Article

The Benefits of Board Committees

a diverse group of people at a board table
Michael G. Daigneault, CCD Photo
Principal/Founder
Quantum Governance L3C
Jennie Boden Photo
Managing Dir/Strategic Relationships
Quantum Governance L3C

8 minutes

Get the most out of them by applying these bright ideas.

If there’s one thing that board members and management often share, it is a disturbing sense of uncertainty as to the real benefits of board committees.

From a board member’s point of view, committee meetings can sometimes be seen as another meeting to travel to, one more report to read, or—worse yet—an additional PowerPoint presentation to sit through. To top it off, it can frequently appear to volunteer leaders that “all their hard work” on a committee is—at times—somewhat less than appreciated by both their fellow board members and management alike.

Of course, the challenge of committee work is not exclusive to board members or other volunteer leaders. Management has the responsibility of assigning staff (who already have full-time jobs) to assist the work of the committees, helping to gather information, coordinating schedules, writing reports, preparing presentations as well as developing motions and updating or crafting new policies for the committee’s (and board’s) final consideration. Staff is regularly “rewarded” for their efforts by then being asked to assist in implementing the to-do list of items that emerge from an affirmative vote at the board level.

You may ask, “Does this mean that board committees should be abolished?” “No,” we would respond. “But,” you might think, “to overcome the types of burdens described above, committees better have some real benefits!” Fortunately, if done well—they do provide some very real benefits. If not done well, however, they are not the “value-add” they are intended to be. 

Do you know whether your committees are truly effective? When is the last time you evaluated your board committees (as well as the overall committee structure) to ensure that they are providing genuine value to your credit union?

When established, charged and composed effectively, board committees can be a valuable asset to both your board and your management team by helping to:

  1. identify and examine key issues, concerns and questions ahead of board meetings.
  2. give laser focus to a project delegated by the board and/or helping to get things done more quickly and efficiently than would be possible for the full board.
  3. more equitably distribute the board’s work, since committee assignments can be dispersed among board members.
  4. facilitate trust-building between board members and management through their combined efforts. (It’s always a good idea to include relevant members of your management team on your board committees, too!)
  5. increase engagement among individual board members and help them make a more meaningful contribution to the board and to the credit union.

But, what does it take to establish, charge, and compose your board’s committees effectively?

The State of Your Committees

There’s no right or wrong number or kind of committees for each CU board. In fact, we would argue that beyond supervisory committees for federal credit unions and some state-chartered CUs and audit committees for other state-chartered credit unions, there really isn’t a must-have list of committees for credit unions.

In establishing or reviewing your board committee structure, the two rules of thumb that we would have you follow are these:

  1. Board committees should be established to do the work of the board, not the work of the staff; and
  2. Establish standing, board committees only when there is sustained, permanent, ongoing work for the committee members to undertake.

Otherwise, we encourage you to use ad-hoc committees and task forces to accomplish your work early and often.

Ad-hoc committees are likely to exist for more than a year, but not intended to be permanent. For example, a CU board may create a “new headquarters committee” that would exist for several years. Its purpose would be to help the board understand and oversee the important process of: 1) identifying the need for a new headquarters; 2) outlining the central benefits and challenges of doing so; 3) identifying or constructing the new building; 4) managing the financial implications of the new headquarters; and 5) overseeing the transition plan to move to the new building. At the end of its work, once the credit union has successfully moved into the new building, the committee would be dissolved.

Task forces are even more temporary. They almost always exist for less than a year, and they are generally subgroups made up of both board and staff, but they may also include other volunteers or even outside experts or consultants. Task forces are charged with focusing on (and learning more about) a particular issue, question, opportunity or challenge and then reporting back to the board their thoughts and findings within a defined period of time. Sometimes task forces may simply report back the information they have gathered. In other cases, they are also asked to provide one or more recommendations for the board’s consideration. Once they have provided their recommendations, unless the board asks for further work from the task force, they are dissolved.

What’s a Committee to Do?

Charging your committees—that is setting their course of action—is an important board responsibility. Did you notice that we said board responsibility and not management responsibility? This is key. Board members need to determine what you want your committees to accomplish. In the spirit of constructive partnership, we encourage you to ask your CEO and management team for their input.

Once you know what you want your committees to accomplish, we suggest you set it down in a committee charter. Include these key sections in the charter document:

  • Prologue: A brief overview of the committee’s key function.
  • Meetings: A statement on how frequently the committee must meet.
  • Members: The required number and qualifications of committee members. This may include restrictions on committee membership. For example, if you opt for an executive compensation committee, you would likely not want a member of the management team to serve on this committee.
  • Committee leadership: Outline any position requirements and responsibilities for the committee chair and/or secretary
  • Role of the CEO: Outline the roles and responsibilities of the CEO vis-à-vis this particular committee.
  • Charge: Detail the roles and responsibilities of the committee, including reporting requirements to the board.

The most important thing to know about all of your board committees is this: Unless it’s explicitly stated, your board’s committees do not have decision-making authority; they can only provide recommendations to the full board for their action. Let us repeat that: Unless it’s explicitly stated, your board’s committees do not have decision-making authority; they can only provide recommendations to the board for their action.

Finding the Right People to Serve

Unless governmentally regulated (such as for supervisory or audit committees), there is no hard-and-fast rule about the number of members a committee should have. Three to five members is often optimal. Committees generally have more credibility if there is some diversity of opinions and experiences. Too many opinions and duplicative effort can result when a committee grows too large. This is particularly the case with credit unions that have fairly small boards. If the committee grows too large, efficiency may be lost.

The ideal composition of a committee depends on a variety of factors, such as the committee’s purpose, charter, size, chair and even the experience of its members. It’s best to have at least one board member on a committee. But including non-board members or community members on board committees can be an effective way of reaching out and potentially beginning to build your bench for future board members. Each committee should also have an official non-voting staff liaison appointed to help carry out its efforts.

Your board chair and the CEO should also be treated as ex-officio, non-voting members of all board committees unless the substance of the committee’s deliberations would be in conflict with their attendance. (Consider our previous example where a CEO would not attend a meeting of a committee doing an analysis of his or her performance and compensation package.)

Other than these basic parameters, be bold. Cast your net widely, and don’t assume that your strategic planning task force should be filled with only strategic thinkers. Remember, there are other aspects to strategic planning that are important, such as developing a realistic budget for those strategic goals. Thus, a financial mind would be a good addition to your strategic task force, too.

Our guess is that if you are like most credit union boards, you are probably secretly worrying about your board committees. Shed some needed light on them. Don’t just carry on with the same committee structure that you’ve always had, just because you’ve always had it.

Board committees are a significant component of your credit union’s governance structure. And they draw a significant number of staff resources. Be sure that you are using them wisely. Do you have the right committees? Tasked with the right responsibilities? Composed with the right folks and aided by the right staff?

Be brave. Ask yourselves these questions—and more questions like them. You’ll be very glad you did.

Michael G. Daigneault, CCD, is CEO of Quantum Governance L3C, Vienna, Va., CUES’ strategic provider for governance services. Daigneault has more than 30 years of experience in the field of governance, management, strategy, planning and facilitation, and served as an executive in residence at CUES Governance Leadership Institute.

Jennie Boden serves as the firm’s managing director of strategic relationships and a senior consultant. She has 25 years of experience in the national nonprofit sector and served as the chief staff officer for two nonprofits before coming to Quantum Governance.

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Keywords

Governance