positions with the procedures mentioned in Series #8: 'Board Member Evaluation & Selection' )

Plan your committees carefully and know that these can change
for different phases of growth or business challenges.

Although the actual number of committees and their titles can vary depending on organization size and purpose, this is an important effort to strategize whether evaluating an existing Board or building a new Board. Many Boards in both the public and private sector incorporate the standard committees such as Executive Committee, Governance Committee, HR Committee, Finance Committee, HR Committee, PR Committee and the very hot Technology and Cyber Security Committee - these are usually referred to as the standing committees. The Non-Profit sector would likely include or substitute the Development Committee or Campaign Committee (fundraising), Program Committee and Event Committee. Ad-hoc committees such as Nominating Committee, Board Development Committee, Audit Committee, etc. can be created to accomplish a specific goal and then disband until needed again.

The standing committees are mentioned as a matter of practice, but know that you can create committees for just about any area you deem important for the long-term well-being of your company or organization. An example of a non-standard standing committee at IBG is our Real Estate & Construction Committee. Definitely not a common committee I can assure you! We have this committee to properly advise strategy to our clients during their expansion phases. I.e. when our clients want to expand to a new geography and/or open a 'brick-and-morter' store location. This expertise is vital in the strategy phase leading to a fruitful planning phase. The process outlined in the 'Sphere of Influence' model (newsletter Series #5) is a great way to evaluate what standing committees your company or organization requires. In most cases, there is a one-to-one relationship with the expertise outlined in your sphere to a corresponding committee.

Structured committee reporting seems like a simple requirement, but it is unfortunately overlooked on many Boards. We utilize a one-pager template that all committees are required to fill out on a monthly or quarterly basis. This standardizes the responses and allows for a view into operational as well as strategic areas of interest to the Board. It goes without saying that these reports should be sent at least a week in advance of a Board meeting to allow for review by the entire Board. During the Board meeting, the Chair of each committee, under the assumption that the entire report has already been reviewed by all Board members, should only address the areas requiring input or a vote. I also recommend that committee chairs call out any accolades of team members during each committee update as a way of balancing challenges with triumphs - it is all too easy to focus only on the things needing to be fixed and not those things that have been fixed.

What will you consider when building or evaluating your Board?

Continue to read our upcoming newsletters on the important focus areas you need to be thinking about in order to build, evaluate and govern an effective Board for your company.

Our next newsletters will focus on Board Governance as well as
The Role of Boards in Succession Planning and Exit Strategies

Also, see the previous newsletter series 1 through 8 in the "Why Build an Effective Board For Your Company" series here.

by Mark A. Pfister, Chairman & CEO, Integral Board Group

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About the Author: In addition to sitting on numerous boards, Mark A. Pfister advises public, private and non-profit boards in efficient and effective operations. He is the inventor of the 'Board as a Service' (BaaS) engagement model and an expert project/program manager frequently consulting on strategic global initiatives in their initiation phases as well as programs that require remedial focus to bring them back on track. Mark holds a Professional Director Certification through the American College of Corporate Directors (ACCD).

Have Mark join you with his 2017 National Speaking Tour 'Building an Effective Board For Your Company' as he shows business owners and leaders the immense value of creating an experienced 'go-to' team.